2022-013 The Department of Corrections improperly charged $37,392 to the Coronavirus Relief Fund. Assistance Listing Number and Title: 21.019 COVID-19 Coronavirus Relief Fund Federal Grantor Name: U.S. Department of the Treasury Federal Award/Contract Number: None Pass-through Entity Name: None Pass-through Award/Contract Number: None Applicable Compliance Component: Activities Allowed or Unallowed Allowable Costs/Cost Principles Known Questioned Cost Amount: $37,392 Background In March 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which authorized the spending of $2.2 trillion in federal funds to respond to the COVID-19 pandemic. The CARES Act established the Coronavirus Relief Fund (CRF), which authorized $150 billion in federal financial assistance for state, territorial, tribal, and certain eligible local governments. Through the CARES Act, Washington was awarded about $2.95 billion of CRF money to help fund the state?s response to the COVID-19 pandemic. Of this amount, the Office of financial Management allocated approximately $2.2 billion to state agencies for various programs. In fiscal year 2022, state agencies spent approximately $345 million in CRF funds. The CARES Act requires recipients to only use CRF payments to cover: ? Necessary expenditures incurred due to the public health emergency (COVID-19) ? Costs that were not accounted for in the government?s most recently approved budget as of March 27, 2020 ? Costs that were incurred during the period that begins March 1, 2020, and ends December 31, 2021 In fiscal year 2022, the Department of Corrections spent $240 million in CRF funds. The Department used the funds to cover payroll costs for employees who were substantially dedicated to responding to the COVID-19 public health emergency. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The Department improperly charged $37,392 to the CRF. We found the Department had adequate internal controls to ensure it materially complied with activities allowed or unallowed and allowable costs/cost principles requirements. We used a statistical sampling method and randomly selected and examined 59 monthly payments out of a total population of 29,459. In addition to the 59 payments, we judgmentally picked two individually significant items. We examined the supporting documentation for each monthly payment and found one instance where an employee?s payroll overpayment totaling $37,392 was identified and referred to collections by the Department, but was inadvertently charged to the CRF. Federal regulations require the auditor to issue a finding when the known or estimated questioned costs identified in a single audit exceed $25,000. We are issuing this finding because, as stated in the Effect of Condition and Questioned Costs section of this finding, the actual questioned costs exceed that threshold. This issue was not reported as a finding in the prior audit. Cause of Condition The Department followed procedures for approving payroll costs. However, multiple reviews did not prevent the overpayment made to an employee from being charged to the CRF. Effect of Condition and Questioned Costs The Department improperly charged the CRF for payroll costs totaling $37,392. We question costs when we find an agency has not complied with grant regulations or when it does not have adequate documentation to support its expenditures. Recommendation We recommend the Department consult with the grantor to discuss whether the questioned costs identified in the audit should be repaid. Department?s Response The Department of Corrections (DOC) would like to thank the State Auditor?s Office (SAO) for the audit of the Coronavirus Relief Fund (CRF) grant. The Department agrees that questioned costs were charged to the grant due to an employee?s overpayment. While the SAO has complimented our internal controls and processes for being able to track each line item in the CRF, we also know that internal controls can always be improved. The Department has additional allowable costs that were not charged to the grant which should compensate for the questioned costs identified and intends to discuss this change with the funder. The Department appreciated the patience of the SAO in obtaining supporting documentation and having clarifying conversations during the audit. Auditor?s Remarks We thank the Department for its cooperation and assistance throughout the audit. We will review the status of the Department?s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200.1, Uniform Guidance, establishes definitions for improper payments. Part 200.410 establishes requirements for the collection of unallowable costs.
2022-014 The Department of Social and Health Services improperly charged $390 to the Coronavirus Relief Fund. Assistance Listing Number and Title: 21.019 COVID-19 Coronavirus Relief Fund Federal Grantor Name: U.S. Department of the Treasury Federal Award/Contract Number: None Pass-through Entity Name: None Pass-through Award/Contract Number: None Applicable Compliance Component: Activities Allowed or Unallowed Allowable Costs/Cost Principles Known Questioned Cost Amount: $390 Background In March 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which authorized the spending of $2.2 trillion in federal funds to respond to the COVID-19 pandemic. The CARES Act established the Coronavirus Relief Fund (CRF), which authorized $150 billion in federal financial assistance for state, territorial, tribal, and certain eligible local governments. Through the CARES Act, Washington was awarded about $2.95 billion of CRF money to help fund the state?s response to the COVID-19 pandemic. Of this amount, the Office of Financial Management allocated about $2.2 billion to state agencies for various programs. In fiscal year 2022, state agencies spent about $345 million in CRF funds. The CARES Act requires recipients to only use CRF payments to cover: ? Necessary expenditures incurred due to the public health emergency (COVID-19) ? Costs that were not accounted for in the government?s most recently approved budget as of March 27, 2020 ? Costs that were incurred during the period that begins March 1, 2020, and ends December 31, 2021 In fiscal year 2022, the Department of Social and Health Services spent $40 million in CRF funds. The Department used the funds to cover payroll costs for employees who were substantially dedicated to responding to the COVID-19 public health emergency. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The Department improperly charged $390 to the CRF. We found the Department had adequate internal controls to ensure it materially complied with activities allowed or unallowed and allowable costs/cost principles requirements. We used a statistical sampling method to randomly select and examine 83 monthly payments out of a total population of 9,415. We reviewed the supporting documentation for each monthly payment and found: ? One overpayment for four hours overtime and overtime shift totaling $208. ? One payment where there was no supporting documentation for an employee?s shift differential pay of $7.50. ? One overpayment for call-back pay totaling $174.23. Federal regulations require the auditor to issue a finding when the known or estimated questioned costs identified in a single audit exceed $25,000. We are issuing this finding because, as stated in the Effect of Condition and Questioned Costs section of this finding, the estimated questioned costs exceed that threshold. This issue was not reported as a finding in the prior audit. Cause of Condition The Department followed procedures for approving payroll costs. However, multiple reviews did not prevent the unsupported shift differential pay and the two overpayments from being charged to the CRF. Effect of Condition and Questioned Costs The Department improperly charged the CRF for payroll costs totaling $390. Based on the unallowable payments, we estimate the likely questioned costs for this grant to be $45,266. Our sampling methodology meets statistical sampling criteria under generally accepted auditing standards in AU-C 530.05. It is important to note that the sampling technique we used is intended to support our audit conclusions by determining if expenditures complied with program requirements in all material respects. Accordingly, we used an acceptance sampling formula designed to provide a high level of assurance, with a 95 percent confidence of whether exceptions exceeded our materiality threshold. Our audit report and finding reflect this conclusion. However, the likely improper payment projections are a point estimate and only represent our ?best estimate of total questioned costs? as required by 2 CFR ? 200.516(3). We question costs when we find an agency has not complied with grant regulations or when it does not have adequate documentation to support its expenditures. Recommendation We recommend the Department consult with the grantor to discuss whether the questioned costs identified in the audit should be repaid. Department?s Response The Department concurs with the audit finding. If the grantor contacts the Department regarding the questioned costs, the Department will discuss the way we used the funds and will take additional action if appropriate. Auditor?s Remarks We thank the Department for its cooperation and assistance throughout the audit. We will review the status of the Department?s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200.1, Uniform Guidance, establishes definitions for improper payments. Part 200.410 establishes requirements for the collection of unallowable costs.
2022-013 The Department of Corrections improperly charged $37,392 to the Coronavirus Relief Fund. Assistance Listing Number and Title: 21.019 COVID-19 Coronavirus Relief Fund Federal Grantor Name: U.S. Department of the Treasury Federal Award/Contract Number: None Pass-through Entity Name: None Pass-through Award/Contract Number: None Applicable Compliance Component: Activities Allowed or Unallowed Allowable Costs/Cost Principles Known Questioned Cost Amount: $37,392 Background In March 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which authorized the spending of $2.2 trillion in federal funds to respond to the COVID-19 pandemic. The CARES Act established the Coronavirus Relief Fund (CRF), which authorized $150 billion in federal financial assistance for state, territorial, tribal, and certain eligible local governments. Through the CARES Act, Washington was awarded about $2.95 billion of CRF money to help fund the state?s response to the COVID-19 pandemic. Of this amount, the Office of financial Management allocated approximately $2.2 billion to state agencies for various programs. In fiscal year 2022, state agencies spent approximately $345 million in CRF funds. The CARES Act requires recipients to only use CRF payments to cover: ? Necessary expenditures incurred due to the public health emergency (COVID-19) ? Costs that were not accounted for in the government?s most recently approved budget as of March 27, 2020 ? Costs that were incurred during the period that begins March 1, 2020, and ends December 31, 2021 In fiscal year 2022, the Department of Corrections spent $240 million in CRF funds. The Department used the funds to cover payroll costs for employees who were substantially dedicated to responding to the COVID-19 public health emergency. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The Department improperly charged $37,392 to the CRF. We found the Department had adequate internal controls to ensure it materially complied with activities allowed or unallowed and allowable costs/cost principles requirements. We used a statistical sampling method and randomly selected and examined 59 monthly payments out of a total population of 29,459. In addition to the 59 payments, we judgmentally picked two individually significant items. We examined the supporting documentation for each monthly payment and found one instance where an employee?s payroll overpayment totaling $37,392 was identified and referred to collections by the Department, but was inadvertently charged to the CRF. Federal regulations require the auditor to issue a finding when the known or estimated questioned costs identified in a single audit exceed $25,000. We are issuing this finding because, as stated in the Effect of Condition and Questioned Costs section of this finding, the actual questioned costs exceed that threshold. This issue was not reported as a finding in the prior audit. Cause of Condition The Department followed procedures for approving payroll costs. However, multiple reviews did not prevent the overpayment made to an employee from being charged to the CRF. Effect of Condition and Questioned Costs The Department improperly charged the CRF for payroll costs totaling $37,392. We question costs when we find an agency has not complied with grant regulations or when it does not have adequate documentation to support its expenditures. Recommendation We recommend the Department consult with the grantor to discuss whether the questioned costs identified in the audit should be repaid. Department?s Response The Department of Corrections (DOC) would like to thank the State Auditor?s Office (SAO) for the audit of the Coronavirus Relief Fund (CRF) grant. The Department agrees that questioned costs were charged to the grant due to an employee?s overpayment. While the SAO has complimented our internal controls and processes for being able to track each line item in the CRF, we also know that internal controls can always be improved. The Department has additional allowable costs that were not charged to the grant which should compensate for the questioned costs identified and intends to discuss this change with the funder. The Department appreciated the patience of the SAO in obtaining supporting documentation and having clarifying conversations during the audit. Auditor?s Remarks We thank the Department for its cooperation and assistance throughout the audit. We will review the status of the Department?s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200.1, Uniform Guidance, establishes definitions for improper payments. Part 200.410 establishes requirements for the collection of unallowable costs.
2022-014 The Department of Social and Health Services improperly charged $390 to the Coronavirus Relief Fund. Assistance Listing Number and Title: 21.019 COVID-19 Coronavirus Relief Fund Federal Grantor Name: U.S. Department of the Treasury Federal Award/Contract Number: None Pass-through Entity Name: None Pass-through Award/Contract Number: None Applicable Compliance Component: Activities Allowed or Unallowed Allowable Costs/Cost Principles Known Questioned Cost Amount: $390 Background In March 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which authorized the spending of $2.2 trillion in federal funds to respond to the COVID-19 pandemic. The CARES Act established the Coronavirus Relief Fund (CRF), which authorized $150 billion in federal financial assistance for state, territorial, tribal, and certain eligible local governments. Through the CARES Act, Washington was awarded about $2.95 billion of CRF money to help fund the state?s response to the COVID-19 pandemic. Of this amount, the Office of Financial Management allocated about $2.2 billion to state agencies for various programs. In fiscal year 2022, state agencies spent about $345 million in CRF funds. The CARES Act requires recipients to only use CRF payments to cover: ? Necessary expenditures incurred due to the public health emergency (COVID-19) ? Costs that were not accounted for in the government?s most recently approved budget as of March 27, 2020 ? Costs that were incurred during the period that begins March 1, 2020, and ends December 31, 2021 In fiscal year 2022, the Department of Social and Health Services spent $40 million in CRF funds. The Department used the funds to cover payroll costs for employees who were substantially dedicated to responding to the COVID-19 public health emergency. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The Department improperly charged $390 to the CRF. We found the Department had adequate internal controls to ensure it materially complied with activities allowed or unallowed and allowable costs/cost principles requirements. We used a statistical sampling method to randomly select and examine 83 monthly payments out of a total population of 9,415. We reviewed the supporting documentation for each monthly payment and found: ? One overpayment for four hours overtime and overtime shift totaling $208. ? One payment where there was no supporting documentation for an employee?s shift differential pay of $7.50. ? One overpayment for call-back pay totaling $174.23. Federal regulations require the auditor to issue a finding when the known or estimated questioned costs identified in a single audit exceed $25,000. We are issuing this finding because, as stated in the Effect of Condition and Questioned Costs section of this finding, the estimated questioned costs exceed that threshold. This issue was not reported as a finding in the prior audit. Cause of Condition The Department followed procedures for approving payroll costs. However, multiple reviews did not prevent the unsupported shift differential pay and the two overpayments from being charged to the CRF. Effect of Condition and Questioned Costs The Department improperly charged the CRF for payroll costs totaling $390. Based on the unallowable payments, we estimate the likely questioned costs for this grant to be $45,266. Our sampling methodology meets statistical sampling criteria under generally accepted auditing standards in AU-C 530.05. It is important to note that the sampling technique we used is intended to support our audit conclusions by determining if expenditures complied with program requirements in all material respects. Accordingly, we used an acceptance sampling formula designed to provide a high level of assurance, with a 95 percent confidence of whether exceptions exceeded our materiality threshold. Our audit report and finding reflect this conclusion. However, the likely improper payment projections are a point estimate and only represent our ?best estimate of total questioned costs? as required by 2 CFR ? 200.516(3). We question costs when we find an agency has not complied with grant regulations or when it does not have adequate documentation to support its expenditures. Recommendation We recommend the Department consult with the grantor to discuss whether the questioned costs identified in the audit should be repaid. Department?s Response The Department concurs with the audit finding. If the grantor contacts the Department regarding the questioned costs, the Department will discuss the way we used the funds and will take additional action if appropriate. Auditor?s Remarks We thank the Department for its cooperation and assistance throughout the audit. We will review the status of the Department?s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200.1, Uniform Guidance, establishes definitions for improper payments. Part 200.410 establishes requirements for the collection of unallowable costs.
2022-013 The Department of Corrections improperly charged $37,392 to the Coronavirus Relief Fund. Assistance Listing Number and Title: 21.019 COVID-19 Coronavirus Relief Fund Federal Grantor Name: U.S. Department of the Treasury Federal Award/Contract Number: None Pass-through Entity Name: None Pass-through Award/Contract Number: None Applicable Compliance Component: Activities Allowed or Unallowed Allowable Costs/Cost Principles Known Questioned Cost Amount: $37,392 Background In March 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which authorized the spending of $2.2 trillion in federal funds to respond to the COVID-19 pandemic. The CARES Act established the Coronavirus Relief Fund (CRF), which authorized $150 billion in federal financial assistance for state, territorial, tribal, and certain eligible local governments. Through the CARES Act, Washington was awarded about $2.95 billion of CRF money to help fund the state?s response to the COVID-19 pandemic. Of this amount, the Office of financial Management allocated approximately $2.2 billion to state agencies for various programs. In fiscal year 2022, state agencies spent approximately $345 million in CRF funds. The CARES Act requires recipients to only use CRF payments to cover: ? Necessary expenditures incurred due to the public health emergency (COVID-19) ? Costs that were not accounted for in the government?s most recently approved budget as of March 27, 2020 ? Costs that were incurred during the period that begins March 1, 2020, and ends December 31, 2021 In fiscal year 2022, the Department of Corrections spent $240 million in CRF funds. The Department used the funds to cover payroll costs for employees who were substantially dedicated to responding to the COVID-19 public health emergency. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The Department improperly charged $37,392 to the CRF. We found the Department had adequate internal controls to ensure it materially complied with activities allowed or unallowed and allowable costs/cost principles requirements. We used a statistical sampling method and randomly selected and examined 59 monthly payments out of a total population of 29,459. In addition to the 59 payments, we judgmentally picked two individually significant items. We examined the supporting documentation for each monthly payment and found one instance where an employee?s payroll overpayment totaling $37,392 was identified and referred to collections by the Department, but was inadvertently charged to the CRF. Federal regulations require the auditor to issue a finding when the known or estimated questioned costs identified in a single audit exceed $25,000. We are issuing this finding because, as stated in the Effect of Condition and Questioned Costs section of this finding, the actual questioned costs exceed that threshold. This issue was not reported as a finding in the prior audit. Cause of Condition The Department followed procedures for approving payroll costs. However, multiple reviews did not prevent the overpayment made to an employee from being charged to the CRF. Effect of Condition and Questioned Costs The Department improperly charged the CRF for payroll costs totaling $37,392. We question costs when we find an agency has not complied with grant regulations or when it does not have adequate documentation to support its expenditures. Recommendation We recommend the Department consult with the grantor to discuss whether the questioned costs identified in the audit should be repaid. Department?s Response The Department of Corrections (DOC) would like to thank the State Auditor?s Office (SAO) for the audit of the Coronavirus Relief Fund (CRF) grant. The Department agrees that questioned costs were charged to the grant due to an employee?s overpayment. While the SAO has complimented our internal controls and processes for being able to track each line item in the CRF, we also know that internal controls can always be improved. The Department has additional allowable costs that were not charged to the grant which should compensate for the questioned costs identified and intends to discuss this change with the funder. The Department appreciated the patience of the SAO in obtaining supporting documentation and having clarifying conversations during the audit. Auditor?s Remarks We thank the Department for its cooperation and assistance throughout the audit. We will review the status of the Department?s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200.1, Uniform Guidance, establishes definitions for improper payments. Part 200.410 establishes requirements for the collection of unallowable costs.
2022-014 The Department of Social and Health Services improperly charged $390 to the Coronavirus Relief Fund. Assistance Listing Number and Title: 21.019 COVID-19 Coronavirus Relief Fund Federal Grantor Name: U.S. Department of the Treasury Federal Award/Contract Number: None Pass-through Entity Name: None Pass-through Award/Contract Number: None Applicable Compliance Component: Activities Allowed or Unallowed Allowable Costs/Cost Principles Known Questioned Cost Amount: $390 Background In March 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which authorized the spending of $2.2 trillion in federal funds to respond to the COVID-19 pandemic. The CARES Act established the Coronavirus Relief Fund (CRF), which authorized $150 billion in federal financial assistance for state, territorial, tribal, and certain eligible local governments. Through the CARES Act, Washington was awarded about $2.95 billion of CRF money to help fund the state?s response to the COVID-19 pandemic. Of this amount, the Office of Financial Management allocated about $2.2 billion to state agencies for various programs. In fiscal year 2022, state agencies spent about $345 million in CRF funds. The CARES Act requires recipients to only use CRF payments to cover: ? Necessary expenditures incurred due to the public health emergency (COVID-19) ? Costs that were not accounted for in the government?s most recently approved budget as of March 27, 2020 ? Costs that were incurred during the period that begins March 1, 2020, and ends December 31, 2021 In fiscal year 2022, the Department of Social and Health Services spent $40 million in CRF funds. The Department used the funds to cover payroll costs for employees who were substantially dedicated to responding to the COVID-19 public health emergency. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The Department improperly charged $390 to the CRF. We found the Department had adequate internal controls to ensure it materially complied with activities allowed or unallowed and allowable costs/cost principles requirements. We used a statistical sampling method to randomly select and examine 83 monthly payments out of a total population of 9,415. We reviewed the supporting documentation for each monthly payment and found: ? One overpayment for four hours overtime and overtime shift totaling $208. ? One payment where there was no supporting documentation for an employee?s shift differential pay of $7.50. ? One overpayment for call-back pay totaling $174.23. Federal regulations require the auditor to issue a finding when the known or estimated questioned costs identified in a single audit exceed $25,000. We are issuing this finding because, as stated in the Effect of Condition and Questioned Costs section of this finding, the estimated questioned costs exceed that threshold. This issue was not reported as a finding in the prior audit. Cause of Condition The Department followed procedures for approving payroll costs. However, multiple reviews did not prevent the unsupported shift differential pay and the two overpayments from being charged to the CRF. Effect of Condition and Questioned Costs The Department improperly charged the CRF for payroll costs totaling $390. Based on the unallowable payments, we estimate the likely questioned costs for this grant to be $45,266. Our sampling methodology meets statistical sampling criteria under generally accepted auditing standards in AU-C 530.05. It is important to note that the sampling technique we used is intended to support our audit conclusions by determining if expenditures complied with program requirements in all material respects. Accordingly, we used an acceptance sampling formula designed to provide a high level of assurance, with a 95 percent confidence of whether exceptions exceeded our materiality threshold. Our audit report and finding reflect this conclusion. However, the likely improper payment projections are a point estimate and only represent our ?best estimate of total questioned costs? as required by 2 CFR ? 200.516(3). We question costs when we find an agency has not complied with grant regulations or when it does not have adequate documentation to support its expenditures. Recommendation We recommend the Department consult with the grantor to discuss whether the questioned costs identified in the audit should be repaid. Department?s Response The Department concurs with the audit finding. If the grantor contacts the Department regarding the questioned costs, the Department will discuss the way we used the funds and will take additional action if appropriate. Auditor?s Remarks We thank the Department for its cooperation and assistance throughout the audit. We will review the status of the Department?s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200.1, Uniform Guidance, establishes definitions for improper payments. Part 200.410 establishes requirements for the collection of unallowable costs.
2022-016 The Department of Commerce did not have adequate internal controls over and did not comply with requirements to ensure payments to subrecipients of the Emergency Rental Assistance program were allowable and properly supported. Assistance Listing Number and Title: 21.023 COVID-19 Emergency Rental Assistance Program Federal Grantor Name: U.S. Department of the Treasury Federal Award/Contract Number: N/A Pass-through Entity Name: None Pass-through Award/Contract Number: None Applicable Compliance Component: Activities Allowed or Unallowed Allowable Costs / Cost Principles Period of Performance Known Questioned Cost Amount: $255,642,551 Background Congress passed two acts authorizing federal funds for the Emergency Rental Assistance (ERA) program to respond to the COVID-19 pandemic. The Consolidated Appropriations Act, 2021, enacted on December 27, 2020, provided $25 billion for ERA. These funds are known as ERA1. The American Rescue Plan Act of 2021, enacted on March 11, 2021, provided $21.55 billion in additional funding for ERA. These funds are known as ERA2. The funds are provided directly to states, U.S. territories, local governments and, in the case of ERA1, Indian tribes, to assist eligible households through existing or newly created rental assistance programs. The Department of Commerce administers the ERA program in Washington. The Department subawarded federal funds to subrecipients to provide financial assistance to households, landlords and utility providers. In fiscal year 2022, the Department spent about $450 million in ERA1 and ERA2 funds. During the audit period, the Department allocated program funds to 38 ERA1 subrecipients and 12 ERA2 subrecipients. Grant recipients may use ERA1 and ERA2 funds for administrative expenses, housing stability services, financial assistance, and other affordable rental housing and eviction prevention purposes. Most of the expenditures the Department spent were for financial assistance to eligible households, which included payment of rent, rental arrears, utilities and home energy costs, utilities and home energy costs arrears, housing stability services and other expenses related to housing. Under the ERA1 program, award funds used for ?other expenses? must be related to housing and ?incurred due, directly or indirectly, to the COVID-19 outbreak.? The amount for prospective rent cannot exceed three months under a single household application. Financial assistance arrears may only cover household expenses accrued on or after March 13, 2020, up to a maximum 15 months for ERA1 and a maximum of 18 months under ERA1 and ERA2 combined. There is no maximum dollar amount for the cumulative financial assistance that may be provided on behalf of an eligible household beyond the requirement that the amounts paid be based on documentation of household income, leases and equivalent forms. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The Department did not have adequate internal controls over and did not comply with requirements to ensure payments for the ERA program were allowable and properly supported. During the audit period, the Department only required high-level supporting documentation when approving subrecipient payments. Since detailed source documentation was not required at the time of the reimbursement payment, the Department implemented a fiscal review process for the ERA1 and ERA2 subrecipients. We reviewed the three fiscal reviews completed in the audit period and determined they were sufficient for ensuring payments to these subrecipients were allowable and adequately supported. However, we determined the Department did not complete fiscal reviews for 35 of the 38 ERA1 subrecipients (92 percent) and all 12 ERA2 subrecipients (100 percent) during the audit period. We used a statistical sampling method to randomly select and review 55 out of 369 payments. Additionally, we judgmentally reviewed one individually significant payment that exceeded $23 million. In total, we examined more than $258 million in provider payments as part of the audit. Of the 56 payments examined, we identified 54 payments (96 percent), including the individually significant payment, that did not have adequate documentation and for which the subrecipient did not receive a fiscal review to ensure the payment(s) was for allowable activities, met cost principles, and occurred within the award?s period of performance. We consider these internal control deficiencies to be a material weakness, which led to material noncompliance. This issue was not reported as a finding in the prior audit. Cause of Condition Management did not ensure that proper internal controls were in place to oversee the ERA program. Department staff approved payments to subrecipients without adequate supporting documentation, and management relied on annual fiscal monitoring reviews to ensure subrecipients had proper support for reimbursement payments. However, management said that due to limited staffing and resources, they were only able to conduct monitoring for three subrecipients during the audit period. Effect of Condition and Questioned Costs We determined the Department did not receive adequate supporting documentation before paying subrecipients and did not perform fiscal reviews to ensure that expenditures were for allowable activities. As a result, we identified $255,642,551 in known federal questioned costs and $437,002,382 in likely federal questioned costs. Our sampling methodology meets statistical sampling criteria under generally accepted auditing standards in AU-C 530.05. It is important to note that the sampling technique we used is intended to support our audit conclusions by determining if expenditures complied with program requirements in all material respects. Accordingly, we used an acceptance sampling formula designed to provide a high level of assurance, with a 95 percent confidence of whether exceptions exceeded our materiality threshold. Our audit report and finding reflects this conclusion. However, the likely improper payment projections are a point estimate and only represent our ?best estimate of total questioned costs,? as required by 2 CFR ? 200.516(3). To ensure a representative sample, we stratified the population by dollar amount. Without establishing adequate internal controls, the Department cannot reasonably ensure it is using federal funds for allowable purposes and spending occurs within the allowed period of performance. We question costs when we find an agency has not complied with grant regulations or when it does not have adequate documentation to support its expenditures. Recommendations We recommend the Department: ? Implement additional monitoring procedures to ensure adequate review of each subrecipient?s use of the federal subaward ? Improve internal controls to ensure subrecipients provide adequate supporting documentation when requesting reimbursement ? Consult with the grantor to discuss whether the questioned costs identified in the audit should be repaid Department?s Response The Coronavirus pandemic created an unprecedented crisis of imminent evictions for an estimated 200,000 households who would face homelessness. Prompt program implementation was critical to reducing evictions as homelessness was shown to increase the spread of COVID-19 leading to death. Every week of delay would increase the number of people at risk of dying. During fiscal years 2021 through 2023, the department created the following programs with federal funding: ? Eviction Rent Assistance Program (ERAP) 1.0 and 2.0, with Coronavirus State Fiscal Recovery Funds allocated by the Washington State Legislature. ? Treasury Rent Assistance Program (T-RAP) 1.0 and 2.0, with funds awarded to the Department by the United States Department of Treasury. The Department endeavored to quickly deploy these programs either concurrently or on overlapping timelines, as the federal government doubled down on passing legislation to provide much needed assistance to the states. At the time the Department received the first ERAP funds for rental assistance, the Department had current contracts with grantees for the same activity and for whom monitoring plans had been completed. The vast majority of our grantees are local government entities, with whom the Department has a long history of contracting and partnering on delivering services. Local governments have controls in place and a proven track record of administering housing assistance funds, so the Department has an inherent trust and confidence in their administrative and fiscal control functions, including the detailed review of expenditures. When the Department received the first emergency rental assistance funds (August 2020) the funding for the program was set to expire just four months after the federal award, requiring the Department to lift bureaucratic barriers and issue funds quickly. It was not until late December 2020 that Congress extended the end date and we were informed we could continue to fund the program into 2021. The Department had started a fiscal review process for ERAP 1 and ERAP 2 programs following those awards. Upon receiving the results of the fiscal year 2021 emergency rental assistance audit, it was determined the fiscal review must be completed for all program reimbursements, even if the detail review of expenditures was completed at our subrecipient level. The initial fiscal monitoring was based on previously conducted risk assessments, so not all payees received a fiscal monitoring. The State Auditor?s Office identified this deficiency during fiscal year 2021. Following that, at the end of fiscal year 2022, the department began to review supporting backup documentation for all expenditures. Unfortunately this process had not been implemented in full to meet the second audit requirements for fiscal year 2022. The Department continues to complete reviews of supporting documentation for fiscal year 2023 expenditures and we strive to meet all other program requirements. We will continue to submit monthly and quarterly data and reconciliation reports to the United States Department of Treasury and work with the Washington State Auditor?s Office in response to any current or future audits. Auditor?s Remarks We thank the Department for its cooperation and assistance throughout the audit. We will review the status of the Department?s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 403, Factors affecting allowability of costs, describes the general criteria in order for a cost to be allowable under federal awards, including being adequately documented. Title 2 CFR Part 200.1, Uniform Guidance, establishes definitions for improper payments. Part 200.410 establishes requirements for the collection of unallowable costs.
2022-019 The Department of Commerce did not have adequate internal controls over and did not comply with requirements for monitoring subrecipients to ensure payments were allowable, properly supported, and met period of performance requirements for the Coronavirus State and Local Fiscal Recovery Funds. Assistance Listing Number and Title: 21.027 COVID-19 Coronavirus State and Local Fiscal Recovery Funds Federal Grantor Name: U.S. Department of the Treasury Federal Award/Contract Number: SLFRP0002 Pass-through Entity Name: None Pass-through Award/Contract Number: None Applicable Compliance Component: Activities Allowed or Unallowed Allowable Costs/Cost Principles Period of Performance Subrecipient Monitoring Known Questioned Cost Amount: $28,886,606 Background The Coronavirus State and Local Fiscal Recovery Funds (SLFRF), as part of the American Rescue Plan Act of 2021, delivered $350 billion to state, local, and tribal governments to support the response to and recovery from the COVID-19 public health emergency. Washington received $4.4 billion of SLFRF money from the U.S. Department of the Treasury, which the state?s Office of Financial Management allocated to state agencies for various programs. In fiscal year 2022, state agencies spent more than $1.4 billion in SLFRF funds, $132 million of which was spent by the Department of Commerce. The Department used SLFRF funds to administer and provide economic assistance to households at risk of eviction and homelessness primarily through the Eviction Rental Assistance Program (ERAP 2.0), in addition to transportation, tourism, and other pandemic-recovery projects. During fiscal year 2022, the Department expended about $111 million on reimbursements and advance payments to local governments and nonprofit organizations as subrecipients. These subrecipients were responsible for making direct payments of rent and utilities for eligible low-income households with overdue rent payments dating as far back as March 2020. Pass-through entities are required to monitor the activities of subrecipients to ensure they are properly using federal funds for allowable activities and expenditures. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The Department did not have adequate internal controls over and did not comply with requirements for monitoring subrecipients to ensure payments were allowable, properly supported, and met period of performance requirements for the SLFRF program. During the audit period, the Department only required summary level supporting documentation when approving subrecipient payments. Since detailed source documentation was not required at the time of reimbursement, the Department implemented a fiscal review process for ERAP 2.0 subrecipients. We determined that the Department did not perform fiscal reviews or any program reviews for 20 of its 32 subrecipients (63 percent) during the audit period. We used a statistical sampling method to randomly select and review seven out of 12 subrecipients for which the Department completed monitoring during the audit period. We determined four of the seven fiscal reviews completed were insufficient for ensuring payments to these subrecipients were allowable and adequately supported, primarily because the support reviewed lacked enough detail to ensure the activities were allowable and within the period of performance. We also examined program monitoring documentation completed for these same seven subrecipients. The Department selected only one household from each subrecipient for eligibility verification. We determined these reviews did not provide reasonable assurance that payments to the subrecipients were made only on behalf of eligible households. We also used a statistical sampling method to randomly select and review 56 out of 627 payments. Additionally, we judgmentally selected and reviewed one individually significant payment of $6 million. In total, we examined 57 provider payments totaling $48.5 million. Of the 57 payments examined, we identified 37 (65 percent), including the individually significant payment, that did not have adequate documentation to ensure the payment was for allowable activities, met cost principles, and occurred within the award?s period of performance. We consider these internal control deficiencies to be a material weakness, which led to material noncompliance. The issue was not reported as a finding in the prior audit. Cause of Condition Management did not ensure that proper internal controls were in place to oversee ERAP 2.0 and the use of SLFRF funds. Department staff approved payments to subrecipients without reviewing adequate supporting documentation, and management relied on annual program and fiscal monitoring to ensure subrecipients had proper support and only served eligible households. However, management said that due to limited staffing and resources, they were only able to monitor 12 subrecipients during the audit period, wherein staff elected to review just one household payment for each subrecipient for appropriateness. Furthermore, the program did not have written policies and procedures in place documenting the programmatic and fiscal monitoring requirements for staff to follow. Therefore, management could not ensure that reviews were thorough and consistent, included a valid sample of subrecipient records, and required detailed source documentation, including accounting support. Effect of Condition and Questioned Costs We determined the Department did not review adequate supporting documentation before paying subrecipients, and it did not perform adequate fiscal reviews to ensure that expenditures were for allowable activities. As a result, we identified $28,886,606 in known federal questioned costs and $71,007,353 in likely federal questioned costs. Our sampling methodology meets statistical sampling criteria under generally accepted auditing standards in AU-C 530.05. It is important to note that the sampling technique we used is intended to support our audit conclusions by determining if expenditures complied with program requirements in all material respects. Accordingly, we used an acceptance sampling formula designed to provide a high level of assurance, with a 95 percent confidence of whether exceptions exceeded our materiality threshold. Our audit report and finding reflect this conclusion. However, the likely improper payment projections are a point estimate and only represent our ?best estimate of total questioned costs,? as required by 2 CFR ? 200.516(3). To ensure a representative sample, we stratified the population by dollar amount. Without establishing adequate internal controls and reviewing detailed supporting documentation from subrecipients, the Department cannot reasonably ensure it is using federal funds for allowable purposes and that spending occurs within the allowed period of performance. We question costs when we find an agency has not complied with grant regulations or when it does not have adequate documentation to support its expenditures. Recommendations We recommend the Department: ? Implement written policies and monitoring procedures to ensure adequate review of each subrecipient?s use of federal funds ? Improve internal controls to ensure subrecipients provide adequate supporting documentation when requesting reimbursement ? Ensure it has sufficient staffing and resources to monitor each subrecipient, as required under Uniform Guidance ? Consult with the grantor to discuss whether the questioned costs identified in the audit should be repaid Department?s Response The Coronavirus pandemic created an unprecedented crisis of imminent evictions for an estimated 200,000 households who would face homelessness. Prompt program implementation was critical to reducing evictions as homelessness was shown to increase the spread of COVID-19 leading to death. In fiscal year 202, Commerce created the Eviction Rent Assistance Programs 1.0 and 2.0: Coronavirus State Fiscal Recovery Funds allocated by the Washington State legislature to fund the program. All of the rental assistance programs included multiple funding allocations. To provide much needed assistance to the state, the Department quickly deployed the programs either concurrently or on overlapping timelines. The vast majority of our grantees are local government entities with whom the Department has a long history of contracting and partnering with to deliver services. Federal requirements dictate local governments ensure their internal controls meet standards to comply with all compliance requirements. The Department used that expectation to rely on their administrative and fiscal control functions to ensure compliance. The Department received the first emergency rental assistance funds in August 2020 and the funding was set to expire four months after the award issuance. The Department moved quickly to relieve barriers to issue funding. In December 2020 Congress extended the end date to continue the funding for this program into 2021. As a result of the fiscal year 2021 audit, it was determined the fiscal review must be completed for all program reimbursements, even if the detail review of expenditures was completed at our subrecipient level. The initial fiscal monitoring was based on previously conducted risk assessments, so not all payees received a fiscal monitoring. As a result of the deficiencies reported in the fiscal year 2021 audit, the program deployed new subrecipient monitoring risk assessment processes, and now completes a new assessment for each award at the time of the award. Once the deficiency was identified, the Department began to review supporting backup documentation for all expenditures. The current finding also focused on specific sets of expenditures which were not reviewed in detail. As a result, the Department is currently evaluating the best approach to obtain and review supporting documentation at a detail level to ensure compliance with all requirements. The Department continues to complete reviews of supporting documentation for fiscal year 2023 expenditures and we strive to meet all other program requirements. We thank the State Auditor?s Office for identifying areas we could improve to meet all compliance requirements for federal funding. Auditor?s Remarks We thank the Department for its cooperation and assistance throughout the audit. We will review the status of the Department?s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 332, Requirements for pass-through entities, establishes the requirements for all pass-through entities. Title 2 CFR Part 200, Uniform Guidance, section 403, Factors affecting allowability of costs, describes the general criteria in order for a cost to be allowable under federal awards, including being adequately documented. Title 2 CFR Part 200.1, Uniform Guidance, establishes definitions for improper payments. Part 200.410 establishes requirements for the collection of unallowable costs.
2022-019 The Department of Commerce did not have adequate internal controls over and did not comply with requirements for monitoring subrecipients to ensure payments were allowable, properly supported, and met period of performance requirements for the Coronavirus State and Local Fiscal Recovery Funds. Assistance Listing Number and Title: 21.027 COVID-19 Coronavirus State and Local Fiscal Recovery Funds Federal Grantor Name: U.S. Department of the Treasury Federal Award/Contract Number: SLFRP0002 Pass-through Entity Name: None Pass-through Award/Contract Number: None Applicable Compliance Component: Activities Allowed or Unallowed Allowable Costs/Cost Principles Period of Performance Subrecipient Monitoring Known Questioned Cost Amount: $28,886,606 Background The Coronavirus State and Local Fiscal Recovery Funds (SLFRF), as part of the American Rescue Plan Act of 2021, delivered $350 billion to state, local, and tribal governments to support the response to and recovery from the COVID-19 public health emergency. Washington received $4.4 billion of SLFRF money from the U.S. Department of the Treasury, which the state?s Office of Financial Management allocated to state agencies for various programs. In fiscal year 2022, state agencies spent more than $1.4 billion in SLFRF funds, $132 million of which was spent by the Department of Commerce. The Department used SLFRF funds to administer and provide economic assistance to households at risk of eviction and homelessness primarily through the Eviction Rental Assistance Program (ERAP 2.0), in addition to transportation, tourism, and other pandemic-recovery projects. During fiscal year 2022, the Department expended about $111 million on reimbursements and advance payments to local governments and nonprofit organizations as subrecipients. These subrecipients were responsible for making direct payments of rent and utilities for eligible low-income households with overdue rent payments dating as far back as March 2020. Pass-through entities are required to monitor the activities of subrecipients to ensure they are properly using federal funds for allowable activities and expenditures. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The Department did not have adequate internal controls over and did not comply with requirements for monitoring subrecipients to ensure payments were allowable, properly supported, and met period of performance requirements for the SLFRF program. During the audit period, the Department only required summary level supporting documentation when approving subrecipient payments. Since detailed source documentation was not required at the time of reimbursement, the Department implemented a fiscal review process for ERAP 2.0 subrecipients. We determined that the Department did not perform fiscal reviews or any program reviews for 20 of its 32 subrecipients (63 percent) during the audit period. We used a statistical sampling method to randomly select and review seven out of 12 subrecipients for which the Department completed monitoring during the audit period. We determined four of the seven fiscal reviews completed were insufficient for ensuring payments to these subrecipients were allowable and adequately supported, primarily because the support reviewed lacked enough detail to ensure the activities were allowable and within the period of performance. We also examined program monitoring documentation completed for these same seven subrecipients. The Department selected only one household from each subrecipient for eligibility verification. We determined these reviews did not provide reasonable assurance that payments to the subrecipients were made only on behalf of eligible households. We also used a statistical sampling method to randomly select and review 56 out of 627 payments. Additionally, we judgmentally selected and reviewed one individually significant payment of $6 million. In total, we examined 57 provider payments totaling $48.5 million. Of the 57 payments examined, we identified 37 (65 percent), including the individually significant payment, that did not have adequate documentation to ensure the payment was for allowable activities, met cost principles, and occurred within the award?s period of performance. We consider these internal control deficiencies to be a material weakness, which led to material noncompliance. The issue was not reported as a finding in the prior audit. Cause of Condition Management did not ensure that proper internal controls were in place to oversee ERAP 2.0 and the use of SLFRF funds. Department staff approved payments to subrecipients without reviewing adequate supporting documentation, and management relied on annual program and fiscal monitoring to ensure subrecipients had proper support and only served eligible households. However, management said that due to limited staffing and resources, they were only able to monitor 12 subrecipients during the audit period, wherein staff elected to review just one household payment for each subrecipient for appropriateness. Furthermore, the program did not have written policies and procedures in place documenting the programmatic and fiscal monitoring requirements for staff to follow. Therefore, management could not ensure that reviews were thorough and consistent, included a valid sample of subrecipient records, and required detailed source documentation, including accounting support. Effect of Condition and Questioned Costs We determined the Department did not review adequate supporting documentation before paying subrecipients, and it did not perform adequate fiscal reviews to ensure that expenditures were for allowable activities. As a result, we identified $28,886,606 in known federal questioned costs and $71,007,353 in likely federal questioned costs. Our sampling methodology meets statistical sampling criteria under generally accepted auditing standards in AU-C 530.05. It is important to note that the sampling technique we used is intended to support our audit conclusions by determining if expenditures complied with program requirements in all material respects. Accordingly, we used an acceptance sampling formula designed to provide a high level of assurance, with a 95 percent confidence of whether exceptions exceeded our materiality threshold. Our audit report and finding reflect this conclusion. However, the likely improper payment projections are a point estimate and only represent our ?best estimate of total questioned costs,? as required by 2 CFR ? 200.516(3). To ensure a representative sample, we stratified the population by dollar amount. Without establishing adequate internal controls and reviewing detailed supporting documentation from subrecipients, the Department cannot reasonably ensure it is using federal funds for allowable purposes and that spending occurs within the allowed period of performance. We question costs when we find an agency has not complied with grant regulations or when it does not have adequate documentation to support its expenditures. Recommendations We recommend the Department: ? Implement written policies and monitoring procedures to ensure adequate review of each subrecipient?s use of federal funds ? Improve internal controls to ensure subrecipients provide adequate supporting documentation when requesting reimbursement ? Ensure it has sufficient staffing and resources to monitor each subrecipient, as required under Uniform Guidance ? Consult with the grantor to discuss whether the questioned costs identified in the audit should be repaid Department?s Response The Coronavirus pandemic created an unprecedented crisis of imminent evictions for an estimated 200,000 households who would face homelessness. Prompt program implementation was critical to reducing evictions as homelessness was shown to increase the spread of COVID-19 leading to death. In fiscal year 202, Commerce created the Eviction Rent Assistance Programs 1.0 and 2.0: Coronavirus State Fiscal Recovery Funds allocated by the Washington State legislature to fund the program. All of the rental assistance programs included multiple funding allocations. To provide much needed assistance to the state, the Department quickly deployed the programs either concurrently or on overlapping timelines. The vast majority of our grantees are local government entities with whom the Department has a long history of contracting and partnering with to deliver services. Federal requirements dictate local governments ensure their internal controls meet standards to comply with all compliance requirements. The Department used that expectation to rely on their administrative and fiscal control functions to ensure compliance. The Department received the first emergency rental assistance funds in August 2020 and the funding was set to expire four months after the award issuance. The Department moved quickly to relieve barriers to issue funding. In December 2020 Congress extended the end date to continue the funding for this program into 2021. As a result of the fiscal year 2021 audit, it was determined the fiscal review must be completed for all program reimbursements, even if the detail review of expenditures was completed at our subrecipient level. The initial fiscal monitoring was based on previously conducted risk assessments, so not all payees received a fiscal monitoring. As a result of the deficiencies reported in the fiscal year 2021 audit, the program deployed new subrecipient monitoring risk assessment processes, and now completes a new assessment for each award at the time of the award. Once the deficiency was identified, the Department began to review supporting backup documentation for all expenditures. The current finding also focused on specific sets of expenditures which were not reviewed in detail. As a result, the Department is currently evaluating the best approach to obtain and review supporting documentation at a detail level to ensure compliance with all requirements. The Department continues to complete reviews of supporting documentation for fiscal year 2023 expenditures and we strive to meet all other program requirements. We thank the State Auditor?s Office for identifying areas we could improve to meet all compliance requirements for federal funding. Auditor?s Remarks We thank the Department for its cooperation and assistance throughout the audit. We will review the status of the Department?s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 332, Requirements for pass-through entities, establishes the requirements for all pass-through entities. Title 2 CFR Part 200, Uniform Guidance, section 403, Factors affecting allowability of costs, describes the general criteria in order for a cost to be allowable under federal awards, including being adequately documented. Title 2 CFR Part 200.1, Uniform Guidance, establishes definitions for improper payments. Part 200.410 establishes requirements for the collection of unallowable costs.
2022-019 The Department of Commerce did not have adequate internal controls over and did not comply with requirements for monitoring subrecipients to ensure payments were allowable, properly supported, and met period of performance requirements for the Coronavirus State and Local Fiscal Recovery Funds. Assistance Listing Number and Title: 21.027 COVID-19 Coronavirus State and Local Fiscal Recovery Funds Federal Grantor Name: U.S. Department of the Treasury Federal Award/Contract Number: SLFRP0002 Pass-through Entity Name: None Pass-through Award/Contract Number: None Applicable Compliance Component: Activities Allowed or Unallowed Allowable Costs/Cost Principles Period of Performance Subrecipient Monitoring Known Questioned Cost Amount: $28,886,606 Background The Coronavirus State and Local Fiscal Recovery Funds (SLFRF), as part of the American Rescue Plan Act of 2021, delivered $350 billion to state, local, and tribal governments to support the response to and recovery from the COVID-19 public health emergency. Washington received $4.4 billion of SLFRF money from the U.S. Department of the Treasury, which the state?s Office of Financial Management allocated to state agencies for various programs. In fiscal year 2022, state agencies spent more than $1.4 billion in SLFRF funds, $132 million of which was spent by the Department of Commerce. The Department used SLFRF funds to administer and provide economic assistance to households at risk of eviction and homelessness primarily through the Eviction Rental Assistance Program (ERAP 2.0), in addition to transportation, tourism, and other pandemic-recovery projects. During fiscal year 2022, the Department expended about $111 million on reimbursements and advance payments to local governments and nonprofit organizations as subrecipients. These subrecipients were responsible for making direct payments of rent and utilities for eligible low-income households with overdue rent payments dating as far back as March 2020. Pass-through entities are required to monitor the activities of subrecipients to ensure they are properly using federal funds for allowable activities and expenditures. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The Department did not have adequate internal controls over and did not comply with requirements for monitoring subrecipients to ensure payments were allowable, properly supported, and met period of performance requirements for the SLFRF program. During the audit period, the Department only required summary level supporting documentation when approving subrecipient payments. Since detailed source documentation was not required at the time of reimbursement, the Department implemented a fiscal review process for ERAP 2.0 subrecipients. We determined that the Department did not perform fiscal reviews or any program reviews for 20 of its 32 subrecipients (63 percent) during the audit period. We used a statistical sampling method to randomly select and review seven out of 12 subrecipients for which the Department completed monitoring during the audit period. We determined four of the seven fiscal reviews completed were insufficient for ensuring payments to these subrecipients were allowable and adequately supported, primarily because the support reviewed lacked enough detail to ensure the activities were allowable and within the period of performance. We also examined program monitoring documentation completed for these same seven subrecipients. The Department selected only one household from each subrecipient for eligibility verification. We determined these reviews did not provide reasonable assurance that payments to the subrecipients were made only on behalf of eligible households. We also used a statistical sampling method to randomly select and review 56 out of 627 payments. Additionally, we judgmentally selected and reviewed one individually significant payment of $6 million. In total, we examined 57 provider payments totaling $48.5 million. Of the 57 payments examined, we identified 37 (65 percent), including the individually significant payment, that did not have adequate documentation to ensure the payment was for allowable activities, met cost principles, and occurred within the award?s period of performance. We consider these internal control deficiencies to be a material weakness, which led to material noncompliance. The issue was not reported as a finding in the prior audit. Cause of Condition Management did not ensure that proper internal controls were in place to oversee ERAP 2.0 and the use of SLFRF funds. Department staff approved payments to subrecipients without reviewing adequate supporting documentation, and management relied on annual program and fiscal monitoring to ensure subrecipients had proper support and only served eligible households. However, management said that due to limited staffing and resources, they were only able to monitor 12 subrecipients during the audit period, wherein staff elected to review just one household payment for each subrecipient for appropriateness. Furthermore, the program did not have written policies and procedures in place documenting the programmatic and fiscal monitoring requirements for staff to follow. Therefore, management could not ensure that reviews were thorough and consistent, included a valid sample of subrecipient records, and required detailed source documentation, including accounting support. Effect of Condition and Questioned Costs We determined the Department did not review adequate supporting documentation before paying subrecipients, and it did not perform adequate fiscal reviews to ensure that expenditures were for allowable activities. As a result, we identified $28,886,606 in known federal questioned costs and $71,007,353 in likely federal questioned costs. Our sampling methodology meets statistical sampling criteria under generally accepted auditing standards in AU-C 530.05. It is important to note that the sampling technique we used is intended to support our audit conclusions by determining if expenditures complied with program requirements in all material respects. Accordingly, we used an acceptance sampling formula designed to provide a high level of assurance, with a 95 percent confidence of whether exceptions exceeded our materiality threshold. Our audit report and finding reflect this conclusion. However, the likely improper payment projections are a point estimate and only represent our ?best estimate of total questioned costs,? as required by 2 CFR ? 200.516(3). To ensure a representative sample, we stratified the population by dollar amount. Without establishing adequate internal controls and reviewing detailed supporting documentation from subrecipients, the Department cannot reasonably ensure it is using federal funds for allowable purposes and that spending occurs within the allowed period of performance. We question costs when we find an agency has not complied with grant regulations or when it does not have adequate documentation to support its expenditures. Recommendations We recommend the Department: ? Implement written policies and monitoring procedures to ensure adequate review of each subrecipient?s use of federal funds ? Improve internal controls to ensure subrecipients provide adequate supporting documentation when requesting reimbursement ? Ensure it has sufficient staffing and resources to monitor each subrecipient, as required under Uniform Guidance ? Consult with the grantor to discuss whether the questioned costs identified in the audit should be repaid Department?s Response The Coronavirus pandemic created an unprecedented crisis of imminent evictions for an estimated 200,000 households who would face homelessness. Prompt program implementation was critical to reducing evictions as homelessness was shown to increase the spread of COVID-19 leading to death. In fiscal year 202, Commerce created the Eviction Rent Assistance Programs 1.0 and 2.0: Coronavirus State Fiscal Recovery Funds allocated by the Washington State legislature to fund the program. All of the rental assistance programs included multiple funding allocations. To provide much needed assistance to the state, the Department quickly deployed the programs either concurrently or on overlapping timelines. The vast majority of our grantees are local government entities with whom the Department has a long history of contracting and partnering with to deliver services. Federal requirements dictate local governments ensure their internal controls meet standards to comply with all compliance requirements. The Department used that expectation to rely on their administrative and fiscal control functions to ensure compliance. The Department received the first emergency rental assistance funds in August 2020 and the funding was set to expire four months after the award issuance. The Department moved quickly to relieve barriers to issue funding. In December 2020 Congress extended the end date to continue the funding for this program into 2021. As a result of the fiscal year 2021 audit, it was determined the fiscal review must be completed for all program reimbursements, even if the detail review of expenditures was completed at our subrecipient level. The initial fiscal monitoring was based on previously conducted risk assessments, so not all payees received a fiscal monitoring. As a result of the deficiencies reported in the fiscal year 2021 audit, the program deployed new subrecipient monitoring risk assessment processes, and now completes a new assessment for each award at the time of the award. Once the deficiency was identified, the Department began to review supporting backup documentation for all expenditures. The current finding also focused on specific sets of expenditures which were not reviewed in detail. As a result, the Department is currently evaluating the best approach to obtain and review supporting documentation at a detail level to ensure compliance with all requirements. The Department continues to complete reviews of supporting documentation for fiscal year 2023 expenditures and we strive to meet all other program requirements. We thank the State Auditor?s Office for identifying areas we could improve to meet all compliance requirements for federal funding. Auditor?s Remarks We thank the Department for its cooperation and assistance throughout the audit. We will review the status of the Department?s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 332, Requirements for pass-through entities, establishes the requirements for all pass-through entities. Title 2 CFR Part 200, Uniform Guidance, section 403, Factors affecting allowability of costs, describes the general criteria in order for a cost to be allowable under federal awards, including being adequately documented. Title 2 CFR Part 200.1, Uniform Guidance, establishes definitions for improper payments. Part 200.410 establishes requirements for the collection of unallowable costs.
2022-019 The Department of Commerce did not have adequate internal controls over and did not comply with requirements for monitoring subrecipients to ensure payments were allowable, properly supported, and met period of performance requirements for the Coronavirus State and Local Fiscal Recovery Funds. Assistance Listing Number and Title: 21.027 COVID-19 Coronavirus State and Local Fiscal Recovery Funds Federal Grantor Name: U.S. Department of the Treasury Federal Award/Contract Number: SLFRP0002 Pass-through Entity Name: None Pass-through Award/Contract Number: None Applicable Compliance Component: Activities Allowed or Unallowed Allowable Costs/Cost Principles Period of Performance Subrecipient Monitoring Known Questioned Cost Amount: $28,886,606 Background The Coronavirus State and Local Fiscal Recovery Funds (SLFRF), as part of the American Rescue Plan Act of 2021, delivered $350 billion to state, local, and tribal governments to support the response to and recovery from the COVID-19 public health emergency. Washington received $4.4 billion of SLFRF money from the U.S. Department of the Treasury, which the state?s Office of Financial Management allocated to state agencies for various programs. In fiscal year 2022, state agencies spent more than $1.4 billion in SLFRF funds, $132 million of which was spent by the Department of Commerce. The Department used SLFRF funds to administer and provide economic assistance to households at risk of eviction and homelessness primarily through the Eviction Rental Assistance Program (ERAP 2.0), in addition to transportation, tourism, and other pandemic-recovery projects. During fiscal year 2022, the Department expended about $111 million on reimbursements and advance payments to local governments and nonprofit organizations as subrecipients. These subrecipients were responsible for making direct payments of rent and utilities for eligible low-income households with overdue rent payments dating as far back as March 2020. Pass-through entities are required to monitor the activities of subrecipients to ensure they are properly using federal funds for allowable activities and expenditures. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The Department did not have adequate internal controls over and did not comply with requirements for monitoring subrecipients to ensure payments were allowable, properly supported, and met period of performance requirements for the SLFRF program. During the audit period, the Department only required summary level supporting documentation when approving subrecipient payments. Since detailed source documentation was not required at the time of reimbursement, the Department implemented a fiscal review process for ERAP 2.0 subrecipients. We determined that the Department did not perform fiscal reviews or any program reviews for 20 of its 32 subrecipients (63 percent) during the audit period. We used a statistical sampling method to randomly select and review seven out of 12 subrecipients for which the Department completed monitoring during the audit period. We determined four of the seven fiscal reviews completed were insufficient for ensuring payments to these subrecipients were allowable and adequately supported, primarily because the support reviewed lacked enough detail to ensure the activities were allowable and within the period of performance. We also examined program monitoring documentation completed for these same seven subrecipients. The Department selected only one household from each subrecipient for eligibility verification. We determined these reviews did not provide reasonable assurance that payments to the subrecipients were made only on behalf of eligible households. We also used a statistical sampling method to randomly select and review 56 out of 627 payments. Additionally, we judgmentally selected and reviewed one individually significant payment of $6 million. In total, we examined 57 provider payments totaling $48.5 million. Of the 57 payments examined, we identified 37 (65 percent), including the individually significant payment, that did not have adequate documentation to ensure the payment was for allowable activities, met cost principles, and occurred within the award?s period of performance. We consider these internal control deficiencies to be a material weakness, which led to material noncompliance. The issue was not reported as a finding in the prior audit. Cause of Condition Management did not ensure that proper internal controls were in place to oversee ERAP 2.0 and the use of SLFRF funds. Department staff approved payments to subrecipients without reviewing adequate supporting documentation, and management relied on annual program and fiscal monitoring to ensure subrecipients had proper support and only served eligible households. However, management said that due to limited staffing and resources, they were only able to monitor 12 subrecipients during the audit period, wherein staff elected to review just one household payment for each subrecipient for appropriateness. Furthermore, the program did not have written policies and procedures in place documenting the programmatic and fiscal monitoring requirements for staff to follow. Therefore, management could not ensure that reviews were thorough and consistent, included a valid sample of subrecipient records, and required detailed source documentation, including accounting support. Effect of Condition and Questioned Costs We determined the Department did not review adequate supporting documentation before paying subrecipients, and it did not perform adequate fiscal reviews to ensure that expenditures were for allowable activities. As a result, we identified $28,886,606 in known federal questioned costs and $71,007,353 in likely federal questioned costs. Our sampling methodology meets statistical sampling criteria under generally accepted auditing standards in AU-C 530.05. It is important to note that the sampling technique we used is intended to support our audit conclusions by determining if expenditures complied with program requirements in all material respects. Accordingly, we used an acceptance sampling formula designed to provide a high level of assurance, with a 95 percent confidence of whether exceptions exceeded our materiality threshold. Our audit report and finding reflect this conclusion. However, the likely improper payment projections are a point estimate and only represent our ?best estimate of total questioned costs,? as required by 2 CFR ? 200.516(3). To ensure a representative sample, we stratified the population by dollar amount. Without establishing adequate internal controls and reviewing detailed supporting documentation from subrecipients, the Department cannot reasonably ensure it is using federal funds for allowable purposes and that spending occurs within the allowed period of performance. We question costs when we find an agency has not complied with grant regulations or when it does not have adequate documentation to support its expenditures. Recommendations We recommend the Department: ? Implement written policies and monitoring procedures to ensure adequate review of each subrecipient?s use of federal funds ? Improve internal controls to ensure subrecipients provide adequate supporting documentation when requesting reimbursement ? Ensure it has sufficient staffing and resources to monitor each subrecipient, as required under Uniform Guidance ? Consult with the grantor to discuss whether the questioned costs identified in the audit should be repaid Department?s Response The Coronavirus pandemic created an unprecedented crisis of imminent evictions for an estimated 200,000 households who would face homelessness. Prompt program implementation was critical to reducing evictions as homelessness was shown to increase the spread of COVID-19 leading to death. In fiscal year 202, Commerce created the Eviction Rent Assistance Programs 1.0 and 2.0: Coronavirus State Fiscal Recovery Funds allocated by the Washington State legislature to fund the program. All of the rental assistance programs included multiple funding allocations. To provide much needed assistance to the state, the Department quickly deployed the programs either concurrently or on overlapping timelines. The vast majority of our grantees are local government entities with whom the Department has a long history of contracting and partnering with to deliver services. Federal requirements dictate local governments ensure their internal controls meet standards to comply with all compliance requirements. The Department used that expectation to rely on their administrative and fiscal control functions to ensure compliance. The Department received the first emergency rental assistance funds in August 2020 and the funding was set to expire four months after the award issuance. The Department moved quickly to relieve barriers to issue funding. In December 2020 Congress extended the end date to continue the funding for this program into 2021. As a result of the fiscal year 2021 audit, it was determined the fiscal review must be completed for all program reimbursements, even if the detail review of expenditures was completed at our subrecipient level. The initial fiscal monitoring was based on previously conducted risk assessments, so not all payees received a fiscal monitoring. As a result of the deficiencies reported in the fiscal year 2021 audit, the program deployed new subrecipient monitoring risk assessment processes, and now completes a new assessment for each award at the time of the award. Once the deficiency was identified, the Department began to review supporting backup documentation for all expenditures. The current finding also focused on specific sets of expenditures which were not reviewed in detail. As a result, the Department is currently evaluating the best approach to obtain and review supporting documentation at a detail level to ensure compliance with all requirements. The Department continues to complete reviews of supporting documentation for fiscal year 2023 expenditures and we strive to meet all other program requirements. We thank the State Auditor?s Office for identifying areas we could improve to meet all compliance requirements for federal funding. Auditor?s Remarks We thank the Department for its cooperation and assistance throughout the audit. We will review the status of the Department?s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 332, Requirements for pass-through entities, establishes the requirements for all pass-through entities. Title 2 CFR Part 200, Uniform Guidance, section 403, Factors affecting allowability of costs, describes the general criteria in order for a cost to be allowable under federal awards, including being adequately documented. Title 2 CFR Part 200.1, Uniform Guidance, establishes definitions for improper payments. Part 200.410 establishes requirements for the collection of unallowable costs.
2022-019 The Department of Commerce did not have adequate internal controls over and did not comply with requirements for monitoring subrecipients to ensure payments were allowable, properly supported, and met period of performance requirements for the Coronavirus State and Local Fiscal Recovery Funds. Assistance Listing Number and Title: 21.027 COVID-19 Coronavirus State and Local Fiscal Recovery Funds Federal Grantor Name: U.S. Department of the Treasury Federal Award/Contract Number: SLFRP0002 Pass-through Entity Name: None Pass-through Award/Contract Number: None Applicable Compliance Component: Activities Allowed or Unallowed Allowable Costs/Cost Principles Period of Performance Subrecipient Monitoring Known Questioned Cost Amount: $28,886,606 Background The Coronavirus State and Local Fiscal Recovery Funds (SLFRF), as part of the American Rescue Plan Act of 2021, delivered $350 billion to state, local, and tribal governments to support the response to and recovery from the COVID-19 public health emergency. Washington received $4.4 billion of SLFRF money from the U.S. Department of the Treasury, which the state?s Office of Financial Management allocated to state agencies for various programs. In fiscal year 2022, state agencies spent more than $1.4 billion in SLFRF funds, $132 million of which was spent by the Department of Commerce. The Department used SLFRF funds to administer and provide economic assistance to households at risk of eviction and homelessness primarily through the Eviction Rental Assistance Program (ERAP 2.0), in addition to transportation, tourism, and other pandemic-recovery projects. During fiscal year 2022, the Department expended about $111 million on reimbursements and advance payments to local governments and nonprofit organizations as subrecipients. These subrecipients were responsible for making direct payments of rent and utilities for eligible low-income households with overdue rent payments dating as far back as March 2020. Pass-through entities are required to monitor the activities of subrecipients to ensure they are properly using federal funds for allowable activities and expenditures. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The Department did not have adequate internal controls over and did not comply with requirements for monitoring subrecipients to ensure payments were allowable, properly supported, and met period of performance requirements for the SLFRF program. During the audit period, the Department only required summary level supporting documentation when approving subrecipient payments. Since detailed source documentation was not required at the time of reimbursement, the Department implemented a fiscal review process for ERAP 2.0 subrecipients. We determined that the Department did not perform fiscal reviews or any program reviews for 20 of its 32 subrecipients (63 percent) during the audit period. We used a statistical sampling method to randomly select and review seven out of 12 subrecipients for which the Department completed monitoring during the audit period. We determined four of the seven fiscal reviews completed were insufficient for ensuring payments to these subrecipients were allowable and adequately supported, primarily because the support reviewed lacked enough detail to ensure the activities were allowable and within the period of performance. We also examined program monitoring documentation completed for these same seven subrecipients. The Department selected only one household from each subrecipient for eligibility verification. We determined these reviews did not provide reasonable assurance that payments to the subrecipients were made only on behalf of eligible households. We also used a statistical sampling method to randomly select and review 56 out of 627 payments. Additionally, we judgmentally selected and reviewed one individually significant payment of $6 million. In total, we examined 57 provider payments totaling $48.5 million. Of the 57 payments examined, we identified 37 (65 percent), including the individually significant payment, that did not have adequate documentation to ensure the payment was for allowable activities, met cost principles, and occurred within the award?s period of performance. We consider these internal control deficiencies to be a material weakness, which led to material noncompliance. The issue was not reported as a finding in the prior audit. Cause of Condition Management did not ensure that proper internal controls were in place to oversee ERAP 2.0 and the use of SLFRF funds. Department staff approved payments to subrecipients without reviewing adequate supporting documentation, and management relied on annual program and fiscal monitoring to ensure subrecipients had proper support and only served eligible households. However, management said that due to limited staffing and resources, they were only able to monitor 12 subrecipients during the audit period, wherein staff elected to review just one household payment for each subrecipient for appropriateness. Furthermore, the program did not have written policies and procedures in place documenting the programmatic and fiscal monitoring requirements for staff to follow. Therefore, management could not ensure that reviews were thorough and consistent, included a valid sample of subrecipient records, and required detailed source documentation, including accounting support. Effect of Condition and Questioned Costs We determined the Department did not review adequate supporting documentation before paying subrecipients, and it did not perform adequate fiscal reviews to ensure that expenditures were for allowable activities. As a result, we identified $28,886,606 in known federal questioned costs and $71,007,353 in likely federal questioned costs. Our sampling methodology meets statistical sampling criteria under generally accepted auditing standards in AU-C 530.05. It is important to note that the sampling technique we used is intended to support our audit conclusions by determining if expenditures complied with program requirements in all material respects. Accordingly, we used an acceptance sampling formula designed to provide a high level of assurance, with a 95 percent confidence of whether exceptions exceeded our materiality threshold. Our audit report and finding reflect this conclusion. However, the likely improper payment projections are a point estimate and only represent our ?best estimate of total questioned costs,? as required by 2 CFR ? 200.516(3). To ensure a representative sample, we stratified the population by dollar amount. Without establishing adequate internal controls and reviewing detailed supporting documentation from subrecipients, the Department cannot reasonably ensure it is using federal funds for allowable purposes and that spending occurs within the allowed period of performance. We question costs when we find an agency has not complied with grant regulations or when it does not have adequate documentation to support its expenditures. Recommendations We recommend the Department: ? Implement written policies and monitoring procedures to ensure adequate review of each subrecipient?s use of federal funds ? Improve internal controls to ensure subrecipients provide adequate supporting documentation when requesting reimbursement ? Ensure it has sufficient staffing and resources to monitor each subrecipient, as required under Uniform Guidance ? Consult with the grantor to discuss whether the questioned costs identified in the audit should be repaid Department?s Response The Coronavirus pandemic created an unprecedented crisis of imminent evictions for an estimated 200,000 households who would face homelessness. Prompt program implementation was critical to reducing evictions as homelessness was shown to increase the spread of COVID-19 leading to death. In fiscal year 202, Commerce created the Eviction Rent Assistance Programs 1.0 and 2.0: Coronavirus State Fiscal Recovery Funds allocated by the Washington State legislature to fund the program. All of the rental assistance programs included multiple funding allocations. To provide much needed assistance to the state, the Department quickly deployed the programs either concurrently or on overlapping timelines. The vast majority of our grantees are local government entities with whom the Department has a long history of contracting and partnering with to deliver services. Federal requirements dictate local governments ensure their internal controls meet standards to comply with all compliance requirements. The Department used that expectation to rely on their administrative and fiscal control functions to ensure compliance. The Department received the first emergency rental assistance funds in August 2020 and the funding was set to expire four months after the award issuance. The Department moved quickly to relieve barriers to issue funding. In December 2020 Congress extended the end date to continue the funding for this program into 2021. As a result of the fiscal year 2021 audit, it was determined the fiscal review must be completed for all program reimbursements, even if the detail review of expenditures was completed at our subrecipient level. The initial fiscal monitoring was based on previously conducted risk assessments, so not all payees received a fiscal monitoring. As a result of the deficiencies reported in the fiscal year 2021 audit, the program deployed new subrecipient monitoring risk assessment processes, and now completes a new assessment for each award at the time of the award. Once the deficiency was identified, the Department began to review supporting backup documentation for all expenditures. The current finding also focused on specific sets of expenditures which were not reviewed in detail. As a result, the Department is currently evaluating the best approach to obtain and review supporting documentation at a detail level to ensure compliance with all requirements. The Department continues to complete reviews of supporting documentation for fiscal year 2023 expenditures and we strive to meet all other program requirements. We thank the State Auditor?s Office for identifying areas we could improve to meet all compliance requirements for federal funding. Auditor?s Remarks We thank the Department for its cooperation and assistance throughout the audit. We will review the status of the Department?s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 332, Requirements for pass-through entities, establishes the requirements for all pass-through entities. Title 2 CFR Part 200, Uniform Guidance, section 403, Factors affecting allowability of costs, describes the general criteria in order for a cost to be allowable under federal awards, including being adequately documented. Title 2 CFR Part 200.1, Uniform Guidance, establishes definitions for improper payments. Part 200.410 establishes requirements for the collection of unallowable costs.
2022-019 The Department of Commerce did not have adequate internal controls over and did not comply with requirements for monitoring subrecipients to ensure payments were allowable, properly supported, and met period of performance requirements for the Coronavirus State and Local Fiscal Recovery Funds. Assistance Listing Number and Title: 21.027 COVID-19 Coronavirus State and Local Fiscal Recovery Funds Federal Grantor Name: U.S. Department of the Treasury Federal Award/Contract Number: SLFRP0002 Pass-through Entity Name: None Pass-through Award/Contract Number: None Applicable Compliance Component: Activities Allowed or Unallowed Allowable Costs/Cost Principles Period of Performance Subrecipient Monitoring Known Questioned Cost Amount: $28,886,606 Background The Coronavirus State and Local Fiscal Recovery Funds (SLFRF), as part of the American Rescue Plan Act of 2021, delivered $350 billion to state, local, and tribal governments to support the response to and recovery from the COVID-19 public health emergency. Washington received $4.4 billion of SLFRF money from the U.S. Department of the Treasury, which the state?s Office of Financial Management allocated to state agencies for various programs. In fiscal year 2022, state agencies spent more than $1.4 billion in SLFRF funds, $132 million of which was spent by the Department of Commerce. The Department used SLFRF funds to administer and provide economic assistance to households at risk of eviction and homelessness primarily through the Eviction Rental Assistance Program (ERAP 2.0), in addition to transportation, tourism, and other pandemic-recovery projects. During fiscal year 2022, the Department expended about $111 million on reimbursements and advance payments to local governments and nonprofit organizations as subrecipients. These subrecipients were responsible for making direct payments of rent and utilities for eligible low-income households with overdue rent payments dating as far back as March 2020. Pass-through entities are required to monitor the activities of subrecipients to ensure they are properly using federal funds for allowable activities and expenditures. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The Department did not have adequate internal controls over and did not comply with requirements for monitoring subrecipients to ensure payments were allowable, properly supported, and met period of performance requirements for the SLFRF program. During the audit period, the Department only required summary level supporting documentation when approving subrecipient payments. Since detailed source documentation was not required at the time of reimbursement, the Department implemented a fiscal review process for ERAP 2.0 subrecipients. We determined that the Department did not perform fiscal reviews or any program reviews for 20 of its 32 subrecipients (63 percent) during the audit period. We used a statistical sampling method to randomly select and review seven out of 12 subrecipients for which the Department completed monitoring during the audit period. We determined four of the seven fiscal reviews completed were insufficient for ensuring payments to these subrecipients were allowable and adequately supported, primarily because the support reviewed lacked enough detail to ensure the activities were allowable and within the period of performance. We also examined program monitoring documentation completed for these same seven subrecipients. The Department selected only one household from each subrecipient for eligibility verification. We determined these reviews did not provide reasonable assurance that payments to the subrecipients were made only on behalf of eligible households. We also used a statistical sampling method to randomly select and review 56 out of 627 payments. Additionally, we judgmentally selected and reviewed one individually significant payment of $6 million. In total, we examined 57 provider payments totaling $48.5 million. Of the 57 payments examined, we identified 37 (65 percent), including the individually significant payment, that did not have adequate documentation to ensure the payment was for allowable activities, met cost principles, and occurred within the award?s period of performance. We consider these internal control deficiencies to be a material weakness, which led to material noncompliance. The issue was not reported as a finding in the prior audit. Cause of Condition Management did not ensure that proper internal controls were in place to oversee ERAP 2.0 and the use of SLFRF funds. Department staff approved payments to subrecipients without reviewing adequate supporting documentation, and management relied on annual program and fiscal monitoring to ensure subrecipients had proper support and only served eligible households. However, management said that due to limited staffing and resources, they were only able to monitor 12 subrecipients during the audit period, wherein staff elected to review just one household payment for each subrecipient for appropriateness. Furthermore, the program did not have written policies and procedures in place documenting the programmatic and fiscal monitoring requirements for staff to follow. Therefore, management could not ensure that reviews were thorough and consistent, included a valid sample of subrecipient records, and required detailed source documentation, including accounting support. Effect of Condition and Questioned Costs We determined the Department did not review adequate supporting documentation before paying subrecipients, and it did not perform adequate fiscal reviews to ensure that expenditures were for allowable activities. As a result, we identified $28,886,606 in known federal questioned costs and $71,007,353 in likely federal questioned costs. Our sampling methodology meets statistical sampling criteria under generally accepted auditing standards in AU-C 530.05. It is important to note that the sampling technique we used is intended to support our audit conclusions by determining if expenditures complied with program requirements in all material respects. Accordingly, we used an acceptance sampling formula designed to provide a high level of assurance, with a 95 percent confidence of whether exceptions exceeded our materiality threshold. Our audit report and finding reflect this conclusion. However, the likely improper payment projections are a point estimate and only represent our ?best estimate of total questioned costs,? as required by 2 CFR ? 200.516(3). To ensure a representative sample, we stratified the population by dollar amount. Without establishing adequate internal controls and reviewing detailed supporting documentation from subrecipients, the Department cannot reasonably ensure it is using federal funds for allowable purposes and that spending occurs within the allowed period of performance. We question costs when we find an agency has not complied with grant regulations or when it does not have adequate documentation to support its expenditures. Recommendations We recommend the Department: ? Implement written policies and monitoring procedures to ensure adequate review of each subrecipient?s use of federal funds ? Improve internal controls to ensure subrecipients provide adequate supporting documentation when requesting reimbursement ? Ensure it has sufficient staffing and resources to monitor each subrecipient, as required under Uniform Guidance ? Consult with the grantor to discuss whether the questioned costs identified in the audit should be repaid Department?s Response The Coronavirus pandemic created an unprecedented crisis of imminent evictions for an estimated 200,000 households who would face homelessness. Prompt program implementation was critical to reducing evictions as homelessness was shown to increase the spread of COVID-19 leading to death. In fiscal year 202, Commerce created the Eviction Rent Assistance Programs 1.0 and 2.0: Coronavirus State Fiscal Recovery Funds allocated by the Washington State legislature to fund the program. All of the rental assistance programs included multiple funding allocations. To provide much needed assistance to the state, the Department quickly deployed the programs either concurrently or on overlapping timelines. The vast majority of our grantees are local government entities with whom the Department has a long history of contracting and partnering with to deliver services. Federal requirements dictate local governments ensure their internal controls meet standards to comply with all compliance requirements. The Department used that expectation to rely on their administrative and fiscal control functions to ensure compliance. The Department received the first emergency rental assistance funds in August 2020 and the funding was set to expire four months after the award issuance. The Department moved quickly to relieve barriers to issue funding. In December 2020 Congress extended the end date to continue the funding for this program into 2021. As a result of the fiscal year 2021 audit, it was determined the fiscal review must be completed for all program reimbursements, even if the detail review of expenditures was completed at our subrecipient level. The initial fiscal monitoring was based on previously conducted risk assessments, so not all payees received a fiscal monitoring. As a result of the deficiencies reported in the fiscal year 2021 audit, the program deployed new subrecipient monitoring risk assessment processes, and now completes a new assessment for each award at the time of the award. Once the deficiency was identified, the Department began to review supporting backup documentation for all expenditures. The current finding also focused on specific sets of expenditures which were not reviewed in detail. As a result, the Department is currently evaluating the best approach to obtain and review supporting documentation at a detail level to ensure compliance with all requirements. The Department continues to complete reviews of supporting documentation for fiscal year 2023 expenditures and we strive to meet all other program requirements. We thank the State Auditor?s Office for identifying areas we could improve to meet all compliance requirements for federal funding. Auditor?s Remarks We thank the Department for its cooperation and assistance throughout the audit. We will review the status of the Department?s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 332, Requirements for pass-through entities, establishes the requirements for all pass-through entities. Title 2 CFR Part 200, Uniform Guidance, section 403, Factors affecting allowability of costs, describes the general criteria in order for a cost to be allowable under federal awards, including being adequately documented. Title 2 CFR Part 200.1, Uniform Guidance, establishes definitions for improper payments. Part 200.410 establishes requirements for the collection of unallowable costs.
2022-002 The University of Washington did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. Assistance Listing Number and Title: Various, Research and Development Cluster ? University of Washington Federal Grantor Name: Various Federal Award/Contract Number: Various Pass-through Entity Name: Various Pass-through Award/Contract Number: Various Applicable Compliance Component: Special Tests and Provisions: Key Personnel Known Questioned Cost Amount: None Background The federal government sponsors research and development (R&D) activities under a variety of types of awards. Most commonly, these are grants, cooperative agreements, and contracts to achieve objectives agreed upon between the federal awarding agency and the non-federal entity. The types of R&D conducted under these awards vary widely. Grants for R&D are awarded to non-federal entities on the basis of applications or proposals submitted to federal agencies or pass-through entities. An award is then negotiated that will include the purpose of the project, the amount of the award and the terms and conditions. R&D awards may include staffing proposals that specify key personnel who will work on the project, as well as the extent of their planned involvement. One of these key personnel is typically a principal investigator (PI) who contributes to the scientific development or execution of a project in a substantive, measurable way. The non-federal entity is required to meet key personnel commitments specified in the award and may be required to obtain approval from the grantor for certain types of changes. The University of Washington (University) is the largest recipient of federal R&D awards in the state of Washington. The University expended funds from 2,396 separate awards for the R&D grants, with expenditures totaling approximately $1.02 billion of the almost $1.17 billion expended statewide during the audit period. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The University did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. To determine if the University complied with key personnel requirements, we reviewed the University?s internal controls over monitoring key personnel time and effort and also examined grant awards to determine if key personnel identified in the application/proposal and award were involved in the project as required. We used a statistical sampling method to randomly select and examine 59 unique budget numbers assigned to R&D programs out of a total population of 7,486. We examined these samples and found: ? Four instances where we could not determine whether the University properly monitored key personnel time and effort to ensure that they met award requirements identified in the grant application/proposal and award were involved in the project as required. ? Two instances where key personnel were not involved in the project as required. Specifically, we found: o One award for which the PI was required to spend approximately 16 percent of their time on the award, but spent less than 5 percent o One award where the PI was required to spend 2 percent of their time on the award, but only spent .67 percent We consider these internal control deficiencies to be a significant deficiency. This issue was not reported as a finding in the prior audit. Cause of Condition While we determined the University had policies and procedures to ensure that key personnel are involved in the grant projects as required, there were not policies or procedures to ensure that there was sufficient University level oversight to ensure key personnel commitments were met. Effect of Condition By not establishing adequate internal controls, the University cannot reasonably ensure it meets the key personnel requirement. Recommendation We recommend the University improve its internal controls to ensure key personnel identified in the application/proposal and award were involved in the project as required. In addition, if the University identifies key personnel commitments are not going to meet required levels, ensure that federal awarding agency approval is obtained when required. University?s Response The University has established internal controls to ensure compliance with program requirements through the effort certification and project reporting processes, and budget reconciliation requirements. However, we agree there are areas for improvement int terms of staff and PI training, and available resources to monitor contribution and documentation of committed levels of effort. The University will implement the following improvements: ? The University offers multiple training courses to research administrators and principal investigators on management of sponsored awards. We will update our training materials and provide additional training on documentation of effort for PIs and key personnel, and prior approval requirements for reductions in effort. ? Update guidance and instructions for effort certifications to ensure all devoted effort is properly accounted for during the effort certification process. ? Develop exception reports to provide additional oversight to monitor deviations from committed effort for PIs and key personnel. Auditor?s Remarks We thank the University for its cooperation and assistance throughout the audit. We will review the status of the University?s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 308, Revision of budget and program plans, states in part: (a) The approved budget for the Federal award summarizes the financial aspects of the project or program as approved during the Federal award process. It may include either the Federal and non-Federal share (see definition for Federal share in ? 200.1) or only the Federal share, depending upon Federal awarding agency requirements. The budget and program plans include considerations for performance and program evaluation purposes whenever required in accordance with the terms and conditions of the award. (b) Recipients are required to report deviations from budget or project scope or objective, and request prior approvals from Federal awarding agencies for budget and program plan revisions, in accordance with this section. (c) For non-construction Federal awards, recipients must request prior approvals from Federal awarding agencies for the following program or budget-related reasons: (1) Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval). (2) Change in a key person specified in the application or the Federal award. (3) The disengagement from the project for more than three months, or a 25 percent reduction in time devoted to the project, by the approved project director or principal investigator. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
2022-002 The University of Washington did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. Assistance Listing Number and Title: Various, Research and Development Cluster ? University of Washington Federal Grantor Name: Various Federal Award/Contract Number: Various Pass-through Entity Name: Various Pass-through Award/Contract Number: Various Applicable Compliance Component: Special Tests and Provisions: Key Personnel Known Questioned Cost Amount: None Background The federal government sponsors research and development (R&D) activities under a variety of types of awards. Most commonly, these are grants, cooperative agreements, and contracts to achieve objectives agreed upon between the federal awarding agency and the non-federal entity. The types of R&D conducted under these awards vary widely. Grants for R&D are awarded to non-federal entities on the basis of applications or proposals submitted to federal agencies or pass-through entities. An award is then negotiated that will include the purpose of the project, the amount of the award and the terms and conditions. R&D awards may include staffing proposals that specify key personnel who will work on the project, as well as the extent of their planned involvement. One of these key personnel is typically a principal investigator (PI) who contributes to the scientific development or execution of a project in a substantive, measurable way. The non-federal entity is required to meet key personnel commitments specified in the award and may be required to obtain approval from the grantor for certain types of changes. The University of Washington (University) is the largest recipient of federal R&D awards in the state of Washington. The University expended funds from 2,396 separate awards for the R&D grants, with expenditures totaling approximately $1.02 billion of the almost $1.17 billion expended statewide during the audit period. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The University did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. To determine if the University complied with key personnel requirements, we reviewed the University?s internal controls over monitoring key personnel time and effort and also examined grant awards to determine if key personnel identified in the application/proposal and award were involved in the project as required. We used a statistical sampling method to randomly select and examine 59 unique budget numbers assigned to R&D programs out of a total population of 7,486. We examined these samples and found: ? Four instances where we could not determine whether the University properly monitored key personnel time and effort to ensure that they met award requirements identified in the grant application/proposal and award were involved in the project as required. ? Two instances where key personnel were not involved in the project as required. Specifically, we found: o One award for which the PI was required to spend approximately 16 percent of their time on the award, but spent less than 5 percent o One award where the PI was required to spend 2 percent of their time on the award, but only spent .67 percent We consider these internal control deficiencies to be a significant deficiency. This issue was not reported as a finding in the prior audit. Cause of Condition While we determined the University had policies and procedures to ensure that key personnel are involved in the grant projects as required, there were not policies or procedures to ensure that there was sufficient University level oversight to ensure key personnel commitments were met. Effect of Condition By not establishing adequate internal controls, the University cannot reasonably ensure it meets the key personnel requirement. Recommendation We recommend the University improve its internal controls to ensure key personnel identified in the application/proposal and award were involved in the project as required. In addition, if the University identifies key personnel commitments are not going to meet required levels, ensure that federal awarding agency approval is obtained when required. University?s Response The University has established internal controls to ensure compliance with program requirements through the effort certification and project reporting processes, and budget reconciliation requirements. However, we agree there are areas for improvement int terms of staff and PI training, and available resources to monitor contribution and documentation of committed levels of effort. The University will implement the following improvements: ? The University offers multiple training courses to research administrators and principal investigators on management of sponsored awards. We will update our training materials and provide additional training on documentation of effort for PIs and key personnel, and prior approval requirements for reductions in effort. ? Update guidance and instructions for effort certifications to ensure all devoted effort is properly accounted for during the effort certification process. ? Develop exception reports to provide additional oversight to monitor deviations from committed effort for PIs and key personnel. Auditor?s Remarks We thank the University for its cooperation and assistance throughout the audit. We will review the status of the University?s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 308, Revision of budget and program plans, states in part: (a) The approved budget for the Federal award summarizes the financial aspects of the project or program as approved during the Federal award process. It may include either the Federal and non-Federal share (see definition for Federal share in ? 200.1) or only the Federal share, depending upon Federal awarding agency requirements. The budget and program plans include considerations for performance and program evaluation purposes whenever required in accordance with the terms and conditions of the award. (b) Recipients are required to report deviations from budget or project scope or objective, and request prior approvals from Federal awarding agencies for budget and program plan revisions, in accordance with this section. (c) For non-construction Federal awards, recipients must request prior approvals from Federal awarding agencies for the following program or budget-related reasons: (1) Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval). (2) Change in a key person specified in the application or the Federal award. (3) The disengagement from the project for more than three months, or a 25 percent reduction in time devoted to the project, by the approved project director or principal investigator. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
2022-002 The University of Washington did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. Assistance Listing Number and Title: Various, Research and Development Cluster ? University of Washington Federal Grantor Name: Various Federal Award/Contract Number: Various Pass-through Entity Name: Various Pass-through Award/Contract Number: Various Applicable Compliance Component: Special Tests and Provisions: Key Personnel Known Questioned Cost Amount: None Background The federal government sponsors research and development (R&D) activities under a variety of types of awards. Most commonly, these are grants, cooperative agreements, and contracts to achieve objectives agreed upon between the federal awarding agency and the non-federal entity. The types of R&D conducted under these awards vary widely. Grants for R&D are awarded to non-federal entities on the basis of applications or proposals submitted to federal agencies or pass-through entities. An award is then negotiated that will include the purpose of the project, the amount of the award and the terms and conditions. R&D awards may include staffing proposals that specify key personnel who will work on the project, as well as the extent of their planned involvement. One of these key personnel is typically a principal investigator (PI) who contributes to the scientific development or execution of a project in a substantive, measurable way. The non-federal entity is required to meet key personnel commitments specified in the award and may be required to obtain approval from the grantor for certain types of changes. The University of Washington (University) is the largest recipient of federal R&D awards in the state of Washington. The University expended funds from 2,396 separate awards for the R&D grants, with expenditures totaling approximately $1.02 billion of the almost $1.17 billion expended statewide during the audit period. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The University did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. To determine if the University complied with key personnel requirements, we reviewed the University?s internal controls over monitoring key personnel time and effort and also examined grant awards to determine if key personnel identified in the application/proposal and award were involved in the project as required. We used a statistical sampling method to randomly select and examine 59 unique budget numbers assigned to R&D programs out of a total population of 7,486. We examined these samples and found: ? Four instances where we could not determine whether the University properly monitored key personnel time and effort to ensure that they met award requirements identified in the grant application/proposal and award were involved in the project as required. ? Two instances where key personnel were not involved in the project as required. Specifically, we found: o One award for which the PI was required to spend approximately 16 percent of their time on the award, but spent less than 5 percent o One award where the PI was required to spend 2 percent of their time on the award, but only spent .67 percent We consider these internal control deficiencies to be a significant deficiency. This issue was not reported as a finding in the prior audit. Cause of Condition While we determined the University had policies and procedures to ensure that key personnel are involved in the grant projects as required, there were not policies or procedures to ensure that there was sufficient University level oversight to ensure key personnel commitments were met. Effect of Condition By not establishing adequate internal controls, the University cannot reasonably ensure it meets the key personnel requirement. Recommendation We recommend the University improve its internal controls to ensure key personnel identified in the application/proposal and award were involved in the project as required. In addition, if the University identifies key personnel commitments are not going to meet required levels, ensure that federal awarding agency approval is obtained when required. University?s Response The University has established internal controls to ensure compliance with program requirements through the effort certification and project reporting processes, and budget reconciliation requirements. However, we agree there are areas for improvement int terms of staff and PI training, and available resources to monitor contribution and documentation of committed levels of effort. The University will implement the following improvements: ? The University offers multiple training courses to research administrators and principal investigators on management of sponsored awards. We will update our training materials and provide additional training on documentation of effort for PIs and key personnel, and prior approval requirements for reductions in effort. ? Update guidance and instructions for effort certifications to ensure all devoted effort is properly accounted for during the effort certification process. ? Develop exception reports to provide additional oversight to monitor deviations from committed effort for PIs and key personnel. Auditor?s Remarks We thank the University for its cooperation and assistance throughout the audit. We will review the status of the University?s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 308, Revision of budget and program plans, states in part: (a) The approved budget for the Federal award summarizes the financial aspects of the project or program as approved during the Federal award process. It may include either the Federal and non-Federal share (see definition for Federal share in ? 200.1) or only the Federal share, depending upon Federal awarding agency requirements. The budget and program plans include considerations for performance and program evaluation purposes whenever required in accordance with the terms and conditions of the award. (b) Recipients are required to report deviations from budget or project scope or objective, and request prior approvals from Federal awarding agencies for budget and program plan revisions, in accordance with this section. (c) For non-construction Federal awards, recipients must request prior approvals from Federal awarding agencies for the following program or budget-related reasons: (1) Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval). (2) Change in a key person specified in the application or the Federal award. (3) The disengagement from the project for more than three months, or a 25 percent reduction in time devoted to the project, by the approved project director or principal investigator. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
2022-002 The University of Washington did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. Assistance Listing Number and Title: Various, Research and Development Cluster ? University of Washington Federal Grantor Name: Various Federal Award/Contract Number: Various Pass-through Entity Name: Various Pass-through Award/Contract Number: Various Applicable Compliance Component: Special Tests and Provisions: Key Personnel Known Questioned Cost Amount: None Background The federal government sponsors research and development (R&D) activities under a variety of types of awards. Most commonly, these are grants, cooperative agreements, and contracts to achieve objectives agreed upon between the federal awarding agency and the non-federal entity. The types of R&D conducted under these awards vary widely. Grants for R&D are awarded to non-federal entities on the basis of applications or proposals submitted to federal agencies or pass-through entities. An award is then negotiated that will include the purpose of the project, the amount of the award and the terms and conditions. R&D awards may include staffing proposals that specify key personnel who will work on the project, as well as the extent of their planned involvement. One of these key personnel is typically a principal investigator (PI) who contributes to the scientific development or execution of a project in a substantive, measurable way. The non-federal entity is required to meet key personnel commitments specified in the award and may be required to obtain approval from the grantor for certain types of changes. The University of Washington (University) is the largest recipient of federal R&D awards in the state of Washington. The University expended funds from 2,396 separate awards for the R&D grants, with expenditures totaling approximately $1.02 billion of the almost $1.17 billion expended statewide during the audit period. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The University did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. To determine if the University complied with key personnel requirements, we reviewed the University?s internal controls over monitoring key personnel time and effort and also examined grant awards to determine if key personnel identified in the application/proposal and award were involved in the project as required. We used a statistical sampling method to randomly select and examine 59 unique budget numbers assigned to R&D programs out of a total population of 7,486. We examined these samples and found: ? Four instances where we could not determine whether the University properly monitored key personnel time and effort to ensure that they met award requirements identified in the grant application/proposal and award were involved in the project as required. ? Two instances where key personnel were not involved in the project as required. Specifically, we found: o One award for which the PI was required to spend approximately 16 percent of their time on the award, but spent less than 5 percent o One award where the PI was required to spend 2 percent of their time on the award, but only spent .67 percent We consider these internal control deficiencies to be a significant deficiency. This issue was not reported as a finding in the prior audit. Cause of Condition While we determined the University had policies and procedures to ensure that key personnel are involved in the grant projects as required, there were not policies or procedures to ensure that there was sufficient University level oversight to ensure key personnel commitments were met. Effect of Condition By not establishing adequate internal controls, the University cannot reasonably ensure it meets the key personnel requirement. Recommendation We recommend the University improve its internal controls to ensure key personnel identified in the application/proposal and award were involved in the project as required. In addition, if the University identifies key personnel commitments are not going to meet required levels, ensure that federal awarding agency approval is obtained when required. University?s Response The University has established internal controls to ensure compliance with program requirements through the effort certification and project reporting processes, and budget reconciliation requirements. However, we agree there are areas for improvement int terms of staff and PI training, and available resources to monitor contribution and documentation of committed levels of effort. The University will implement the following improvements: ? The University offers multiple training courses to research administrators and principal investigators on management of sponsored awards. We will update our training materials and provide additional training on documentation of effort for PIs and key personnel, and prior approval requirements for reductions in effort. ? Update guidance and instructions for effort certifications to ensure all devoted effort is properly accounted for during the effort certification process. ? Develop exception reports to provide additional oversight to monitor deviations from committed effort for PIs and key personnel. Auditor?s Remarks We thank the University for its cooperation and assistance throughout the audit. We will review the status of the University?s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 308, Revision of budget and program plans, states in part: (a) The approved budget for the Federal award summarizes the financial aspects of the project or program as approved during the Federal award process. It may include either the Federal and non-Federal share (see definition for Federal share in ? 200.1) or only the Federal share, depending upon Federal awarding agency requirements. The budget and program plans include considerations for performance and program evaluation purposes whenever required in accordance with the terms and conditions of the award. (b) Recipients are required to report deviations from budget or project scope or objective, and request prior approvals from Federal awarding agencies for budget and program plan revisions, in accordance with this section. (c) For non-construction Federal awards, recipients must request prior approvals from Federal awarding agencies for the following program or budget-related reasons: (1) Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval). (2) Change in a key person specified in the application or the Federal award. (3) The disengagement from the project for more than three months, or a 25 percent reduction in time devoted to the project, by the approved project director or principal investigator. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
2022-002 The University of Washington did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. Assistance Listing Number and Title: Various, Research and Development Cluster ? University of Washington Federal Grantor Name: Various Federal Award/Contract Number: Various Pass-through Entity Name: Various Pass-through Award/Contract Number: Various Applicable Compliance Component: Special Tests and Provisions: Key Personnel Known Questioned Cost Amount: None Background The federal government sponsors research and development (R&D) activities under a variety of types of awards. Most commonly, these are grants, cooperative agreements, and contracts to achieve objectives agreed upon between the federal awarding agency and the non-federal entity. The types of R&D conducted under these awards vary widely. Grants for R&D are awarded to non-federal entities on the basis of applications or proposals submitted to federal agencies or pass-through entities. An award is then negotiated that will include the purpose of the project, the amount of the award and the terms and conditions. R&D awards may include staffing proposals that specify key personnel who will work on the project, as well as the extent of their planned involvement. One of these key personnel is typically a principal investigator (PI) who contributes to the scientific development or execution of a project in a substantive, measurable way. The non-federal entity is required to meet key personnel commitments specified in the award and may be required to obtain approval from the grantor for certain types of changes. The University of Washington (University) is the largest recipient of federal R&D awards in the state of Washington. The University expended funds from 2,396 separate awards for the R&D grants, with expenditures totaling approximately $1.02 billion of the almost $1.17 billion expended statewide during the audit period. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The University did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. To determine if the University complied with key personnel requirements, we reviewed the University?s internal controls over monitoring key personnel time and effort and also examined grant awards to determine if key personnel identified in the application/proposal and award were involved in the project as required. We used a statistical sampling method to randomly select and examine 59 unique budget numbers assigned to R&D programs out of a total population of 7,486. We examined these samples and found: ? Four instances where we could not determine whether the University properly monitored key personnel time and effort to ensure that they met award requirements identified in the grant application/proposal and award were involved in the project as required. ? Two instances where key personnel were not involved in the project as required. Specifically, we found: o One award for which the PI was required to spend approximately 16 percent of their time on the award, but spent less than 5 percent o One award where the PI was required to spend 2 percent of their time on the award, but only spent .67 percent We consider these internal control deficiencies to be a significant deficiency. This issue was not reported as a finding in the prior audit. Cause of Condition While we determined the University had policies and procedures to ensure that key personnel are involved in the grant projects as required, there were not policies or procedures to ensure that there was sufficient University level oversight to ensure key personnel commitments were met. Effect of Condition By not establishing adequate internal controls, the University cannot reasonably ensure it meets the key personnel requirement. Recommendation We recommend the University improve its internal controls to ensure key personnel identified in the application/proposal and award were involved in the project as required. In addition, if the University identifies key personnel commitments are not going to meet required levels, ensure that federal awarding agency approval is obtained when required. University?s Response The University has established internal controls to ensure compliance with program requirements through the effort certification and project reporting processes, and budget reconciliation requirements. However, we agree there are areas for improvement int terms of staff and PI training, and available resources to monitor contribution and documentation of committed levels of effort. The University will implement the following improvements: ? The University offers multiple training courses to research administrators and principal investigators on management of sponsored awards. We will update our training materials and provide additional training on documentation of effort for PIs and key personnel, and prior approval requirements for reductions in effort. ? Update guidance and instructions for effort certifications to ensure all devoted effort is properly accounted for during the effort certification process. ? Develop exception reports to provide additional oversight to monitor deviations from committed effort for PIs and key personnel. Auditor?s Remarks We thank the University for its cooperation and assistance throughout the audit. We will review the status of the University?s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 308, Revision of budget and program plans, states in part: (a) The approved budget for the Federal award summarizes the financial aspects of the project or program as approved during the Federal award process. It may include either the Federal and non-Federal share (see definition for Federal share in ? 200.1) or only the Federal share, depending upon Federal awarding agency requirements. The budget and program plans include considerations for performance and program evaluation purposes whenever required in accordance with the terms and conditions of the award. (b) Recipients are required to report deviations from budget or project scope or objective, and request prior approvals from Federal awarding agencies for budget and program plan revisions, in accordance with this section. (c) For non-construction Federal awards, recipients must request prior approvals from Federal awarding agencies for the following program or budget-related reasons: (1) Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval). (2) Change in a key person specified in the application or the Federal award. (3) The disengagement from the project for more than three months, or a 25 percent reduction in time devoted to the project, by the approved project director or principal investigator. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
2022-002 The University of Washington did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. Assistance Listing Number and Title: Various, Research and Development Cluster ? University of Washington Federal Grantor Name: Various Federal Award/Contract Number: Various Pass-through Entity Name: Various Pass-through Award/Contract Number: Various Applicable Compliance Component: Special Tests and Provisions: Key Personnel Known Questioned Cost Amount: None Background The federal government sponsors research and development (R&D) activities under a variety of types of awards. Most commonly, these are grants, cooperative agreements, and contracts to achieve objectives agreed upon between the federal awarding agency and the non-federal entity. The types of R&D conducted under these awards vary widely. Grants for R&D are awarded to non-federal entities on the basis of applications or proposals submitted to federal agencies or pass-through entities. An award is then negotiated that will include the purpose of the project, the amount of the award and the terms and conditions. R&D awards may include staffing proposals that specify key personnel who will work on the project, as well as the extent of their planned involvement. One of these key personnel is typically a principal investigator (PI) who contributes to the scientific development or execution of a project in a substantive, measurable way. The non-federal entity is required to meet key personnel commitments specified in the award and may be required to obtain approval from the grantor for certain types of changes. The University of Washington (University) is the largest recipient of federal R&D awards in the state of Washington. The University expended funds from 2,396 separate awards for the R&D grants, with expenditures totaling approximately $1.02 billion of the almost $1.17 billion expended statewide during the audit period. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The University did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. To determine if the University complied with key personnel requirements, we reviewed the University?s internal controls over monitoring key personnel time and effort and also examined grant awards to determine if key personnel identified in the application/proposal and award were involved in the project as required. We used a statistical sampling method to randomly select and examine 59 unique budget numbers assigned to R&D programs out of a total population of 7,486. We examined these samples and found: ? Four instances where we could not determine whether the University properly monitored key personnel time and effort to ensure that they met award requirements identified in the grant application/proposal and award were involved in the project as required. ? Two instances where key personnel were not involved in the project as required. Specifically, we found: o One award for which the PI was required to spend approximately 16 percent of their time on the award, but spent less than 5 percent o One award where the PI was required to spend 2 percent of their time on the award, but only spent .67 percent We consider these internal control deficiencies to be a significant deficiency. This issue was not reported as a finding in the prior audit. Cause of Condition While we determined the University had policies and procedures to ensure that key personnel are involved in the grant projects as required, there were not policies or procedures to ensure that there was sufficient University level oversight to ensure key personnel commitments were met. Effect of Condition By not establishing adequate internal controls, the University cannot reasonably ensure it meets the key personnel requirement. Recommendation We recommend the University improve its internal controls to ensure key personnel identified in the application/proposal and award were involved in the project as required. In addition, if the University identifies key personnel commitments are not going to meet required levels, ensure that federal awarding agency approval is obtained when required. University?s Response The University has established internal controls to ensure compliance with program requirements through the effort certification and project reporting processes, and budget reconciliation requirements. However, we agree there are areas for improvement int terms of staff and PI training, and available resources to monitor contribution and documentation of committed levels of effort. The University will implement the following improvements: ? The University offers multiple training courses to research administrators and principal investigators on management of sponsored awards. We will update our training materials and provide additional training on documentation of effort for PIs and key personnel, and prior approval requirements for reductions in effort. ? Update guidance and instructions for effort certifications to ensure all devoted effort is properly accounted for during the effort certification process. ? Develop exception reports to provide additional oversight to monitor deviations from committed effort for PIs and key personnel. Auditor?s Remarks We thank the University for its cooperation and assistance throughout the audit. We will review the status of the University?s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 308, Revision of budget and program plans, states in part: (a) The approved budget for the Federal award summarizes the financial aspects of the project or program as approved during the Federal award process. It may include either the Federal and non-Federal share (see definition for Federal share in ? 200.1) or only the Federal share, depending upon Federal awarding agency requirements. The budget and program plans include considerations for performance and program evaluation purposes whenever required in accordance with the terms and conditions of the award. (b) Recipients are required to report deviations from budget or project scope or objective, and request prior approvals from Federal awarding agencies for budget and program plan revisions, in accordance with this section. (c) For non-construction Federal awards, recipients must request prior approvals from Federal awarding agencies for the following program or budget-related reasons: (1) Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval). (2) Change in a key person specified in the application or the Federal award. (3) The disengagement from the project for more than three months, or a 25 percent reduction in time devoted to the project, by the approved project director or principal investigator. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
2022-002 The University of Washington did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. Assistance Listing Number and Title: Various, Research and Development Cluster ? University of Washington Federal Grantor Name: Various Federal Award/Contract Number: Various Pass-through Entity Name: Various Pass-through Award/Contract Number: Various Applicable Compliance Component: Special Tests and Provisions: Key Personnel Known Questioned Cost Amount: None Background The federal government sponsors research and development (R&D) activities under a variety of types of awards. Most commonly, these are grants, cooperative agreements, and contracts to achieve objectives agreed upon between the federal awarding agency and the non-federal entity. The types of R&D conducted under these awards vary widely. Grants for R&D are awarded to non-federal entities on the basis of applications or proposals submitted to federal agencies or pass-through entities. An award is then negotiated that will include the purpose of the project, the amount of the award and the terms and conditions. R&D awards may include staffing proposals that specify key personnel who will work on the project, as well as the extent of their planned involvement. One of these key personnel is typically a principal investigator (PI) who contributes to the scientific development or execution of a project in a substantive, measurable way. The non-federal entity is required to meet key personnel commitments specified in the award and may be required to obtain approval from the grantor for certain types of changes. The University of Washington (University) is the largest recipient of federal R&D awards in the state of Washington. The University expended funds from 2,396 separate awards for the R&D grants, with expenditures totaling approximately $1.02 billion of the almost $1.17 billion expended statewide during the audit period. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The University did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. To determine if the University complied with key personnel requirements, we reviewed the University?s internal controls over monitoring key personnel time and effort and also examined grant awards to determine if key personnel identified in the application/proposal and award were involved in the project as required. We used a statistical sampling method to randomly select and examine 59 unique budget numbers assigned to R&D programs out of a total population of 7,486. We examined these samples and found: ? Four instances where we could not determine whether the University properly monitored key personnel time and effort to ensure that they met award requirements identified in the grant application/proposal and award were involved in the project as required. ? Two instances where key personnel were not involved in the project as required. Specifically, we found: o One award for which the PI was required to spend approximately 16 percent of their time on the award, but spent less than 5 percent o One award where the PI was required to spend 2 percent of their time on the award, but only spent .67 percent We consider these internal control deficiencies to be a significant deficiency. This issue was not reported as a finding in the prior audit. Cause of Condition While we determined the University had policies and procedures to ensure that key personnel are involved in the grant projects as required, there were not policies or procedures to ensure that there was sufficient University level oversight to ensure key personnel commitments were met. Effect of Condition By not establishing adequate internal controls, the University cannot reasonably ensure it meets the key personnel requirement. Recommendation We recommend the University improve its internal controls to ensure key personnel identified in the application/proposal and award were involved in the project as required. In addition, if the University identifies key personnel commitments are not going to meet required levels, ensure that federal awarding agency approval is obtained when required. University?s Response The University has established internal controls to ensure compliance with program requirements through the effort certification and project reporting processes, and budget reconciliation requirements. However, we agree there are areas for improvement int terms of staff and PI training, and available resources to monitor contribution and documentation of committed levels of effort. The University will implement the following improvements: ? The University offers multiple training courses to research administrators and principal investigators on management of sponsored awards. We will update our training materials and provide additional training on documentation of effort for PIs and key personnel, and prior approval requirements for reductions in effort. ? Update guidance and instructions for effort certifications to ensure all devoted effort is properly accounted for during the effort certification process. ? Develop exception reports to provide additional oversight to monitor deviations from committed effort for PIs and key personnel. Auditor?s Remarks We thank the University for its cooperation and assistance throughout the audit. We will review the status of the University?s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 308, Revision of budget and program plans, states in part: (a) The approved budget for the Federal award summarizes the financial aspects of the project or program as approved during the Federal award process. It may include either the Federal and non-Federal share (see definition for Federal share in ? 200.1) or only the Federal share, depending upon Federal awarding agency requirements. The budget and program plans include considerations for performance and program evaluation purposes whenever required in accordance with the terms and conditions of the award. (b) Recipients are required to report deviations from budget or project scope or objective, and request prior approvals from Federal awarding agencies for budget and program plan revisions, in accordance with this section. (c) For non-construction Federal awards, recipients must request prior approvals from Federal awarding agencies for the following program or budget-related reasons: (1) Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval). (2) Change in a key person specified in the application or the Federal award. (3) The disengagement from the project for more than three months, or a 25 percent reduction in time devoted to the project, by the approved project director or principal investigator. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
2022-002 The University of Washington did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. Assistance Listing Number and Title: Various, Research and Development Cluster ? University of Washington Federal Grantor Name: Various Federal Award/Contract Number: Various Pass-through Entity Name: Various Pass-through Award/Contract Number: Various Applicable Compliance Component: Special Tests and Provisions: Key Personnel Known Questioned Cost Amount: None Background The federal government sponsors research and development (R&D) activities under a variety of types of awards. Most commonly, these are grants, cooperative agreements, and contracts to achieve objectives agreed upon between the federal awarding agency and the non-federal entity. The types of R&D conducted under these awards vary widely. Grants for R&D are awarded to non-federal entities on the basis of applications or proposals submitted to federal agencies or pass-through entities. An award is then negotiated that will include the purpose of the project, the amount of the award and the terms and conditions. R&D awards may include staffing proposals that specify key personnel who will work on the project, as well as the extent of their planned involvement. One of these key personnel is typically a principal investigator (PI) who contributes to the scientific development or execution of a project in a substantive, measurable way. The non-federal entity is required to meet key personnel commitments specified in the award and may be required to obtain approval from the grantor for certain types of changes. The University of Washington (University) is the largest recipient of federal R&D awards in the state of Washington. The University expended funds from 2,396 separate awards for the R&D grants, with expenditures totaling approximately $1.02 billion of the almost $1.17 billion expended statewide during the audit period. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The University did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. To determine if the University complied with key personnel requirements, we reviewed the University?s internal controls over monitoring key personnel time and effort and also examined grant awards to determine if key personnel identified in the application/proposal and award were involved in the project as required. We used a statistical sampling method to randomly select and examine 59 unique budget numbers assigned to R&D programs out of a total population of 7,486. We examined these samples and found: ? Four instances where we could not determine whether the University properly monitored key personnel time and effort to ensure that they met award requirements identified in the grant application/proposal and award were involved in the project as required. ? Two instances where key personnel were not involved in the project as required. Specifically, we found: o One award for which the PI was required to spend approximately 16 percent of their time on the award, but spent less than 5 percent o One award where the PI was required to spend 2 percent of their time on the award, but only spent .67 percent We consider these internal control deficiencies to be a significant deficiency. This issue was not reported as a finding in the prior audit. Cause of Condition While we determined the University had policies and procedures to ensure that key personnel are involved in the grant projects as required, there were not policies or procedures to ensure that there was sufficient University level oversight to ensure key personnel commitments were met. Effect of Condition By not establishing adequate internal controls, the University cannot reasonably ensure it meets the key personnel requirement. Recommendation We recommend the University improve its internal controls to ensure key personnel identified in the application/proposal and award were involved in the project as required. In addition, if the University identifies key personnel commitments are not going to meet required levels, ensure that federal awarding agency approval is obtained when required. University?s Response The University has established internal controls to ensure compliance with program requirements through the effort certification and project reporting processes, and budget reconciliation requirements. However, we agree there are areas for improvement int terms of staff and PI training, and available resources to monitor contribution and documentation of committed levels of effort. The University will implement the following improvements: ? The University offers multiple training courses to research administrators and principal investigators on management of sponsored awards. We will update our training materials and provide additional training on documentation of effort for PIs and key personnel, and prior approval requirements for reductions in effort. ? Update guidance and instructions for effort certifications to ensure all devoted effort is properly accounted for during the effort certification process. ? Develop exception reports to provide additional oversight to monitor deviations from committed effort for PIs and key personnel. Auditor?s Remarks We thank the University for its cooperation and assistance throughout the audit. We will review the status of the University?s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 308, Revision of budget and program plans, states in part: (a) The approved budget for the Federal award summarizes the financial aspects of the project or program as approved during the Federal award process. It may include either the Federal and non-Federal share (see definition for Federal share in ? 200.1) or only the Federal share, depending upon Federal awarding agency requirements. The budget and program plans include considerations for performance and program evaluation purposes whenever required in accordance with the terms and conditions of the award. (b) Recipients are required to report deviations from budget or project scope or objective, and request prior approvals from Federal awarding agencies for budget and program plan revisions, in accordance with this section. (c) For non-construction Federal awards, recipients must request prior approvals from Federal awarding agencies for the following program or budget-related reasons: (1) Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval). (2) Change in a key person specified in the application or the Federal award. (3) The disengagement from the project for more than three months, or a 25 percent reduction in time devoted to the project, by the approved project director or principal investigator. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
2022-002 The University of Washington did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. Assistance Listing Number and Title: Various, Research and Development Cluster ? University of Washington Federal Grantor Name: Various Federal Award/Contract Number: Various Pass-through Entity Name: Various Pass-through Award/Contract Number: Various Applicable Compliance Component: Special Tests and Provisions: Key Personnel Known Questioned Cost Amount: None Background The federal government sponsors research and development (R&D) activities under a variety of types of awards. Most commonly, these are grants, cooperative agreements, and contracts to achieve objectives agreed upon between the federal awarding agency and the non-federal entity. The types of R&D conducted under these awards vary widely. Grants for R&D are awarded to non-federal entities on the basis of applications or proposals submitted to federal agencies or pass-through entities. An award is then negotiated that will include the purpose of the project, the amount of the award and the terms and conditions. R&D awards may include staffing proposals that specify key personnel who will work on the project, as well as the extent of their planned involvement. One of these key personnel is typically a principal investigator (PI) who contributes to the scientific development or execution of a project in a substantive, measurable way. The non-federal entity is required to meet key personnel commitments specified in the award and may be required to obtain approval from the grantor for certain types of changes. The University of Washington (University) is the largest recipient of federal R&D awards in the state of Washington. The University expended funds from 2,396 separate awards for the R&D grants, with expenditures totaling approximately $1.02 billion of the almost $1.17 billion expended statewide during the audit period. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The University did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. To determine if the University complied with key personnel requirements, we reviewed the University?s internal controls over monitoring key personnel time and effort and also examined grant awards to determine if key personnel identified in the application/proposal and award were involved in the project as required. We used a statistical sampling method to randomly select and examine 59 unique budget numbers assigned to R&D programs out of a total population of 7,486. We examined these samples and found: ? Four instances where we could not determine whether the University properly monitored key personnel time and effort to ensure that they met award requirements identified in the grant application/proposal and award were involved in the project as required. ? Two instances where key personnel were not involved in the project as required. Specifically, we found: o One award for which the PI was required to spend approximately 16 percent of their time on the award, but spent less than 5 percent o One award where the PI was required to spend 2 percent of their time on the award, but only spent .67 percent We consider these internal control deficiencies to be a significant deficiency. This issue was not reported as a finding in the prior audit. Cause of Condition While we determined the University had policies and procedures to ensure that key personnel are involved in the grant projects as required, there were not policies or procedures to ensure that there was sufficient University level oversight to ensure key personnel commitments were met. Effect of Condition By not establishing adequate internal controls, the University cannot reasonably ensure it meets the key personnel requirement. Recommendation We recommend the University improve its internal controls to ensure key personnel identified in the application/proposal and award were involved in the project as required. In addition, if the University identifies key personnel commitments are not going to meet required levels, ensure that federal awarding agency approval is obtained when required. University?s Response The University has established internal controls to ensure compliance with program requirements through the effort certification and project reporting processes, and budget reconciliation requirements. However, we agree there are areas for improvement int terms of staff and PI training, and available resources to monitor contribution and documentation of committed levels of effort. The University will implement the following improvements: ? The University offers multiple training courses to research administrators and principal investigators on management of sponsored awards. We will update our training materials and provide additional training on documentation of effort for PIs and key personnel, and prior approval requirements for reductions in effort. ? Update guidance and instructions for effort certifications to ensure all devoted effort is properly accounted for during the effort certification process. ? Develop exception reports to provide additional oversight to monitor deviations from committed effort for PIs and key personnel. Auditor?s Remarks We thank the University for its cooperation and assistance throughout the audit. We will review the status of the University?s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 308, Revision of budget and program plans, states in part: (a) The approved budget for the Federal award summarizes the financial aspects of the project or program as approved during the Federal award process. It may include either the Federal and non-Federal share (see definition for Federal share in ? 200.1) or only the Federal share, depending upon Federal awarding agency requirements. The budget and program plans include considerations for performance and program evaluation purposes whenever required in accordance with the terms and conditions of the award. (b) Recipients are required to report deviations from budget or project scope or objective, and request prior approvals from Federal awarding agencies for budget and program plan revisions, in accordance with this section. (c) For non-construction Federal awards, recipients must request prior approvals from Federal awarding agencies for the following program or budget-related reasons: (1) Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval). (2) Change in a key person specified in the application or the Federal award. (3) The disengagement from the project for more than three months, or a 25 percent reduction in time devoted to the project, by the approved project director or principal investigator. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
2022-002 The University of Washington did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. Assistance Listing Number and Title: Various, Research and Development Cluster ? University of Washington Federal Grantor Name: Various Federal Award/Contract Number: Various Pass-through Entity Name: Various Pass-through Award/Contract Number: Various Applicable Compliance Component: Special Tests and Provisions: Key Personnel Known Questioned Cost Amount: None Background The federal government sponsors research and development (R&D) activities under a variety of types of awards. Most commonly, these are grants, cooperative agreements, and contracts to achieve objectives agreed upon between the federal awarding agency and the non-federal entity. The types of R&D conducted under these awards vary widely. Grants for R&D are awarded to non-federal entities on the basis of applications or proposals submitted to federal agencies or pass-through entities. An award is then negotiated that will include the purpose of the project, the amount of the award and the terms and conditions. R&D awards may include staffing proposals that specify key personnel who will work on the project, as well as the extent of their planned involvement. One of these key personnel is typically a principal investigator (PI) who contributes to the scientific development or execution of a project in a substantive, measurable way. The non-federal entity is required to meet key personnel commitments specified in the award and may be required to obtain approval from the grantor for certain types of changes. The University of Washington (University) is the largest recipient of federal R&D awards in the state of Washington. The University expended funds from 2,396 separate awards for the R&D grants, with expenditures totaling approximately $1.02 billion of the almost $1.17 billion expended statewide during the audit period. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The University did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. To determine if the University complied with key personnel requirements, we reviewed the University?s internal controls over monitoring key personnel time and effort and also examined grant awards to determine if key personnel identified in the application/proposal and award were involved in the project as required. We used a statistical sampling method to randomly select and examine 59 unique budget numbers assigned to R&D programs out of a total population of 7,486. We examined these samples and found: ? Four instances where we could not determine whether the University properly monitored key personnel time and effort to ensure that they met award requirements identified in the grant application/proposal and award were involved in the project as required. ? Two instances where key personnel were not involved in the project as required. Specifically, we found: o One award for which the PI was required to spend approximately 16 percent of their time on the award, but spent less than 5 percent o One award where the PI was required to spend 2 percent of their time on the award, but only spent .67 percent We consider these internal control deficiencies to be a significant deficiency. This issue was not reported as a finding in the prior audit. Cause of Condition While we determined the University had policies and procedures to ensure that key personnel are involved in the grant projects as required, there were not policies or procedures to ensure that there was sufficient University level oversight to ensure key personnel commitments were met. Effect of Condition By not establishing adequate internal controls, the University cannot reasonably ensure it meets the key personnel requirement. Recommendation We recommend the University improve its internal controls to ensure key personnel identified in the application/proposal and award were involved in the project as required. In addition, if the University identifies key personnel commitments are not going to meet required levels, ensure that federal awarding agency approval is obtained when required. University?s Response The University has established internal controls to ensure compliance with program requirements through the effort certification and project reporting processes, and budget reconciliation requirements. However, we agree there are areas for improvement int terms of staff and PI training, and available resources to monitor contribution and documentation of committed levels of effort. The University will implement the following improvements: ? The University offers multiple training courses to research administrators and principal investigators on management of sponsored awards. We will update our training materials and provide additional training on documentation of effort for PIs and key personnel, and prior approval requirements for reductions in effort. ? Update guidance and instructions for effort certifications to ensure all devoted effort is properly accounted for during the effort certification process. ? Develop exception reports to provide additional oversight to monitor deviations from committed effort for PIs and key personnel. Auditor?s Remarks We thank the University for its cooperation and assistance throughout the audit. We will review the status of the University?s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 308, Revision of budget and program plans, states in part: (a) The approved budget for the Federal award summarizes the financial aspects of the project or program as approved during the Federal award process. It may include either the Federal and non-Federal share (see definition for Federal share in ? 200.1) or only the Federal share, depending upon Federal awarding agency requirements. The budget and program plans include considerations for performance and program evaluation purposes whenever required in accordance with the terms and conditions of the award. (b) Recipients are required to report deviations from budget or project scope or objective, and request prior approvals from Federal awarding agencies for budget and program plan revisions, in accordance with this section. (c) For non-construction Federal awards, recipients must request prior approvals from Federal awarding agencies for the following program or budget-related reasons: (1) Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval). (2) Change in a key person specified in the application or the Federal award. (3) The disengagement from the project for more than three months, or a 25 percent reduction in time devoted to the project, by the approved project director or principal investigator. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
2022-002 The University of Washington did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. Assistance Listing Number and Title: Various, Research and Development Cluster ? University of Washington Federal Grantor Name: Various Federal Award/Contract Number: Various Pass-through Entity Name: Various Pass-through Award/Contract Number: Various Applicable Compliance Component: Special Tests and Provisions: Key Personnel Known Questioned Cost Amount: None Background The federal government sponsors research and development (R&D) activities under a variety of types of awards. Most commonly, these are grants, cooperative agreements, and contracts to achieve objectives agreed upon between the federal awarding agency and the non-federal entity. The types of R&D conducted under these awards vary widely. Grants for R&D are awarded to non-federal entities on the basis of applications or proposals submitted to federal agencies or pass-through entities. An award is then negotiated that will include the purpose of the project, the amount of the award and the terms and conditions. R&D awards may include staffing proposals that specify key personnel who will work on the project, as well as the extent of their planned involvement. One of these key personnel is typically a principal investigator (PI) who contributes to the scientific development or execution of a project in a substantive, measurable way. The non-federal entity is required to meet key personnel commitments specified in the award and may be required to obtain approval from the grantor for certain types of changes. The University of Washington (University) is the largest recipient of federal R&D awards in the state of Washington. The University expended funds from 2,396 separate awards for the R&D grants, with expenditures totaling approximately $1.02 billion of the almost $1.17 billion expended statewide during the audit period. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The University did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. To determine if the University complied with key personnel requirements, we reviewed the University?s internal controls over monitoring key personnel time and effort and also examined grant awards to determine if key personnel identified in the application/proposal and award were involved in the project as required. We used a statistical sampling method to randomly select and examine 59 unique budget numbers assigned to R&D programs out of a total population of 7,486. We examined these samples and found: ? Four instances where we could not determine whether the University properly monitored key personnel time and effort to ensure that they met award requirements identified in the grant application/proposal and award were involved in the project as required. ? Two instances where key personnel were not involved in the project as required. Specifically, we found: o One award for which the PI was required to spend approximately 16 percent of their time on the award, but spent less than 5 percent o One award where the PI was required to spend 2 percent of their time on the award, but only spent .67 percent We consider these internal control deficiencies to be a significant deficiency. This issue was not reported as a finding in the prior audit. Cause of Condition While we determined the University had policies and procedures to ensure that key personnel are involved in the grant projects as required, there were not policies or procedures to ensure that there was sufficient University level oversight to ensure key personnel commitments were met. Effect of Condition By not establishing adequate internal controls, the University cannot reasonably ensure it meets the key personnel requirement. Recommendation We recommend the University improve its internal controls to ensure key personnel identified in the application/proposal and award were involved in the project as required. In addition, if the University identifies key personnel commitments are not going to meet required levels, ensure that federal awarding agency approval is obtained when required. University?s Response The University has established internal controls to ensure compliance with program requirements through the effort certification and project reporting processes, and budget reconciliation requirements. However, we agree there are areas for improvement int terms of staff and PI training, and available resources to monitor contribution and documentation of committed levels of effort. The University will implement the following improvements: ? The University offers multiple training courses to research administrators and principal investigators on management of sponsored awards. We will update our training materials and provide additional training on documentation of effort for PIs and key personnel, and prior approval requirements for reductions in effort. ? Update guidance and instructions for effort certifications to ensure all devoted effort is properly accounted for during the effort certification process. ? Develop exception reports to provide additional oversight to monitor deviations from committed effort for PIs and key personnel. Auditor?s Remarks We thank the University for its cooperation and assistance throughout the audit. We will review the status of the University?s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 308, Revision of budget and program plans, states in part: (a) The approved budget for the Federal award summarizes the financial aspects of the project or program as approved during the Federal award process. It may include either the Federal and non-Federal share (see definition for Federal share in ? 200.1) or only the Federal share, depending upon Federal awarding agency requirements. The budget and program plans include considerations for performance and program evaluation purposes whenever required in accordance with the terms and conditions of the award. (b) Recipients are required to report deviations from budget or project scope or objective, and request prior approvals from Federal awarding agencies for budget and program plan revisions, in accordance with this section. (c) For non-construction Federal awards, recipients must request prior approvals from Federal awarding agencies for the following program or budget-related reasons: (1) Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval). (2) Change in a key person specified in the application or the Federal award. (3) The disengagement from the project for more than three months, or a 25 percent reduction in time devoted to the project, by the approved project director or principal investigator. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
2022-002 The University of Washington did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. Assistance Listing Number and Title: Various, Research and Development Cluster ? University of Washington Federal Grantor Name: Various Federal Award/Contract Number: Various Pass-through Entity Name: Various Pass-through Award/Contract Number: Various Applicable Compliance Component: Special Tests and Provisions: Key Personnel Known Questioned Cost Amount: None Background The federal government sponsors research and development (R&D) activities under a variety of types of awards. Most commonly, these are grants, cooperative agreements, and contracts to achieve objectives agreed upon between the federal awarding agency and the non-federal entity. The types of R&D conducted under these awards vary widely. Grants for R&D are awarded to non-federal entities on the basis of applications or proposals submitted to federal agencies or pass-through entities. An award is then negotiated that will include the purpose of the project, the amount of the award and the terms and conditions. R&D awards may include staffing proposals that specify key personnel who will work on the project, as well as the extent of their planned involvement. One of these key personnel is typically a principal investigator (PI) who contributes to the scientific development or execution of a project in a substantive, measurable way. The non-federal entity is required to meet key personnel commitments specified in the award and may be required to obtain approval from the grantor for certain types of changes. The University of Washington (University) is the largest recipient of federal R&D awards in the state of Washington. The University expended funds from 2,396 separate awards for the R&D grants, with expenditures totaling approximately $1.02 billion of the almost $1.17 billion expended statewide during the audit period. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The University did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. To determine if the University complied with key personnel requirements, we reviewed the University?s internal controls over monitoring key personnel time and effort and also examined grant awards to determine if key personnel identified in the application/proposal and award were involved in the project as required. We used a statistical sampling method to randomly select and examine 59 unique budget numbers assigned to R&D programs out of a total population of 7,486. We examined these samples and found: ? Four instances where we could not determine whether the University properly monitored key personnel time and effort to ensure that they met award requirements identified in the grant application/proposal and award were involved in the project as required. ? Two instances where key personnel were not involved in the project as required. Specifically, we found: o One award for which the PI was required to spend approximately 16 percent of their time on the award, but spent less than 5 percent o One award where the PI was required to spend 2 percent of their time on the award, but only spent .67 percent We consider these internal control deficiencies to be a significant deficiency. This issue was not reported as a finding in the prior audit. Cause of Condition While we determined the University had policies and procedures to ensure that key personnel are involved in the grant projects as required, there were not policies or procedures to ensure that there was sufficient University level oversight to ensure key personnel commitments were met. Effect of Condition By not establishing adequate internal controls, the University cannot reasonably ensure it meets the key personnel requirement. Recommendation We recommend the University improve its internal controls to ensure key personnel identified in the application/proposal and award were involved in the project as required. In addition, if the University identifies key personnel commitments are not going to meet required levels, ensure that federal awarding agency approval is obtained when required. University?s Response The University has established internal controls to ensure compliance with program requirements through the effort certification and project reporting processes, and budget reconciliation requirements. However, we agree there are areas for improvement int terms of staff and PI training, and available resources to monitor contribution and documentation of committed levels of effort. The University will implement the following improvements: ? The University offers multiple training courses to research administrators and principal investigators on management of sponsored awards. We will update our training materials and provide additional training on documentation of effort for PIs and key personnel, and prior approval requirements for reductions in effort. ? Update guidance and instructions for effort certifications to ensure all devoted effort is properly accounted for during the effort certification process. ? Develop exception reports to provide additional oversight to monitor deviations from committed effort for PIs and key personnel. Auditor?s Remarks We thank the University for its cooperation and assistance throughout the audit. We will review the status of the University?s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 308, Revision of budget and program plans, states in part: (a) The approved budget for the Federal award summarizes the financial aspects of the project or program as approved during the Federal award process. It may include either the Federal and non-Federal share (see definition for Federal share in ? 200.1) or only the Federal share, depending upon Federal awarding agency requirements. The budget and program plans include considerations for performance and program evaluation purposes whenever required in accordance with the terms and conditions of the award. (b) Recipients are required to report deviations from budget or project scope or objective, and request prior approvals from Federal awarding agencies for budget and program plan revisions, in accordance with this section. (c) For non-construction Federal awards, recipients must request prior approvals from Federal awarding agencies for the following program or budget-related reasons: (1) Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval). (2) Change in a key person specified in the application or the Federal award. (3) The disengagement from the project for more than three months, or a 25 percent reduction in time devoted to the project, by the approved project director or principal investigator. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
2022-002 The University of Washington did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. Assistance Listing Number and Title: Various, Research and Development Cluster ? University of Washington Federal Grantor Name: Various Federal Award/Contract Number: Various Pass-through Entity Name: Various Pass-through Award/Contract Number: Various Applicable Compliance Component: Special Tests and Provisions: Key Personnel Known Questioned Cost Amount: None Background The federal government sponsors research and development (R&D) activities under a variety of types of awards. Most commonly, these are grants, cooperative agreements, and contracts to achieve objectives agreed upon between the federal awarding agency and the non-federal entity. The types of R&D conducted under these awards vary widely. Grants for R&D are awarded to non-federal entities on the basis of applications or proposals submitted to federal agencies or pass-through entities. An award is then negotiated that will include the purpose of the project, the amount of the award and the terms and conditions. R&D awards may include staffing proposals that specify key personnel who will work on the project, as well as the extent of their planned involvement. One of these key personnel is typically a principal investigator (PI) who contributes to the scientific development or execution of a project in a substantive, measurable way. The non-federal entity is required to meet key personnel commitments specified in the award and may be required to obtain approval from the grantor for certain types of changes. The University of Washington (University) is the largest recipient of federal R&D awards in the state of Washington. The University expended funds from 2,396 separate awards for the R&D grants, with expenditures totaling approximately $1.02 billion of the almost $1.17 billion expended statewide during the audit period. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The University did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. To determine if the University complied with key personnel requirements, we reviewed the University?s internal controls over monitoring key personnel time and effort and also examined grant awards to determine if key personnel identified in the application/proposal and award were involved in the project as required. We used a statistical sampling method to randomly select and examine 59 unique budget numbers assigned to R&D programs out of a total population of 7,486. We examined these samples and found: ? Four instances where we could not determine whether the University properly monitored key personnel time and effort to ensure that they met award requirements identified in the grant application/proposal and award were involved in the project as required. ? Two instances where key personnel were not involved in the project as required. Specifically, we found: o One award for which the PI was required to spend approximately 16 percent of their time on the award, but spent less than 5 percent o One award where the PI was required to spend 2 percent of their time on the award, but only spent .67 percent We consider these internal control deficiencies to be a significant deficiency. This issue was not reported as a finding in the prior audit. Cause of Condition While we determined the University had policies and procedures to ensure that key personnel are involved in the grant projects as required, there were not policies or procedures to ensure that there was sufficient University level oversight to ensure key personnel commitments were met. Effect of Condition By not establishing adequate internal controls, the University cannot reasonably ensure it meets the key personnel requirement. Recommendation We recommend the University improve its internal controls to ensure key personnel identified in the application/proposal and award were involved in the project as required. In addition, if the University identifies key personnel commitments are not going to meet required levels, ensure that federal awarding agency approval is obtained when required. University?s Response The University has established internal controls to ensure compliance with program requirements through the effort certification and project reporting processes, and budget reconciliation requirements. However, we agree there are areas for improvement int terms of staff and PI training, and available resources to monitor contribution and documentation of committed levels of effort. The University will implement the following improvements: ? The University offers multiple training courses to research administrators and principal investigators on management of sponsored awards. We will update our training materials and provide additional training on documentation of effort for PIs and key personnel, and prior approval requirements for reductions in effort. ? Update guidance and instructions for effort certifications to ensure all devoted effort is properly accounted for during the effort certification process. ? Develop exception reports to provide additional oversight to monitor deviations from committed effort for PIs and key personnel. Auditor?s Remarks We thank the University for its cooperation and assistance throughout the audit. We will review the status of the University?s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 308, Revision of budget and program plans, states in part: (a) The approved budget for the Federal award summarizes the financial aspects of the project or program as approved during the Federal award process. It may include either the Federal and non-Federal share (see definition for Federal share in ? 200.1) or only the Federal share, depending upon Federal awarding agency requirements. The budget and program plans include considerations for performance and program evaluation purposes whenever required in accordance with the terms and conditions of the award. (b) Recipients are required to report deviations from budget or project scope or objective, and request prior approvals from Federal awarding agencies for budget and program plan revisions, in accordance with this section. (c) For non-construction Federal awards, recipients must request prior approvals from Federal awarding agencies for the following program or budget-related reasons: (1) Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval). (2) Change in a key person specified in the application or the Federal award. (3) The disengagement from the project for more than three months, or a 25 percent reduction in time devoted to the project, by the approved project director or principal investigator. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
2022-002 The University of Washington did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. Assistance Listing Number and Title: Various, Research and Development Cluster ? University of Washington Federal Grantor Name: Various Federal Award/Contract Number: Various Pass-through Entity Name: Various Pass-through Award/Contract Number: Various Applicable Compliance Component: Special Tests and Provisions: Key Personnel Known Questioned Cost Amount: None Background The federal government sponsors research and development (R&D) activities under a variety of types of awards. Most commonly, these are grants, cooperative agreements, and contracts to achieve objectives agreed upon between the federal awarding agency and the non-federal entity. The types of R&D conducted under these awards vary widely. Grants for R&D are awarded to non-federal entities on the basis of applications or proposals submitted to federal agencies or pass-through entities. An award is then negotiated that will include the purpose of the project, the amount of the award and the terms and conditions. R&D awards may include staffing proposals that specify key personnel who will work on the project, as well as the extent of their planned involvement. One of these key personnel is typically a principal investigator (PI) who contributes to the scientific development or execution of a project in a substantive, measurable way. The non-federal entity is required to meet key personnel commitments specified in the award and may be required to obtain approval from the grantor for certain types of changes. The University of Washington (University) is the largest recipient of federal R&D awards in the state of Washington. The University expended funds from 2,396 separate awards for the R&D grants, with expenditures totaling approximately $1.02 billion of the almost $1.17 billion expended statewide during the audit period. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The University did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. To determine if the University complied with key personnel requirements, we reviewed the University?s internal controls over monitoring key personnel time and effort and also examined grant awards to determine if key personnel identified in the application/proposal and award were involved in the project as required. We used a statistical sampling method to randomly select and examine 59 unique budget numbers assigned to R&D programs out of a total population of 7,486. We examined these samples and found: ? Four instances where we could not determine whether the University properly monitored key personnel time and effort to ensure that they met award requirements identified in the grant application/proposal and award were involved in the project as required. ? Two instances where key personnel were not involved in the project as required. Specifically, we found: o One award for which the PI was required to spend approximately 16 percent of their time on the award, but spent less than 5 percent o One award where the PI was required to spend 2 percent of their time on the award, but only spent .67 percent We consider these internal control deficiencies to be a significant deficiency. This issue was not reported as a finding in the prior audit. Cause of Condition While we determined the University had policies and procedures to ensure that key personnel are involved in the grant projects as required, there were not policies or procedures to ensure that there was sufficient University level oversight to ensure key personnel commitments were met. Effect of Condition By not establishing adequate internal controls, the University cannot reasonably ensure it meets the key personnel requirement. Recommendation We recommend the University improve its internal controls to ensure key personnel identified in the application/proposal and award were involved in the project as required. In addition, if the University identifies key personnel commitments are not going to meet required levels, ensure that federal awarding agency approval is obtained when required. University?s Response The University has established internal controls to ensure compliance with program requirements through the effort certification and project reporting processes, and budget reconciliation requirements. However, we agree there are areas for improvement int terms of staff and PI training, and available resources to monitor contribution and documentation of committed levels of effort. The University will implement the following improvements: ? The University offers multiple training courses to research administrators and principal investigators on management of sponsored awards. We will update our training materials and provide additional training on documentation of effort for PIs and key personnel, and prior approval requirements for reductions in effort. ? Update guidance and instructions for effort certifications to ensure all devoted effort is properly accounted for during the effort certification process. ? Develop exception reports to provide additional oversight to monitor deviations from committed effort for PIs and key personnel. Auditor?s Remarks We thank the University for its cooperation and assistance throughout the audit. We will review the status of the University?s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 308, Revision of budget and program plans, states in part: (a) The approved budget for the Federal award summarizes the financial aspects of the project or program as approved during the Federal award process. It may include either the Federal and non-Federal share (see definition for Federal share in ? 200.1) or only the Federal share, depending upon Federal awarding agency requirements. The budget and program plans include considerations for performance and program evaluation purposes whenever required in accordance with the terms and conditions of the award. (b) Recipients are required to report deviations from budget or project scope or objective, and request prior approvals from Federal awarding agencies for budget and program plan revisions, in accordance with this section. (c) For non-construction Federal awards, recipients must request prior approvals from Federal awarding agencies for the following program or budget-related reasons: (1) Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval). (2) Change in a key person specified in the application or the Federal award. (3) The disengagement from the project for more than three months, or a 25 percent reduction in time devoted to the project, by the approved project director or principal investigator. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
2022-002 The University of Washington did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. Assistance Listing Number and Title: Various, Research and Development Cluster ? University of Washington Federal Grantor Name: Various Federal Award/Contract Number: Various Pass-through Entity Name: Various Pass-through Award/Contract Number: Various Applicable Compliance Component: Special Tests and Provisions: Key Personnel Known Questioned Cost Amount: None Background The federal government sponsors research and development (R&D) activities under a variety of types of awards. Most commonly, these are grants, cooperative agreements, and contracts to achieve objectives agreed upon between the federal awarding agency and the non-federal entity. The types of R&D conducted under these awards vary widely. Grants for R&D are awarded to non-federal entities on the basis of applications or proposals submitted to federal agencies or pass-through entities. An award is then negotiated that will include the purpose of the project, the amount of the award and the terms and conditions. R&D awards may include staffing proposals that specify key personnel who will work on the project, as well as the extent of their planned involvement. One of these key personnel is typically a principal investigator (PI) who contributes to the scientific development or execution of a project in a substantive, measurable way. The non-federal entity is required to meet key personnel commitments specified in the award and may be required to obtain approval from the grantor for certain types of changes. The University of Washington (University) is the largest recipient of federal R&D awards in the state of Washington. The University expended funds from 2,396 separate awards for the R&D grants, with expenditures totaling approximately $1.02 billion of the almost $1.17 billion expended statewide during the audit period. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The University did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. To determine if the University complied with key personnel requirements, we reviewed the University?s internal controls over monitoring key personnel time and effort and also examined grant awards to determine if key personnel identified in the application/proposal and award were involved in the project as required. We used a statistical sampling method to randomly select and examine 59 unique budget numbers assigned to R&D programs out of a total population of 7,486. We examined these samples and found: ? Four instances where we could not determine whether the University properly monitored key personnel time and effort to ensure that they met award requirements identified in the grant application/proposal and award were involved in the project as required. ? Two instances where key personnel were not involved in the project as required. Specifically, we found: o One award for which the PI was required to spend approximately 16 percent of their time on the award, but spent less than 5 percent o One award where the PI was required to spend 2 percent of their time on the award, but only spent .67 percent We consider these internal control deficiencies to be a significant deficiency. This issue was not reported as a finding in the prior audit. Cause of Condition While we determined the University had policies and procedures to ensure that key personnel are involved in the grant projects as required, there were not policies or procedures to ensure that there was sufficient University level oversight to ensure key personnel commitments were met. Effect of Condition By not establishing adequate internal controls, the University cannot reasonably ensure it meets the key personnel requirement. Recommendation We recommend the University improve its internal controls to ensure key personnel identified in the application/proposal and award were involved in the project as required. In addition, if the University identifies key personnel commitments are not going to meet required levels, ensure that federal awarding agency approval is obtained when required. University?s Response The University has established internal controls to ensure compliance with program requirements through the effort certification and project reporting processes, and budget reconciliation requirements. However, we agree there are areas for improvement int terms of staff and PI training, and available resources to monitor contribution and documentation of committed levels of effort. The University will implement the following improvements: ? The University offers multiple training courses to research administrators and principal investigators on management of sponsored awards. We will update our training materials and provide additional training on documentation of effort for PIs and key personnel, and prior approval requirements for reductions in effort. ? Update guidance and instructions for effort certifications to ensure all devoted effort is properly accounted for during the effort certification process. ? Develop exception reports to provide additional oversight to monitor deviations from committed effort for PIs and key personnel. Auditor?s Remarks We thank the University for its cooperation and assistance throughout the audit. We will review the status of the University?s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 308, Revision of budget and program plans, states in part: (a) The approved budget for the Federal award summarizes the financial aspects of the project or program as approved during the Federal award process. It may include either the Federal and non-Federal share (see definition for Federal share in ? 200.1) or only the Federal share, depending upon Federal awarding agency requirements. The budget and program plans include considerations for performance and program evaluation purposes whenever required in accordance with the terms and conditions of the award. (b) Recipients are required to report deviations from budget or project scope or objective, and request prior approvals from Federal awarding agencies for budget and program plan revisions, in accordance with this section. (c) For non-construction Federal awards, recipients must request prior approvals from Federal awarding agencies for the following program or budget-related reasons: (1) Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval). (2) Change in a key person specified in the application or the Federal award. (3) The disengagement from the project for more than three months, or a 25 percent reduction in time devoted to the project, by the approved project director or principal investigator. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
2022-002 The University of Washington did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. Assistance Listing Number and Title: Various, Research and Development Cluster ? University of Washington Federal Grantor Name: Various Federal Award/Contract Number: Various Pass-through Entity Name: Various Pass-through Award/Contract Number: Various Applicable Compliance Component: Special Tests and Provisions: Key Personnel Known Questioned Cost Amount: None Background The federal government sponsors research and development (R&D) activities under a variety of types of awards. Most commonly, these are grants, cooperative agreements, and contracts to achieve objectives agreed upon between the federal awarding agency and the non-federal entity. The types of R&D conducted under these awards vary widely. Grants for R&D are awarded to non-federal entities on the basis of applications or proposals submitted to federal agencies or pass-through entities. An award is then negotiated that will include the purpose of the project, the amount of the award and the terms and conditions. R&D awards may include staffing proposals that specify key personnel who will work on the project, as well as the extent of their planned involvement. One of these key personnel is typically a principal investigator (PI) who contributes to the scientific development or execution of a project in a substantive, measurable way. The non-federal entity is required to meet key personnel commitments specified in the award and may be required to obtain approval from the grantor for certain types of changes. The University of Washington (University) is the largest recipient of federal R&D awards in the state of Washington. The University expended funds from 2,396 separate awards for the R&D grants, with expenditures totaling approximately $1.02 billion of the almost $1.17 billion expended statewide during the audit period. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The University did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. To determine if the University complied with key personnel requirements, we reviewed the University?s internal controls over monitoring key personnel time and effort and also examined grant awards to determine if key personnel identified in the application/proposal and award were involved in the project as required. We used a statistical sampling method to randomly select and examine 59 unique budget numbers assigned to R&D programs out of a total population of 7,486. We examined these samples and found: ? Four instances where we could not determine whether the University properly monitored key personnel time and effort to ensure that they met award requirements identified in the grant application/proposal and award were involved in the project as required. ? Two instances where key personnel were not involved in the project as required. Specifically, we found: o One award for which the PI was required to spend approximately 16 percent of their time on the award, but spent less than 5 percent o One award where the PI was required to spend 2 percent of their time on the award, but only spent .67 percent We consider these internal control deficiencies to be a significant deficiency. This issue was not reported as a finding in the prior audit. Cause of Condition While we determined the University had policies and procedures to ensure that key personnel are involved in the grant projects as required, there were not policies or procedures to ensure that there was sufficient University level oversight to ensure key personnel commitments were met. Effect of Condition By not establishing adequate internal controls, the University cannot reasonably ensure it meets the key personnel requirement. Recommendation We recommend the University improve its internal controls to ensure key personnel identified in the application/proposal and award were involved in the project as required. In addition, if the University identifies key personnel commitments are not going to meet required levels, ensure that federal awarding agency approval is obtained when required. University?s Response The University has established internal controls to ensure compliance with program requirements through the effort certification and project reporting processes, and budget reconciliation requirements. However, we agree there are areas for improvement int terms of staff and PI training, and available resources to monitor contribution and documentation of committed levels of effort. The University will implement the following improvements: ? The University offers multiple training courses to research administrators and principal investigators on management of sponsored awards. We will update our training materials and provide additional training on documentation of effort for PIs and key personnel, and prior approval requirements for reductions in effort. ? Update guidance and instructions for effort certifications to ensure all devoted effort is properly accounted for during the effort certification process. ? Develop exception reports to provide additional oversight to monitor deviations from committed effort for PIs and key personnel. Auditor?s Remarks We thank the University for its cooperation and assistance throughout the audit. We will review the status of the University?s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 308, Revision of budget and program plans, states in part: (a) The approved budget for the Federal award summarizes the financial aspects of the project or program as approved during the Federal award process. It may include either the Federal and non-Federal share (see definition for Federal share in ? 200.1) or only the Federal share, depending upon Federal awarding agency requirements. The budget and program plans include considerations for performance and program evaluation purposes whenever required in accordance with the terms and conditions of the award. (b) Recipients are required to report deviations from budget or project scope or objective, and request prior approvals from Federal awarding agencies for budget and program plan revisions, in accordance with this section. (c) For non-construction Federal awards, recipients must request prior approvals from Federal awarding agencies for the following program or budget-related reasons: (1) Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval). (2) Change in a key person specified in the application or the Federal award. (3) The disengagement from the project for more than three months, or a 25 percent reduction in time devoted to the project, by the approved project director or principal investigator. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
2022-002 The University of Washington did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. Assistance Listing Number and Title: Various, Research and Development Cluster ? University of Washington Federal Grantor Name: Various Federal Award/Contract Number: Various Pass-through Entity Name: Various Pass-through Award/Contract Number: Various Applicable Compliance Component: Special Tests and Provisions: Key Personnel Known Questioned Cost Amount: None Background The federal government sponsors research and development (R&D) activities under a variety of types of awards. Most commonly, these are grants, cooperative agreements, and contracts to achieve objectives agreed upon between the federal awarding agency and the non-federal entity. The types of R&D conducted under these awards vary widely. Grants for R&D are awarded to non-federal entities on the basis of applications or proposals submitted to federal agencies or pass-through entities. An award is then negotiated that will include the purpose of the project, the amount of the award and the terms and conditions. R&D awards may include staffing proposals that specify key personnel who will work on the project, as well as the extent of their planned involvement. One of these key personnel is typically a principal investigator (PI) who contributes to the scientific development or execution of a project in a substantive, measurable way. The non-federal entity is required to meet key personnel commitments specified in the award and may be required to obtain approval from the grantor for certain types of changes. The University of Washington (University) is the largest recipient of federal R&D awards in the state of Washington. The University expended funds from 2,396 separate awards for the R&D grants, with expenditures totaling approximately $1.02 billion of the almost $1.17 billion expended statewide during the audit period. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The University did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. To determine if the University complied with key personnel requirements, we reviewed the University?s internal controls over monitoring key personnel time and effort and also examined grant awards to determine if key personnel identified in the application/proposal and award were involved in the project as required. We used a statistical sampling method to randomly select and examine 59 unique budget numbers assigned to R&D programs out of a total population of 7,486. We examined these samples and found: ? Four instances where we could not determine whether the University properly monitored key personnel time and effort to ensure that they met award requirements identified in the grant application/proposal and award were involved in the project as required. ? Two instances where key personnel were not involved in the project as required. Specifically, we found: o One award for which the PI was required to spend approximately 16 percent of their time on the award, but spent less than 5 percent o One award where the PI was required to spend 2 percent of their time on the award, but only spent .67 percent We consider these internal control deficiencies to be a significant deficiency. This issue was not reported as a finding in the prior audit. Cause of Condition While we determined the University had policies and procedures to ensure that key personnel are involved in the grant projects as required, there were not policies or procedures to ensure that there was sufficient University level oversight to ensure key personnel commitments were met. Effect of Condition By not establishing adequate internal controls, the University cannot reasonably ensure it meets the key personnel requirement. Recommendation We recommend the University improve its internal controls to ensure key personnel identified in the application/proposal and award were involved in the project as required. In addition, if the University identifies key personnel commitments are not going to meet required levels, ensure that federal awarding agency approval is obtained when required. University?s Response The University has established internal controls to ensure compliance with program requirements through the effort certification and project reporting processes, and budget reconciliation requirements. However, we agree there are areas for improvement int terms of staff and PI training, and available resources to monitor contribution and documentation of committed levels of effort. The University will implement the following improvements: ? The University offers multiple training courses to research administrators and principal investigators on management of sponsored awards. We will update our training materials and provide additional training on documentation of effort for PIs and key personnel, and prior approval requirements for reductions in effort. ? Update guidance and instructions for effort certifications to ensure all devoted effort is properly accounted for during the effort certification process. ? Develop exception reports to provide additional oversight to monitor deviations from committed effort for PIs and key personnel. Auditor?s Remarks We thank the University for its cooperation and assistance throughout the audit. We will review the status of the University?s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 308, Revision of budget and program plans, states in part: (a) The approved budget for the Federal award summarizes the financial aspects of the project or program as approved during the Federal award process. It may include either the Federal and non-Federal share (see definition for Federal share in ? 200.1) or only the Federal share, depending upon Federal awarding agency requirements. The budget and program plans include considerations for performance and program evaluation purposes whenever required in accordance with the terms and conditions of the award. (b) Recipients are required to report deviations from budget or project scope or objective, and request prior approvals from Federal awarding agencies for budget and program plan revisions, in accordance with this section. (c) For non-construction Federal awards, recipients must request prior approvals from Federal awarding agencies for the following program or budget-related reasons: (1) Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval). (2) Change in a key person specified in the application or the Federal award. (3) The disengagement from the project for more than three months, or a 25 percent reduction in time devoted to the project, by the approved project director or principal investigator. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
2022-002 The University of Washington did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. Assistance Listing Number and Title: Various, Research and Development Cluster ? University of Washington Federal Grantor Name: Various Federal Award/Contract Number: Various Pass-through Entity Name: Various Pass-through Award/Contract Number: Various Applicable Compliance Component: Special Tests and Provisions: Key Personnel Known Questioned Cost Amount: None Background The federal government sponsors research and development (R&D) activities under a variety of types of awards. Most commonly, these are grants, cooperative agreements, and contracts to achieve objectives agreed upon between the federal awarding agency and the non-federal entity. The types of R&D conducted under these awards vary widely. Grants for R&D are awarded to non-federal entities on the basis of applications or proposals submitted to federal agencies or pass-through entities. An award is then negotiated that will include the purpose of the project, the amount of the award and the terms and conditions. R&D awards may include staffing proposals that specify key personnel who will work on the project, as well as the extent of their planned involvement. One of these key personnel is typically a principal investigator (PI) who contributes to the scientific development or execution of a project in a substantive, measurable way. The non-federal entity is required to meet key personnel commitments specified in the award and may be required to obtain approval from the grantor for certain types of changes. The University of Washington (University) is the largest recipient of federal R&D awards in the state of Washington. The University expended funds from 2,396 separate awards for the R&D grants, with expenditures totaling approximately $1.02 billion of the almost $1.17 billion expended statewide during the audit period. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The University did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. To determine if the University complied with key personnel requirements, we reviewed the University?s internal controls over monitoring key personnel time and effort and also examined grant awards to determine if key personnel identified in the application/proposal and award were involved in the project as required. We used a statistical sampling method to randomly select and examine 59 unique budget numbers assigned to R&D programs out of a total population of 7,486. We examined these samples and found: ? Four instances where we could not determine whether the University properly monitored key personnel time and effort to ensure that they met award requirements identified in the grant application/proposal and award were involved in the project as required. ? Two instances where key personnel were not involved in the project as required. Specifically, we found: o One award for which the PI was required to spend approximately 16 percent of their time on the award, but spent less than 5 percent o One award where the PI was required to spend 2 percent of their time on the award, but only spent .67 percent We consider these internal control deficiencies to be a significant deficiency. This issue was not reported as a finding in the prior audit. Cause of Condition While we determined the University had policies and procedures to ensure that key personnel are involved in the grant projects as required, there were not policies or procedures to ensure that there was sufficient University level oversight to ensure key personnel commitments were met. Effect of Condition By not establishing adequate internal controls, the University cannot reasonably ensure it meets the key personnel requirement. Recommendation We recommend the University improve its internal controls to ensure key personnel identified in the application/proposal and award were involved in the project as required. In addition, if the University identifies key personnel commitments are not going to meet required levels, ensure that federal awarding agency approval is obtained when required. University?s Response The University has established internal controls to ensure compliance with program requirements through the effort certification and project reporting processes, and budget reconciliation requirements. However, we agree there are areas for improvement int terms of staff and PI training, and available resources to monitor contribution and documentation of committed levels of effort. The University will implement the following improvements: ? The University offers multiple training courses to research administrators and principal investigators on management of sponsored awards. We will update our training materials and provide additional training on documentation of effort for PIs and key personnel, and prior approval requirements for reductions in effort. ? Update guidance and instructions for effort certifications to ensure all devoted effort is properly accounted for during the effort certification process. ? Develop exception reports to provide additional oversight to monitor deviations from committed effort for PIs and key personnel. Auditor?s Remarks We thank the University for its cooperation and assistance throughout the audit. We will review the status of the University?s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 308, Revision of budget and program plans, states in part: (a) The approved budget for the Federal award summarizes the financial aspects of the project or program as approved during the Federal award process. It may include either the Federal and non-Federal share (see definition for Federal share in ? 200.1) or only the Federal share, depending upon Federal awarding agency requirements. The budget and program plans include considerations for performance and program evaluation purposes whenever required in accordance with the terms and conditions of the award. (b) Recipients are required to report deviations from budget or project scope or objective, and request prior approvals from Federal awarding agencies for budget and program plan revisions, in accordance with this section. (c) For non-construction Federal awards, recipients must request prior approvals from Federal awarding agencies for the following program or budget-related reasons: (1) Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval). (2) Change in a key person specified in the application or the Federal award. (3) The disengagement from the project for more than three months, or a 25 percent reduction in time devoted to the project, by the approved project director or principal investigator. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
2022-002 The University of Washington did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. Assistance Listing Number and Title: Various, Research and Development Cluster ? University of Washington Federal Grantor Name: Various Federal Award/Contract Number: Various Pass-through Entity Name: Various Pass-through Award/Contract Number: Various Applicable Compliance Component: Special Tests and Provisions: Key Personnel Known Questioned Cost Amount: None Background The federal government sponsors research and development (R&D) activities under a variety of types of awards. Most commonly, these are grants, cooperative agreements, and contracts to achieve objectives agreed upon between the federal awarding agency and the non-federal entity. The types of R&D conducted under these awards vary widely. Grants for R&D are awarded to non-federal entities on the basis of applications or proposals submitted to federal agencies or pass-through entities. An award is then negotiated that will include the purpose of the project, the amount of the award and the terms and conditions. R&D awards may include staffing proposals that specify key personnel who will work on the project, as well as the extent of their planned involvement. One of these key personnel is typically a principal investigator (PI) who contributes to the scientific development or execution of a project in a substantive, measurable way. The non-federal entity is required to meet key personnel commitments specified in the award and may be required to obtain approval from the grantor for certain types of changes. The University of Washington (University) is the largest recipient of federal R&D awards in the state of Washington. The University expended funds from 2,396 separate awards for the R&D grants, with expenditures totaling approximately $1.02 billion of the almost $1.17 billion expended statewide during the audit period. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The University did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. To determine if the University complied with key personnel requirements, we reviewed the University?s internal controls over monitoring key personnel time and effort and also examined grant awards to determine if key personnel identified in the application/proposal and award were involved in the project as required. We used a statistical sampling method to randomly select and examine 59 unique budget numbers assigned to R&D programs out of a total population of 7,486. We examined these samples and found: ? Four instances where we could not determine whether the University properly monitored key personnel time and effort to ensure that they met award requirements identified in the grant application/proposal and award were involved in the project as required. ? Two instances where key personnel were not involved in the project as required. Specifically, we found: o One award for which the PI was required to spend approximately 16 percent of their time on the award, but spent less than 5 percent o One award where the PI was required to spend 2 percent of their time on the award, but only spent .67 percent We consider these internal control deficiencies to be a significant deficiency. This issue was not reported as a finding in the prior audit. Cause of Condition While we determined the University had policies and procedures to ensure that key personnel are involved in the grant projects as required, there were not policies or procedures to ensure that there was sufficient University level oversight to ensure key personnel commitments were met. Effect of Condition By not establishing adequate internal controls, the University cannot reasonably ensure it meets the key personnel requirement. Recommendation We recommend the University improve its internal controls to ensure key personnel identified in the application/proposal and award were involved in the project as required. In addition, if the University identifies key personnel commitments are not going to meet required levels, ensure that federal awarding agency approval is obtained when required. University?s Response The University has established internal controls to ensure compliance with program requirements through the effort certification and project reporting processes, and budget reconciliation requirements. However, we agree there are areas for improvement int terms of staff and PI training, and available resources to monitor contribution and documentation of committed levels of effort. The University will implement the following improvements: ? The University offers multiple training courses to research administrators and principal investigators on management of sponsored awards. We will update our training materials and provide additional training on documentation of effort for PIs and key personnel, and prior approval requirements for reductions in effort. ? Update guidance and instructions for effort certifications to ensure all devoted effort is properly accounted for during the effort certification process. ? Develop exception reports to provide additional oversight to monitor deviations from committed effort for PIs and key personnel. Auditor?s Remarks We thank the University for its cooperation and assistance throughout the audit. We will review the status of the University?s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 308, Revision of budget and program plans, states in part: (a) The approved budget for the Federal award summarizes the financial aspects of the project or program as approved during the Federal award process. It may include either the Federal and non-Federal share (see definition for Federal share in ? 200.1) or only the Federal share, depending upon Federal awarding agency requirements. The budget and program plans include considerations for performance and program evaluation purposes whenever required in accordance with the terms and conditions of the award. (b) Recipients are required to report deviations from budget or project scope or objective, and request prior approvals from Federal awarding agencies for budget and program plan revisions, in accordance with this section. (c) For non-construction Federal awards, recipients must request prior approvals from Federal awarding agencies for the following program or budget-related reasons: (1) Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval). (2) Change in a key person specified in the application or the Federal award. (3) The disengagement from the project for more than three months, or a 25 percent reduction in time devoted to the project, by the approved project director or principal investigator. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
2022-002 The University of Washington did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. Assistance Listing Number and Title: Various, Research and Development Cluster ? University of Washington Federal Grantor Name: Various Federal Award/Contract Number: Various Pass-through Entity Name: Various Pass-through Award/Contract Number: Various Applicable Compliance Component: Special Tests and Provisions: Key Personnel Known Questioned Cost Amount: None Background The federal government sponsors research and development (R&D) activities under a variety of types of awards. Most commonly, these are grants, cooperative agreements, and contracts to achieve objectives agreed upon between the federal awarding agency and the non-federal entity. The types of R&D conducted under these awards vary widely. Grants for R&D are awarded to non-federal entities on the basis of applications or proposals submitted to federal agencies or pass-through entities. An award is then negotiated that will include the purpose of the project, the amount of the award and the terms and conditions. R&D awards may include staffing proposals that specify key personnel who will work on the project, as well as the extent of their planned involvement. One of these key personnel is typically a principal investigator (PI) who contributes to the scientific development or execution of a project in a substantive, measurable way. The non-federal entity is required to meet key personnel commitments specified in the award and may be required to obtain approval from the grantor for certain types of changes. The University of Washington (University) is the largest recipient of federal R&D awards in the state of Washington. The University expended funds from 2,396 separate awards for the R&D grants, with expenditures totaling approximately $1.02 billion of the almost $1.17 billion expended statewide during the audit period. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The University did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. To determine if the University complied with key personnel requirements, we reviewed the University?s internal controls over monitoring key personnel time and effort and also examined grant awards to determine if key personnel identified in the application/proposal and award were involved in the project as required. We used a statistical sampling method to randomly select and examine 59 unique budget numbers assigned to R&D programs out of a total population of 7,486. We examined these samples and found: ? Four instances where we could not determine whether the University properly monitored key personnel time and effort to ensure that they met award requirements identified in the grant application/proposal and award were involved in the project as required. ? Two instances where key personnel were not involved in the project as required. Specifically, we found: o One award for which the PI was required to spend approximately 16 percent of their time on the award, but spent less than 5 percent o One award where the PI was required to spend 2 percent of their time on the award, but only spent .67 percent We consider these internal control deficiencies to be a significant deficiency. This issue was not reported as a finding in the prior audit. Cause of Condition While we determined the University had policies and procedures to ensure that key personnel are involved in the grant projects as required, there were not policies or procedures to ensure that there was sufficient University level oversight to ensure key personnel commitments were met. Effect of Condition By not establishing adequate internal controls, the University cannot reasonably ensure it meets the key personnel requirement. Recommendation We recommend the University improve its internal controls to ensure key personnel identified in the application/proposal and award were involved in the project as required. In addition, if the University identifies key personnel commitments are not going to meet required levels, ensure that federal awarding agency approval is obtained when required. University?s Response The University has established internal controls to ensure compliance with program requirements through the effort certification and project reporting processes, and budget reconciliation requirements. However, we agree there are areas for improvement int terms of staff and PI training, and available resources to monitor contribution and documentation of committed levels of effort. The University will implement the following improvements: ? The University offers multiple training courses to research administrators and principal investigators on management of sponsored awards. We will update our training materials and provide additional training on documentation of effort for PIs and key personnel, and prior approval requirements for reductions in effort. ? Update guidance and instructions for effort certifications to ensure all devoted effort is properly accounted for during the effort certification process. ? Develop exception reports to provide additional oversight to monitor deviations from committed effort for PIs and key personnel. Auditor?s Remarks We thank the University for its cooperation and assistance throughout the audit. We will review the status of the University?s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 308, Revision of budget and program plans, states in part: (a) The approved budget for the Federal award summarizes the financial aspects of the project or program as approved during the Federal award process. It may include either the Federal and non-Federal share (see definition for Federal share in ? 200.1) or only the Federal share, depending upon Federal awarding agency requirements. The budget and program plans include considerations for performance and program evaluation purposes whenever required in accordance with the terms and conditions of the award. (b) Recipients are required to report deviations from budget or project scope or objective, and request prior approvals from Federal awarding agencies for budget and program plan revisions, in accordance with this section. (c) For non-construction Federal awards, recipients must request prior approvals from Federal awarding agencies for the following program or budget-related reasons: (1) Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval). (2) Change in a key person specified in the application or the Federal award. (3) The disengagement from the project for more than three months, or a 25 percent reduction in time devoted to the project, by the approved project director or principal investigator. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
2022-002 The University of Washington did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. Assistance Listing Number and Title: Various, Research and Development Cluster ? University of Washington Federal Grantor Name: Various Federal Award/Contract Number: Various Pass-through Entity Name: Various Pass-through Award/Contract Number: Various Applicable Compliance Component: Special Tests and Provisions: Key Personnel Known Questioned Cost Amount: None Background The federal government sponsors research and development (R&D) activities under a variety of types of awards. Most commonly, these are grants, cooperative agreements, and contracts to achieve objectives agreed upon between the federal awarding agency and the non-federal entity. The types of R&D conducted under these awards vary widely. Grants for R&D are awarded to non-federal entities on the basis of applications or proposals submitted to federal agencies or pass-through entities. An award is then negotiated that will include the purpose of the project, the amount of the award and the terms and conditions. R&D awards may include staffing proposals that specify key personnel who will work on the project, as well as the extent of their planned involvement. One of these key personnel is typically a principal investigator (PI) who contributes to the scientific development or execution of a project in a substantive, measurable way. The non-federal entity is required to meet key personnel commitments specified in the award and may be required to obtain approval from the grantor for certain types of changes. The University of Washington (University) is the largest recipient of federal R&D awards in the state of Washington. The University expended funds from 2,396 separate awards for the R&D grants, with expenditures totaling approximately $1.02 billion of the almost $1.17 billion expended statewide during the audit period. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The University did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. To determine if the University complied with key personnel requirements, we reviewed the University?s internal controls over monitoring key personnel time and effort and also examined grant awards to determine if key personnel identified in the application/proposal and award were involved in the project as required. We used a statistical sampling method to randomly select and examine 59 unique budget numbers assigned to R&D programs out of a total population of 7,486. We examined these samples and found: ? Four instances where we could not determine whether the University properly monitored key personnel time and effort to ensure that they met award requirements identified in the grant application/proposal and award were involved in the project as required. ? Two instances where key personnel were not involved in the project as required. Specifically, we found: o One award for which the PI was required to spend approximately 16 percent of their time on the award, but spent less than 5 percent o One award where the PI was required to spend 2 percent of their time on the award, but only spent .67 percent We consider these internal control deficiencies to be a significant deficiency. This issue was not reported as a finding in the prior audit. Cause of Condition While we determined the University had policies and procedures to ensure that key personnel are involved in the grant projects as required, there were not policies or procedures to ensure that there was sufficient University level oversight to ensure key personnel commitments were met. Effect of Condition By not establishing adequate internal controls, the University cannot reasonably ensure it meets the key personnel requirement. Recommendation We recommend the University improve its internal controls to ensure key personnel identified in the application/proposal and award were involved in the project as required. In addition, if the University identifies key personnel commitments are not going to meet required levels, ensure that federal awarding agency approval is obtained when required. University?s Response The University has established internal controls to ensure compliance with program requirements through the effort certification and project reporting processes, and budget reconciliation requirements. However, we agree there are areas for improvement int terms of staff and PI training, and available resources to monitor contribution and documentation of committed levels of effort. The University will implement the following improvements: ? The University offers multiple training courses to research administrators and principal investigators on management of sponsored awards. We will update our training materials and provide additional training on documentation of effort for PIs and key personnel, and prior approval requirements for reductions in effort. ? Update guidance and instructions for effort certifications to ensure all devoted effort is properly accounted for during the effort certification process. ? Develop exception reports to provide additional oversight to monitor deviations from committed effort for PIs and key personnel. Auditor?s Remarks We thank the University for its cooperation and assistance throughout the audit. We will review the status of the University?s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 308, Revision of budget and program plans, states in part: (a) The approved budget for the Federal award summarizes the financial aspects of the project or program as approved during the Federal award process. It may include either the Federal and non-Federal share (see definition for Federal share in ? 200.1) or only the Federal share, depending upon Federal awarding agency requirements. The budget and program plans include considerations for performance and program evaluation purposes whenever required in accordance with the terms and conditions of the award. (b) Recipients are required to report deviations from budget or project scope or objective, and request prior approvals from Federal awarding agencies for budget and program plan revisions, in accordance with this section. (c) For non-construction Federal awards, recipients must request prior approvals from Federal awarding agencies for the following program or budget-related reasons: (1) Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval). (2) Change in a key person specified in the application or the Federal award. (3) The disengagement from the project for more than three months, or a 25 percent reduction in time devoted to the project, by the approved project director or principal investigator. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
2022-002 The University of Washington did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. Assistance Listing Number and Title: Various, Research and Development Cluster ? University of Washington Federal Grantor Name: Various Federal Award/Contract Number: Various Pass-through Entity Name: Various Pass-through Award/Contract Number: Various Applicable Compliance Component: Special Tests and Provisions: Key Personnel Known Questioned Cost Amount: None Background The federal government sponsors research and development (R&D) activities under a variety of types of awards. Most commonly, these are grants, cooperative agreements, and contracts to achieve objectives agreed upon between the federal awarding agency and the non-federal entity. The types of R&D conducted under these awards vary widely. Grants for R&D are awarded to non-federal entities on the basis of applications or proposals submitted to federal agencies or pass-through entities. An award is then negotiated that will include the purpose of the project, the amount of the award and the terms and conditions. R&D awards may include staffing proposals that specify key personnel who will work on the project, as well as the extent of their planned involvement. One of these key personnel is typically a principal investigator (PI) who contributes to the scientific development or execution of a project in a substantive, measurable way. The non-federal entity is required to meet key personnel commitments specified in the award and may be required to obtain approval from the grantor for certain types of changes. The University of Washington (University) is the largest recipient of federal R&D awards in the state of Washington. The University expended funds from 2,396 separate awards for the R&D grants, with expenditures totaling approximately $1.02 billion of the almost $1.17 billion expended statewide during the audit period. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The University did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. To determine if the University complied with key personnel requirements, we reviewed the University?s internal controls over monitoring key personnel time and effort and also examined grant awards to determine if key personnel identified in the application/proposal and award were involved in the project as required. We used a statistical sampling method to randomly select and examine 59 unique budget numbers assigned to R&D programs out of a total population of 7,486. We examined these samples and found: ? Four instances where we could not determine whether the University properly monitored key personnel time and effort to ensure that they met award requirements identified in the grant application/proposal and award were involved in the project as required. ? Two instances where key personnel were not involved in the project as required. Specifically, we found: o One award for which the PI was required to spend approximately 16 percent of their time on the award, but spent less than 5 percent o One award where the PI was required to spend 2 percent of their time on the award, but only spent .67 percent We consider these internal control deficiencies to be a significant deficiency. This issue was not reported as a finding in the prior audit. Cause of Condition While we determined the University had policies and procedures to ensure that key personnel are involved in the grant projects as required, there were not policies or procedures to ensure that there was sufficient University level oversight to ensure key personnel commitments were met. Effect of Condition By not establishing adequate internal controls, the University cannot reasonably ensure it meets the key personnel requirement. Recommendation We recommend the University improve its internal controls to ensure key personnel identified in the application/proposal and award were involved in the project as required. In addition, if the University identifies key personnel commitments are not going to meet required levels, ensure that federal awarding agency approval is obtained when required. University?s Response The University has established internal controls to ensure compliance with program requirements through the effort certification and project reporting processes, and budget reconciliation requirements. However, we agree there are areas for improvement int terms of staff and PI training, and available resources to monitor contribution and documentation of committed levels of effort. The University will implement the following improvements: ? The University offers multiple training courses to research administrators and principal investigators on management of sponsored awards. We will update our training materials and provide additional training on documentation of effort for PIs and key personnel, and prior approval requirements for reductions in effort. ? Update guidance and instructions for effort certifications to ensure all devoted effort is properly accounted for during the effort certification process. ? Develop exception reports to provide additional oversight to monitor deviations from committed effort for PIs and key personnel. Auditor?s Remarks We thank the University for its cooperation and assistance throughout the audit. We will review the status of the University?s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 308, Revision of budget and program plans, states in part: (a) The approved budget for the Federal award summarizes the financial aspects of the project or program as approved during the Federal award process. It may include either the Federal and non-Federal share (see definition for Federal share in ? 200.1) or only the Federal share, depending upon Federal awarding agency requirements. The budget and program plans include considerations for performance and program evaluation purposes whenever required in accordance with the terms and conditions of the award. (b) Recipients are required to report deviations from budget or project scope or objective, and request prior approvals from Federal awarding agencies for budget and program plan revisions, in accordance with this section. (c) For non-construction Federal awards, recipients must request prior approvals from Federal awarding agencies for the following program or budget-related reasons: (1) Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval). (2) Change in a key person specified in the application or the Federal award. (3) The disengagement from the project for more than three months, or a 25 percent reduction in time devoted to the project, by the approved project director or principal investigator. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
2022-002 The University of Washington did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. Assistance Listing Number and Title: Various, Research and Development Cluster ? University of Washington Federal Grantor Name: Various Federal Award/Contract Number: Various Pass-through Entity Name: Various Pass-through Award/Contract Number: Various Applicable Compliance Component: Special Tests and Provisions: Key Personnel Known Questioned Cost Amount: None Background The federal government sponsors research and development (R&D) activities under a variety of types of awards. Most commonly, these are grants, cooperative agreements, and contracts to achieve objectives agreed upon between the federal awarding agency and the non-federal entity. The types of R&D conducted under these awards vary widely. Grants for R&D are awarded to non-federal entities on the basis of applications or proposals submitted to federal agencies or pass-through entities. An award is then negotiated that will include the purpose of the project, the amount of the award and the terms and conditions. R&D awards may include staffing proposals that specify key personnel who will work on the project, as well as the extent of their planned involvement. One of these key personnel is typically a principal investigator (PI) who contributes to the scientific development or execution of a project in a substantive, measurable way. The non-federal entity is required to meet key personnel commitments specified in the award and may be required to obtain approval from the grantor for certain types of changes. The University of Washington (University) is the largest recipient of federal R&D awards in the state of Washington. The University expended funds from 2,396 separate awards for the R&D grants, with expenditures totaling approximately $1.02 billion of the almost $1.17 billion expended statewide during the audit period. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The University did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. To determine if the University complied with key personnel requirements, we reviewed the University?s internal controls over monitoring key personnel time and effort and also examined grant awards to determine if key personnel identified in the application/proposal and award were involved in the project as required. We used a statistical sampling method to randomly select and examine 59 unique budget numbers assigned to R&D programs out of a total population of 7,486. We examined these samples and found: ? Four instances where we could not determine whether the University properly monitored key personnel time and effort to ensure that they met award requirements identified in the grant application/proposal and award were involved in the project as required. ? Two instances where key personnel were not involved in the project as required. Specifically, we found: o One award for which the PI was required to spend approximately 16 percent of their time on the award, but spent less than 5 percent o One award where the PI was required to spend 2 percent of their time on the award, but only spent .67 percent We consider these internal control deficiencies to be a significant deficiency. This issue was not reported as a finding in the prior audit. Cause of Condition While we determined the University had policies and procedures to ensure that key personnel are involved in the grant projects as required, there were not policies or procedures to ensure that there was sufficient University level oversight to ensure key personnel commitments were met. Effect of Condition By not establishing adequate internal controls, the University cannot reasonably ensure it meets the key personnel requirement. Recommendation We recommend the University improve its internal controls to ensure key personnel identified in the application/proposal and award were involved in the project as required. In addition, if the University identifies key personnel commitments are not going to meet required levels, ensure that federal awarding agency approval is obtained when required. University?s Response The University has established internal controls to ensure compliance with program requirements through the effort certification and project reporting processes, and budget reconciliation requirements. However, we agree there are areas for improvement int terms of staff and PI training, and available resources to monitor contribution and documentation of committed levels of effort. The University will implement the following improvements: ? The University offers multiple training courses to research administrators and principal investigators on management of sponsored awards. We will update our training materials and provide additional training on documentation of effort for PIs and key personnel, and prior approval requirements for reductions in effort. ? Update guidance and instructions for effort certifications to ensure all devoted effort is properly accounted for during the effort certification process. ? Develop exception reports to provide additional oversight to monitor deviations from committed effort for PIs and key personnel. Auditor?s Remarks We thank the University for its cooperation and assistance throughout the audit. We will review the status of the University?s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 308, Revision of budget and program plans, states in part: (a) The approved budget for the Federal award summarizes the financial aspects of the project or program as approved during the Federal award process. It may include either the Federal and non-Federal share (see definition for Federal share in ? 200.1) or only the Federal share, depending upon Federal awarding agency requirements. The budget and program plans include considerations for performance and program evaluation purposes whenever required in accordance with the terms and conditions of the award. (b) Recipients are required to report deviations from budget or project scope or objective, and request prior approvals from Federal awarding agencies for budget and program plan revisions, in accordance with this section. (c) For non-construction Federal awards, recipients must request prior approvals from Federal awarding agencies for the following program or budget-related reasons: (1) Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval). (2) Change in a key person specified in the application or the Federal award. (3) The disengagement from the project for more than three months, or a 25 percent reduction in time devoted to the project, by the approved project director or principal investigator. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
2022-002 The University of Washington did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. Assistance Listing Number and Title: Various, Research and Development Cluster ? University of Washington Federal Grantor Name: Various Federal Award/Contract Number: Various Pass-through Entity Name: Various Pass-through Award/Contract Number: Various Applicable Compliance Component: Special Tests and Provisions: Key Personnel Known Questioned Cost Amount: None Background The federal government sponsors research and development (R&D) activities under a variety of types of awards. Most commonly, these are grants, cooperative agreements, and contracts to achieve objectives agreed upon between the federal awarding agency and the non-federal entity. The types of R&D conducted under these awards vary widely. Grants for R&D are awarded to non-federal entities on the basis of applications or proposals submitted to federal agencies or pass-through entities. An award is then negotiated that will include the purpose of the project, the amount of the award and the terms and conditions. R&D awards may include staffing proposals that specify key personnel who will work on the project, as well as the extent of their planned involvement. One of these key personnel is typically a principal investigator (PI) who contributes to the scientific development or execution of a project in a substantive, measurable way. The non-federal entity is required to meet key personnel commitments specified in the award and may be required to obtain approval from the grantor for certain types of changes. The University of Washington (University) is the largest recipient of federal R&D awards in the state of Washington. The University expended funds from 2,396 separate awards for the R&D grants, with expenditures totaling approximately $1.02 billion of the almost $1.17 billion expended statewide during the audit period. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The University did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. To determine if the University complied with key personnel requirements, we reviewed the University?s internal controls over monitoring key personnel time and effort and also examined grant awards to determine if key personnel identified in the application/proposal and award were involved in the project as required. We used a statistical sampling method to randomly select and examine 59 unique budget numbers assigned to R&D programs out of a total population of 7,486. We examined these samples and found: ? Four instances where we could not determine whether the University properly monitored key personnel time and effort to ensure that they met award requirements identified in the grant application/proposal and award were involved in the project as required. ? Two instances where key personnel were not involved in the project as required. Specifically, we found: o One award for which the PI was required to spend approximately 16 percent of their time on the award, but spent less than 5 percent o One award where the PI was required to spend 2 percent of their time on the award, but only spent .67 percent We consider these internal control deficiencies to be a significant deficiency. This issue was not reported as a finding in the prior audit. Cause of Condition While we determined the University had policies and procedures to ensure that key personnel are involved in the grant projects as required, there were not policies or procedures to ensure that there was sufficient University level oversight to ensure key personnel commitments were met. Effect of Condition By not establishing adequate internal controls, the University cannot reasonably ensure it meets the key personnel requirement. Recommendation We recommend the University improve its internal controls to ensure key personnel identified in the application/proposal and award were involved in the project as required. In addition, if the University identifies key personnel commitments are not going to meet required levels, ensure that federal awarding agency approval is obtained when required. University?s Response The University has established internal controls to ensure compliance with program requirements through the effort certification and project reporting processes, and budget reconciliation requirements. However, we agree there are areas for improvement int terms of staff and PI training, and available resources to monitor contribution and documentation of committed levels of effort. The University will implement the following improvements: ? The University offers multiple training courses to research administrators and principal investigators on management of sponsored awards. We will update our training materials and provide additional training on documentation of effort for PIs and key personnel, and prior approval requirements for reductions in effort. ? Update guidance and instructions for effort certifications to ensure all devoted effort is properly accounted for during the effort certification process. ? Develop exception reports to provide additional oversight to monitor deviations from committed effort for PIs and key personnel. Auditor?s Remarks We thank the University for its cooperation and assistance throughout the audit. We will review the status of the University?s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 308, Revision of budget and program plans, states in part: (a) The approved budget for the Federal award summarizes the financial aspects of the project or program as approved during the Federal award process. It may include either the Federal and non-Federal share (see definition for Federal share in ? 200.1) or only the Federal share, depending upon Federal awarding agency requirements. The budget and program plans include considerations for performance and program evaluation purposes whenever required in accordance with the terms and conditions of the award. (b) Recipients are required to report deviations from budget or project scope or objective, and request prior approvals from Federal awarding agencies for budget and program plan revisions, in accordance with this section. (c) For non-construction Federal awards, recipients must request prior approvals from Federal awarding agencies for the following program or budget-related reasons: (1) Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval). (2) Change in a key person specified in the application or the Federal award. (3) The disengagement from the project for more than three months, or a 25 percent reduction in time devoted to the project, by the approved project director or principal investigator. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
2022-002 The University of Washington did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. Assistance Listing Number and Title: Various, Research and Development Cluster ? University of Washington Federal Grantor Name: Various Federal Award/Contract Number: Various Pass-through Entity Name: Various Pass-through Award/Contract Number: Various Applicable Compliance Component: Special Tests and Provisions: Key Personnel Known Questioned Cost Amount: None Background The federal government sponsors research and development (R&D) activities under a variety of types of awards. Most commonly, these are grants, cooperative agreements, and contracts to achieve objectives agreed upon between the federal awarding agency and the non-federal entity. The types of R&D conducted under these awards vary widely. Grants for R&D are awarded to non-federal entities on the basis of applications or proposals submitted to federal agencies or pass-through entities. An award is then negotiated that will include the purpose of the project, the amount of the award and the terms and conditions. R&D awards may include staffing proposals that specify key personnel who will work on the project, as well as the extent of their planned involvement. One of these key personnel is typically a principal investigator (PI) who contributes to the scientific development or execution of a project in a substantive, measurable way. The non-federal entity is required to meet key personnel commitments specified in the award and may be required to obtain approval from the grantor for certain types of changes. The University of Washington (University) is the largest recipient of federal R&D awards in the state of Washington. The University expended funds from 2,396 separate awards for the R&D grants, with expenditures totaling approximately $1.02 billion of the almost $1.17 billion expended statewide during the audit period. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The University did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. To determine if the University complied with key personnel requirements, we reviewed the University?s internal controls over monitoring key personnel time and effort and also examined grant awards to determine if key personnel identified in the application/proposal and award were involved in the project as required. We used a statistical sampling method to randomly select and examine 59 unique budget numbers assigned to R&D programs out of a total population of 7,486. We examined these samples and found: ? Four instances where we could not determine whether the University properly monitored key personnel time and effort to ensure that they met award requirements identified in the grant application/proposal and award were involved in the project as required. ? Two instances where key personnel were not involved in the project as required. Specifically, we found: o One award for which the PI was required to spend approximately 16 percent of their time on the award, but spent less than 5 percent o One award where the PI was required to spend 2 percent of their time on the award, but only spent .67 percent We consider these internal control deficiencies to be a significant deficiency. This issue was not reported as a finding in the prior audit. Cause of Condition While we determined the University had policies and procedures to ensure that key personnel are involved in the grant projects as required, there were not policies or procedures to ensure that there was sufficient University level oversight to ensure key personnel commitments were met. Effect of Condition By not establishing adequate internal controls, the University cannot reasonably ensure it meets the key personnel requirement. Recommendation We recommend the University improve its internal controls to ensure key personnel identified in the application/proposal and award were involved in the project as required. In addition, if the University identifies key personnel commitments are not going to meet required levels, ensure that federal awarding agency approval is obtained when required. University?s Response The University has established internal controls to ensure compliance with program requirements through the effort certification and project reporting processes, and budget reconciliation requirements. However, we agree there are areas for improvement int terms of staff and PI training, and available resources to monitor contribution and documentation of committed levels of effort. The University will implement the following improvements: ? The University offers multiple training courses to research administrators and principal investigators on management of sponsored awards. We will update our training materials and provide additional training on documentation of effort for PIs and key personnel, and prior approval requirements for reductions in effort. ? Update guidance and instructions for effort certifications to ensure all devoted effort is properly accounted for during the effort certification process. ? Develop exception reports to provide additional oversight to monitor deviations from committed effort for PIs and key personnel. Auditor?s Remarks We thank the University for its cooperation and assistance throughout the audit. We will review the status of the University?s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 308, Revision of budget and program plans, states in part: (a) The approved budget for the Federal award summarizes the financial aspects of the project or program as approved during the Federal award process. It may include either the Federal and non-Federal share (see definition for Federal share in ? 200.1) or only the Federal share, depending upon Federal awarding agency requirements. The budget and program plans include considerations for performance and program evaluation purposes whenever required in accordance with the terms and conditions of the award. (b) Recipients are required to report deviations from budget or project scope or objective, and request prior approvals from Federal awarding agencies for budget and program plan revisions, in accordance with this section. (c) For non-construction Federal awards, recipients must request prior approvals from Federal awarding agencies for the following program or budget-related reasons: (1) Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval). (2) Change in a key person specified in the application or the Federal award. (3) The disengagement from the project for more than three months, or a 25 percent reduction in time devoted to the project, by the approved project director or principal investigator. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
2022-002 The University of Washington did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. Assistance Listing Number and Title: Various, Research and Development Cluster ? University of Washington Federal Grantor Name: Various Federal Award/Contract Number: Various Pass-through Entity Name: Various Pass-through Award/Contract Number: Various Applicable Compliance Component: Special Tests and Provisions: Key Personnel Known Questioned Cost Amount: None Background The federal government sponsors research and development (R&D) activities under a variety of types of awards. Most commonly, these are grants, cooperative agreements, and contracts to achieve objectives agreed upon between the federal awarding agency and the non-federal entity. The types of R&D conducted under these awards vary widely. Grants for R&D are awarded to non-federal entities on the basis of applications or proposals submitted to federal agencies or pass-through entities. An award is then negotiated that will include the purpose of the project, the amount of the award and the terms and conditions. R&D awards may include staffing proposals that specify key personnel who will work on the project, as well as the extent of their planned involvement. One of these key personnel is typically a principal investigator (PI) who contributes to the scientific development or execution of a project in a substantive, measurable way. The non-federal entity is required to meet key personnel commitments specified in the award and may be required to obtain approval from the grantor for certain types of changes. The University of Washington (University) is the largest recipient of federal R&D awards in the state of Washington. The University expended funds from 2,396 separate awards for the R&D grants, with expenditures totaling approximately $1.02 billion of the almost $1.17 billion expended statewide during the audit period. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The University did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. To determine if the University complied with key personnel requirements, we reviewed the University?s internal controls over monitoring key personnel time and effort and also examined grant awards to determine if key personnel identified in the application/proposal and award were involved in the project as required. We used a statistical sampling method to randomly select and examine 59 unique budget numbers assigned to R&D programs out of a total population of 7,486. We examined these samples and found: ? Four instances where we could not determine whether the University properly monitored key personnel time and effort to ensure that they met award requirements identified in the grant application/proposal and award were involved in the project as required. ? Two instances where key personnel were not involved in the project as required. Specifically, we found: o One award for which the PI was required to spend approximately 16 percent of their time on the award, but spent less than 5 percent o One award where the PI was required to spend 2 percent of their time on the award, but only spent .67 percent We consider these internal control deficiencies to be a significant deficiency. This issue was not reported as a finding in the prior audit. Cause of Condition While we determined the University had policies and procedures to ensure that key personnel are involved in the grant projects as required, there were not policies or procedures to ensure that there was sufficient University level oversight to ensure key personnel commitments were met. Effect of Condition By not establishing adequate internal controls, the University cannot reasonably ensure it meets the key personnel requirement. Recommendation We recommend the University improve its internal controls to ensure key personnel identified in the application/proposal and award were involved in the project as required. In addition, if the University identifies key personnel commitments are not going to meet required levels, ensure that federal awarding agency approval is obtained when required. University?s Response The University has established internal controls to ensure compliance with program requirements through the effort certification and project reporting processes, and budget reconciliation requirements. However, we agree there are areas for improvement int terms of staff and PI training, and available resources to monitor contribution and documentation of committed levels of effort. The University will implement the following improvements: ? The University offers multiple training courses to research administrators and principal investigators on management of sponsored awards. We will update our training materials and provide additional training on documentation of effort for PIs and key personnel, and prior approval requirements for reductions in effort. ? Update guidance and instructions for effort certifications to ensure all devoted effort is properly accounted for during the effort certification process. ? Develop exception reports to provide additional oversight to monitor deviations from committed effort for PIs and key personnel. Auditor?s Remarks We thank the University for its cooperation and assistance throughout the audit. We will review the status of the University?s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 308, Revision of budget and program plans, states in part: (a) The approved budget for the Federal award summarizes the financial aspects of the project or program as approved during the Federal award process. It may include either the Federal and non-Federal share (see definition for Federal share in ? 200.1) or only the Federal share, depending upon Federal awarding agency requirements. The budget and program plans include considerations for performance and program evaluation purposes whenever required in accordance with the terms and conditions of the award. (b) Recipients are required to report deviations from budget or project scope or objective, and request prior approvals from Federal awarding agencies for budget and program plan revisions, in accordance with this section. (c) For non-construction Federal awards, recipients must request prior approvals from Federal awarding agencies for the following program or budget-related reasons: (1) Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval). (2) Change in a key person specified in the application or the Federal award. (3) The disengagement from the project for more than three months, or a 25 percent reduction in time devoted to the project, by the approved project director or principal investigator. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
2022-002 The University of Washington did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. Assistance Listing Number and Title: Various, Research and Development Cluster ? University of Washington Federal Grantor Name: Various Federal Award/Contract Number: Various Pass-through Entity Name: Various Pass-through Award/Contract Number: Various Applicable Compliance Component: Special Tests and Provisions: Key Personnel Known Questioned Cost Amount: None Background The federal government sponsors research and development (R&D) activities under a variety of types of awards. Most commonly, these are grants, cooperative agreements, and contracts to achieve objectives agreed upon between the federal awarding agency and the non-federal entity. The types of R&D conducted under these awards vary widely. Grants for R&D are awarded to non-federal entities on the basis of applications or proposals submitted to federal agencies or pass-through entities. An award is then negotiated that will include the purpose of the project, the amount of the award and the terms and conditions. R&D awards may include staffing proposals that specify key personnel who will work on the project, as well as the extent of their planned involvement. One of these key personnel is typically a principal investigator (PI) who contributes to the scientific development or execution of a project in a substantive, measurable way. The non-federal entity is required to meet key personnel commitments specified in the award and may be required to obtain approval from the grantor for certain types of changes. The University of Washington (University) is the largest recipient of federal R&D awards in the state of Washington. The University expended funds from 2,396 separate awards for the R&D grants, with expenditures totaling approximately $1.02 billion of the almost $1.17 billion expended statewide during the audit period. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The University did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. To determine if the University complied with key personnel requirements, we reviewed the University?s internal controls over monitoring key personnel time and effort and also examined grant awards to determine if key personnel identified in the application/proposal and award were involved in the project as required. We used a statistical sampling method to randomly select and examine 59 unique budget numbers assigned to R&D programs out of a total population of 7,486. We examined these samples and found: ? Four instances where we could not determine whether the University properly monitored key personnel time and effort to ensure that they met award requirements identified in the grant application/proposal and award were involved in the project as required. ? Two instances where key personnel were not involved in the project as required. Specifically, we found: o One award for which the PI was required to spend approximately 16 percent of their time on the award, but spent less than 5 percent o One award where the PI was required to spend 2 percent of their time on the award, but only spent .67 percent We consider these internal control deficiencies to be a significant deficiency. This issue was not reported as a finding in the prior audit. Cause of Condition While we determined the University had policies and procedures to ensure that key personnel are involved in the grant projects as required, there were not policies or procedures to ensure that there was sufficient University level oversight to ensure key personnel commitments were met. Effect of Condition By not establishing adequate internal controls, the University cannot reasonably ensure it meets the key personnel requirement. Recommendation We recommend the University improve its internal controls to ensure key personnel identified in the application/proposal and award were involved in the project as required. In addition, if the University identifies key personnel commitments are not going to meet required levels, ensure that federal awarding agency approval is obtained when required. University?s Response The University has established internal controls to ensure compliance with program requirements through the effort certification and project reporting processes, and budget reconciliation requirements. However, we agree there are areas for improvement int terms of staff and PI training, and available resources to monitor contribution and documentation of committed levels of effort. The University will implement the following improvements: ? The University offers multiple training courses to research administrators and principal investigators on management of sponsored awards. We will update our training materials and provide additional training on documentation of effort for PIs and key personnel, and prior approval requirements for reductions in effort. ? Update guidance and instructions for effort certifications to ensure all devoted effort is properly accounted for during the effort certification process. ? Develop exception reports to provide additional oversight to monitor deviations from committed effort for PIs and key personnel. Auditor?s Remarks We thank the University for its cooperation and assistance throughout the audit. We will review the status of the University?s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 308, Revision of budget and program plans, states in part: (a) The approved budget for the Federal award summarizes the financial aspects of the project or program as approved during the Federal award process. It may include either the Federal and non-Federal share (see definition for Federal share in ? 200.1) or only the Federal share, depending upon Federal awarding agency requirements. The budget and program plans include considerations for performance and program evaluation purposes whenever required in accordance with the terms and conditions of the award. (b) Recipients are required to report deviations from budget or project scope or objective, and request prior approvals from Federal awarding agencies for budget and program plan revisions, in accordance with this section. (c) For non-construction Federal awards, recipients must request prior approvals from Federal awarding agencies for the following program or budget-related reasons: (1) Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval). (2) Change in a key person specified in the application or the Federal award. (3) The disengagement from the project for more than three months, or a 25 percent reduction in time devoted to the project, by the approved project director or principal investigator. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
2022-002 The University of Washington did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. Assistance Listing Number and Title: Various, Research and Development Cluster ? University of Washington Federal Grantor Name: Various Federal Award/Contract Number: Various Pass-through Entity Name: Various Pass-through Award/Contract Number: Various Applicable Compliance Component: Special Tests and Provisions: Key Personnel Known Questioned Cost Amount: None Background The federal government sponsors research and development (R&D) activities under a variety of types of awards. Most commonly, these are grants, cooperative agreements, and contracts to achieve objectives agreed upon between the federal awarding agency and the non-federal entity. The types of R&D conducted under these awards vary widely. Grants for R&D are awarded to non-federal entities on the basis of applications or proposals submitted to federal agencies or pass-through entities. An award is then negotiated that will include the purpose of the project, the amount of the award and the terms and conditions. R&D awards may include staffing proposals that specify key personnel who will work on the project, as well as the extent of their planned involvement. One of these key personnel is typically a principal investigator (PI) who contributes to the scientific development or execution of a project in a substantive, measurable way. The non-federal entity is required to meet key personnel commitments specified in the award and may be required to obtain approval from the grantor for certain types of changes. The University of Washington (University) is the largest recipient of federal R&D awards in the state of Washington. The University expended funds from 2,396 separate awards for the R&D grants, with expenditures totaling approximately $1.02 billion of the almost $1.17 billion expended statewide during the audit period. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The University did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. To determine if the University complied with key personnel requirements, we reviewed the University?s internal controls over monitoring key personnel time and effort and also examined grant awards to determine if key personnel identified in the application/proposal and award were involved in the project as required. We used a statistical sampling method to randomly select and examine 59 unique budget numbers assigned to R&D programs out of a total population of 7,486. We examined these samples and found: ? Four instances where we could not determine whether the University properly monitored key personnel time and effort to ensure that they met award requirements identified in the grant application/proposal and award were involved in the project as required. ? Two instances where key personnel were not involved in the project as required. Specifically, we found: o One award for which the PI was required to spend approximately 16 percent of their time on the award, but spent less than 5 percent o One award where the PI was required to spend 2 percent of their time on the award, but only spent .67 percent We consider these internal control deficiencies to be a significant deficiency. This issue was not reported as a finding in the prior audit. Cause of Condition While we determined the University had policies and procedures to ensure that key personnel are involved in the grant projects as required, there were not policies or procedures to ensure that there was sufficient University level oversight to ensure key personnel commitments were met. Effect of Condition By not establishing adequate internal controls, the University cannot reasonably ensure it meets the key personnel requirement. Recommendation We recommend the University improve its internal controls to ensure key personnel identified in the application/proposal and award were involved in the project as required. In addition, if the University identifies key personnel commitments are not going to meet required levels, ensure that federal awarding agency approval is obtained when required. University?s Response The University has established internal controls to ensure compliance with program requirements through the effort certification and project reporting processes, and budget reconciliation requirements. However, we agree there are areas for improvement int terms of staff and PI training, and available resources to monitor contribution and documentation of committed levels of effort. The University will implement the following improvements: ? The University offers multiple training courses to research administrators and principal investigators on management of sponsored awards. We will update our training materials and provide additional training on documentation of effort for PIs and key personnel, and prior approval requirements for reductions in effort. ? Update guidance and instructions for effort certifications to ensure all devoted effort is properly accounted for during the effort certification process. ? Develop exception reports to provide additional oversight to monitor deviations from committed effort for PIs and key personnel. Auditor?s Remarks We thank the University for its cooperation and assistance throughout the audit. We will review the status of the University?s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 308, Revision of budget and program plans, states in part: (a) The approved budget for the Federal award summarizes the financial aspects of the project or program as approved during the Federal award process. It may include either the Federal and non-Federal share (see definition for Federal share in ? 200.1) or only the Federal share, depending upon Federal awarding agency requirements. The budget and program plans include considerations for performance and program evaluation purposes whenever required in accordance with the terms and conditions of the award. (b) Recipients are required to report deviations from budget or project scope or objective, and request prior approvals from Federal awarding agencies for budget and program plan revisions, in accordance with this section. (c) For non-construction Federal awards, recipients must request prior approvals from Federal awarding agencies for the following program or budget-related reasons: (1) Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval). (2) Change in a key person specified in the application or the Federal award. (3) The disengagement from the project for more than three months, or a 25 percent reduction in time devoted to the project, by the approved project director or principal investigator. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
2022-002 The University of Washington did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. Assistance Listing Number and Title: Various, Research and Development Cluster ? University of Washington Federal Grantor Name: Various Federal Award/Contract Number: Various Pass-through Entity Name: Various Pass-through Award/Contract Number: Various Applicable Compliance Component: Special Tests and Provisions: Key Personnel Known Questioned Cost Amount: None Background The federal government sponsors research and development (R&D) activities under a variety of types of awards. Most commonly, these are grants, cooperative agreements, and contracts to achieve objectives agreed upon between the federal awarding agency and the non-federal entity. The types of R&D conducted under these awards vary widely. Grants for R&D are awarded to non-federal entities on the basis of applications or proposals submitted to federal agencies or pass-through entities. An award is then negotiated that will include the purpose of the project, the amount of the award and the terms and conditions. R&D awards may include staffing proposals that specify key personnel who will work on the project, as well as the extent of their planned involvement. One of these key personnel is typically a principal investigator (PI) who contributes to the scientific development or execution of a project in a substantive, measurable way. The non-federal entity is required to meet key personnel commitments specified in the award and may be required to obtain approval from the grantor for certain types of changes. The University of Washington (University) is the largest recipient of federal R&D awards in the state of Washington. The University expended funds from 2,396 separate awards for the R&D grants, with expenditures totaling approximately $1.02 billion of the almost $1.17 billion expended statewide during the audit period. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The University did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. To determine if the University complied with key personnel requirements, we reviewed the University?s internal controls over monitoring key personnel time and effort and also examined grant awards to determine if key personnel identified in the application/proposal and award were involved in the project as required. We used a statistical sampling method to randomly select and examine 59 unique budget numbers assigned to R&D programs out of a total population of 7,486. We examined these samples and found: ? Four instances where we could not determine whether the University properly monitored key personnel time and effort to ensure that they met award requirements identified in the grant application/proposal and award were involved in the project as required. ? Two instances where key personnel were not involved in the project as required. Specifically, we found: o One award for which the PI was required to spend approximately 16 percent of their time on the award, but spent less than 5 percent o One award where the PI was required to spend 2 percent of their time on the award, but only spent .67 percent We consider these internal control deficiencies to be a significant deficiency. This issue was not reported as a finding in the prior audit. Cause of Condition While we determined the University had policies and procedures to ensure that key personnel are involved in the grant projects as required, there were not policies or procedures to ensure that there was sufficient University level oversight to ensure key personnel commitments were met. Effect of Condition By not establishing adequate internal controls, the University cannot reasonably ensure it meets the key personnel requirement. Recommendation We recommend the University improve its internal controls to ensure key personnel identified in the application/proposal and award were involved in the project as required. In addition, if the University identifies key personnel commitments are not going to meet required levels, ensure that federal awarding agency approval is obtained when required. University?s Response The University has established internal controls to ensure compliance with program requirements through the effort certification and project reporting processes, and budget reconciliation requirements. However, we agree there are areas for improvement int terms of staff and PI training, and available resources to monitor contribution and documentation of committed levels of effort. The University will implement the following improvements: ? The University offers multiple training courses to research administrators and principal investigators on management of sponsored awards. We will update our training materials and provide additional training on documentation of effort for PIs and key personnel, and prior approval requirements for reductions in effort. ? Update guidance and instructions for effort certifications to ensure all devoted effort is properly accounted for during the effort certification process. ? Develop exception reports to provide additional oversight to monitor deviations from committed effort for PIs and key personnel. Auditor?s Remarks We thank the University for its cooperation and assistance throughout the audit. We will review the status of the University?s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 308, Revision of budget and program plans, states in part: (a) The approved budget for the Federal award summarizes the financial aspects of the project or program as approved during the Federal award process. It may include either the Federal and non-Federal share (see definition for Federal share in ? 200.1) or only the Federal share, depending upon Federal awarding agency requirements. The budget and program plans include considerations for performance and program evaluation purposes whenever required in accordance with the terms and conditions of the award. (b) Recipients are required to report deviations from budget or project scope or objective, and request prior approvals from Federal awarding agencies for budget and program plan revisions, in accordance with this section. (c) For non-construction Federal awards, recipients must request prior approvals from Federal awarding agencies for the following program or budget-related reasons: (1) Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval). (2) Change in a key person specified in the application or the Federal award. (3) The disengagement from the project for more than three months, or a 25 percent reduction in time devoted to the project, by the approved project director or principal investigator. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
2022-002 The University of Washington did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. Assistance Listing Number and Title: Various, Research and Development Cluster ? University of Washington Federal Grantor Name: Various Federal Award/Contract Number: Various Pass-through Entity Name: Various Pass-through Award/Contract Number: Various Applicable Compliance Component: Special Tests and Provisions: Key Personnel Known Questioned Cost Amount: None Background The federal government sponsors research and development (R&D) activities under a variety of types of awards. Most commonly, these are grants, cooperative agreements, and contracts to achieve objectives agreed upon between the federal awarding agency and the non-federal entity. The types of R&D conducted under these awards vary widely. Grants for R&D are awarded to non-federal entities on the basis of applications or proposals submitted to federal agencies or pass-through entities. An award is then negotiated that will include the purpose of the project, the amount of the award and the terms and conditions. R&D awards may include staffing proposals that specify key personnel who will work on the project, as well as the extent of their planned involvement. One of these key personnel is typically a principal investigator (PI) who contributes to the scientific development or execution of a project in a substantive, measurable way. The non-federal entity is required to meet key personnel commitments specified in the award and may be required to obtain approval from the grantor for certain types of changes. The University of Washington (University) is the largest recipient of federal R&D awards in the state of Washington. The University expended funds from 2,396 separate awards for the R&D grants, with expenditures totaling approximately $1.02 billion of the almost $1.17 billion expended statewide during the audit period. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The University did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. To determine if the University complied with key personnel requirements, we reviewed the University?s internal controls over monitoring key personnel time and effort and also examined grant awards to determine if key personnel identified in the application/proposal and award were involved in the project as required. We used a statistical sampling method to randomly select and examine 59 unique budget numbers assigned to R&D programs out of a total population of 7,486. We examined these samples and found: ? Four instances where we could not determine whether the University properly monitored key personnel time and effort to ensure that they met award requirements identified in the grant application/proposal and award were involved in the project as required. ? Two instances where key personnel were not involved in the project as required. Specifically, we found: o One award for which the PI was required to spend approximately 16 percent of their time on the award, but spent less than 5 percent o One award where the PI was required to spend 2 percent of their time on the award, but only spent .67 percent We consider these internal control deficiencies to be a significant deficiency. This issue was not reported as a finding in the prior audit. Cause of Condition While we determined the University had policies and procedures to ensure that key personnel are involved in the grant projects as required, there were not policies or procedures to ensure that there was sufficient University level oversight to ensure key personnel commitments were met. Effect of Condition By not establishing adequate internal controls, the University cannot reasonably ensure it meets the key personnel requirement. Recommendation We recommend the University improve its internal controls to ensure key personnel identified in the application/proposal and award were involved in the project as required. In addition, if the University identifies key personnel commitments are not going to meet required levels, ensure that federal awarding agency approval is obtained when required. University?s Response The University has established internal controls to ensure compliance with program requirements through the effort certification and project reporting processes, and budget reconciliation requirements. However, we agree there are areas for improvement int terms of staff and PI training, and available resources to monitor contribution and documentation of committed levels of effort. The University will implement the following improvements: ? The University offers multiple training courses to research administrators and principal investigators on management of sponsored awards. We will update our training materials and provide additional training on documentation of effort for PIs and key personnel, and prior approval requirements for reductions in effort. ? Update guidance and instructions for effort certifications to ensure all devoted effort is properly accounted for during the effort certification process. ? Develop exception reports to provide additional oversight to monitor deviations from committed effort for PIs and key personnel. Auditor?s Remarks We thank the University for its cooperation and assistance throughout the audit. We will review the status of the University?s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 308, Revision of budget and program plans, states in part: (a) The approved budget for the Federal award summarizes the financial aspects of the project or program as approved during the Federal award process. It may include either the Federal and non-Federal share (see definition for Federal share in ? 200.1) or only the Federal share, depending upon Federal awarding agency requirements. The budget and program plans include considerations for performance and program evaluation purposes whenever required in accordance with the terms and conditions of the award. (b) Recipients are required to report deviations from budget or project scope or objective, and request prior approvals from Federal awarding agencies for budget and program plan revisions, in accordance with this section. (c) For non-construction Federal awards, recipients must request prior approvals from Federal awarding agencies for the following program or budget-related reasons: (1) Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval). (2) Change in a key person specified in the application or the Federal award. (3) The disengagement from the project for more than three months, or a 25 percent reduction in time devoted to the project, by the approved project director or principal investigator. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
2022-002 The University of Washington did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. Assistance Listing Number and Title: Various, Research and Development Cluster ? University of Washington Federal Grantor Name: Various Federal Award/Contract Number: Various Pass-through Entity Name: Various Pass-through Award/Contract Number: Various Applicable Compliance Component: Special Tests and Provisions: Key Personnel Known Questioned Cost Amount: None Background The federal government sponsors research and development (R&D) activities under a variety of types of awards. Most commonly, these are grants, cooperative agreements, and contracts to achieve objectives agreed upon between the federal awarding agency and the non-federal entity. The types of R&D conducted under these awards vary widely. Grants for R&D are awarded to non-federal entities on the basis of applications or proposals submitted to federal agencies or pass-through entities. An award is then negotiated that will include the purpose of the project, the amount of the award and the terms and conditions. R&D awards may include staffing proposals that specify key personnel who will work on the project, as well as the extent of their planned involvement. One of these key personnel is typically a principal investigator (PI) who contributes to the scientific development or execution of a project in a substantive, measurable way. The non-federal entity is required to meet key personnel commitments specified in the award and may be required to obtain approval from the grantor for certain types of changes. The University of Washington (University) is the largest recipient of federal R&D awards in the state of Washington. The University expended funds from 2,396 separate awards for the R&D grants, with expenditures totaling approximately $1.02 billion of the almost $1.17 billion expended statewide during the audit period. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The University did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. To determine if the University complied with key personnel requirements, we reviewed the University?s internal controls over monitoring key personnel time and effort and also examined grant awards to determine if key personnel identified in the application/proposal and award were involved in the project as required. We used a statistical sampling method to randomly select and examine 59 unique budget numbers assigned to R&D programs out of a total population of 7,486. We examined these samples and found: ? Four instances where we could not determine whether the University properly monitored key personnel time and effort to ensure that they met award requirements identified in the grant application/proposal and award were involved in the project as required. ? Two instances where key personnel were not involved in the project as required. Specifically, we found: o One award for which the PI was required to spend approximately 16 percent of their time on the award, but spent less than 5 percent o One award where the PI was required to spend 2 percent of their time on the award, but only spent .67 percent We consider these internal control deficiencies to be a significant deficiency. This issue was not reported as a finding in the prior audit. Cause of Condition While we determined the University had policies and procedures to ensure that key personnel are involved in the grant projects as required, there were not policies or procedures to ensure that there was sufficient University level oversight to ensure key personnel commitments were met. Effect of Condition By not establishing adequate internal controls, the University cannot reasonably ensure it meets the key personnel requirement. Recommendation We recommend the University improve its internal controls to ensure key personnel identified in the application/proposal and award were involved in the project as required. In addition, if the University identifies key personnel commitments are not going to meet required levels, ensure that federal awarding agency approval is obtained when required. University?s Response The University has established internal controls to ensure compliance with program requirements through the effort certification and project reporting processes, and budget reconciliation requirements. However, we agree there are areas for improvement int terms of staff and PI training, and available resources to monitor contribution and documentation of committed levels of effort. The University will implement the following improvements: ? The University offers multiple training courses to research administrators and principal investigators on management of sponsored awards. We will update our training materials and provide additional training on documentation of effort for PIs and key personnel, and prior approval requirements for reductions in effort. ? Update guidance and instructions for effort certifications to ensure all devoted effort is properly accounted for during the effort certification process. ? Develop exception reports to provide additional oversight to monitor deviations from committed effort for PIs and key personnel. Auditor?s Remarks We thank the University for its cooperation and assistance throughout the audit. We will review the status of the University?s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 308, Revision of budget and program plans, states in part: (a) The approved budget for the Federal award summarizes the financial aspects of the project or program as approved during the Federal award process. It may include either the Federal and non-Federal share (see definition for Federal share in ? 200.1) or only the Federal share, depending upon Federal awarding agency requirements. The budget and program plans include considerations for performance and program evaluation purposes whenever required in accordance with the terms and conditions of the award. (b) Recipients are required to report deviations from budget or project scope or objective, and request prior approvals from Federal awarding agencies for budget and program plan revisions, in accordance with this section. (c) For non-construction Federal awards, recipients must request prior approvals from Federal awarding agencies for the following program or budget-related reasons: (1) Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval). (2) Change in a key person specified in the application or the Federal award. (3) The disengagement from the project for more than three months, or a 25 percent reduction in time devoted to the project, by the approved project director or principal investigator. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
2022-002 The University of Washington did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. Assistance Listing Number and Title: Various, Research and Development Cluster ? University of Washington Federal Grantor Name: Various Federal Award/Contract Number: Various Pass-through Entity Name: Various Pass-through Award/Contract Number: Various Applicable Compliance Component: Special Tests and Provisions: Key Personnel Known Questioned Cost Amount: None Background The federal government sponsors research and development (R&D) activities under a variety of types of awards. Most commonly, these are grants, cooperative agreements, and contracts to achieve objectives agreed upon between the federal awarding agency and the non-federal entity. The types of R&D conducted under these awards vary widely. Grants for R&D are awarded to non-federal entities on the basis of applications or proposals submitted to federal agencies or pass-through entities. An award is then negotiated that will include the purpose of the project, the amount of the award and the terms and conditions. R&D awards may include staffing proposals that specify key personnel who will work on the project, as well as the extent of their planned involvement. One of these key personnel is typically a principal investigator (PI) who contributes to the scientific development or execution of a project in a substantive, measurable way. The non-federal entity is required to meet key personnel commitments specified in the award and may be required to obtain approval from the grantor for certain types of changes. The University of Washington (University) is the largest recipient of federal R&D awards in the state of Washington. The University expended funds from 2,396 separate awards for the R&D grants, with expenditures totaling approximately $1.02 billion of the almost $1.17 billion expended statewide during the audit period. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The University did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. To determine if the University complied with key personnel requirements, we reviewed the University?s internal controls over monitoring key personnel time and effort and also examined grant awards to determine if key personnel identified in the application/proposal and award were involved in the project as required. We used a statistical sampling method to randomly select and examine 59 unique budget numbers assigned to R&D programs out of a total population of 7,486. We examined these samples and found: ? Four instances where we could not determine whether the University properly monitored key personnel time and effort to ensure that they met award requirements identified in the grant application/proposal and award were involved in the project as required. ? Two instances where key personnel were not involved in the project as required. Specifically, we found: o One award for which the PI was required to spend approximately 16 percent of their time on the award, but spent less than 5 percent o One award where the PI was required to spend 2 percent of their time on the award, but only spent .67 percent We consider these internal control deficiencies to be a significant deficiency. This issue was not reported as a finding in the prior audit. Cause of Condition While we determined the University had policies and procedures to ensure that key personnel are involved in the grant projects as required, there were not policies or procedures to ensure that there was sufficient University level oversight to ensure key personnel commitments were met. Effect of Condition By not establishing adequate internal controls, the University cannot reasonably ensure it meets the key personnel requirement. Recommendation We recommend the University improve its internal controls to ensure key personnel identified in the application/proposal and award were involved in the project as required. In addition, if the University identifies key personnel commitments are not going to meet required levels, ensure that federal awarding agency approval is obtained when required. University?s Response The University has established internal controls to ensure compliance with program requirements through the effort certification and project reporting processes, and budget reconciliation requirements. However, we agree there are areas for improvement int terms of staff and PI training, and available resources to monitor contribution and documentation of committed levels of effort. The University will implement the following improvements: ? The University offers multiple training courses to research administrators and principal investigators on management of sponsored awards. We will update our training materials and provide additional training on documentation of effort for PIs and key personnel, and prior approval requirements for reductions in effort. ? Update guidance and instructions for effort certifications to ensure all devoted effort is properly accounted for during the effort certification process. ? Develop exception reports to provide additional oversight to monitor deviations from committed effort for PIs and key personnel. Auditor?s Remarks We thank the University for its cooperation and assistance throughout the audit. We will review the status of the University?s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 308, Revision of budget and program plans, states in part: (a) The approved budget for the Federal award summarizes the financial aspects of the project or program as approved during the Federal award process. It may include either the Federal and non-Federal share (see definition for Federal share in ? 200.1) or only the Federal share, depending upon Federal awarding agency requirements. The budget and program plans include considerations for performance and program evaluation purposes whenever required in accordance with the terms and conditions of the award. (b) Recipients are required to report deviations from budget or project scope or objective, and request prior approvals from Federal awarding agencies for budget and program plan revisions, in accordance with this section. (c) For non-construction Federal awards, recipients must request prior approvals from Federal awarding agencies for the following program or budget-related reasons: (1) Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval). (2) Change in a key person specified in the application or the Federal award. (3) The disengagement from the project for more than three months, or a 25 percent reduction in time devoted to the project, by the approved project director or principal investigator. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
2022-002 The University of Washington did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. Assistance Listing Number and Title: Various, Research and Development Cluster ? University of Washington Federal Grantor Name: Various Federal Award/Contract Number: Various Pass-through Entity Name: Various Pass-through Award/Contract Number: Various Applicable Compliance Component: Special Tests and Provisions: Key Personnel Known Questioned Cost Amount: None Background The federal government sponsors research and development (R&D) activities under a variety of types of awards. Most commonly, these are grants, cooperative agreements, and contracts to achieve objectives agreed upon between the federal awarding agency and the non-federal entity. The types of R&D conducted under these awards vary widely. Grants for R&D are awarded to non-federal entities on the basis of applications or proposals submitted to federal agencies or pass-through entities. An award is then negotiated that will include the purpose of the project, the amount of the award and the terms and conditions. R&D awards may include staffing proposals that specify key personnel who will work on the project, as well as the extent of their planned involvement. One of these key personnel is typically a principal investigator (PI) who contributes to the scientific development or execution of a project in a substantive, measurable way. The non-federal entity is required to meet key personnel commitments specified in the award and may be required to obtain approval from the grantor for certain types of changes. The University of Washington (University) is the largest recipient of federal R&D awards in the state of Washington. The University expended funds from 2,396 separate awards for the R&D grants, with expenditures totaling approximately $1.02 billion of the almost $1.17 billion expended statewide during the audit period. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The University did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. To determine if the University complied with key personnel requirements, we reviewed the University?s internal controls over monitoring key personnel time and effort and also examined grant awards to determine if key personnel identified in the application/proposal and award were involved in the project as required. We used a statistical sampling method to randomly select and examine 59 unique budget numbers assigned to R&D programs out of a total population of 7,486. We examined these samples and found: ? Four instances where we could not determine whether the University properly monitored key personnel time and effort to ensure that they met award requirements identified in the grant application/proposal and award were involved in the project as required. ? Two instances where key personnel were not involved in the project as required. Specifically, we found: o One award for which the PI was required to spend approximately 16 percent of their time on the award, but spent less than 5 percent o One award where the PI was required to spend 2 percent of their time on the award, but only spent .67 percent We consider these internal control deficiencies to be a significant deficiency. This issue was not reported as a finding in the prior audit. Cause of Condition While we determined the University had policies and procedures to ensure that key personnel are involved in the grant projects as required, there were not policies or procedures to ensure that there was sufficient University level oversight to ensure key personnel commitments were met. Effect of Condition By not establishing adequate internal controls, the University cannot reasonably ensure it meets the key personnel requirement. Recommendation We recommend the University improve its internal controls to ensure key personnel identified in the application/proposal and award were involved in the project as required. In addition, if the University identifies key personnel commitments are not going to meet required levels, ensure that federal awarding agency approval is obtained when required. University?s Response The University has established internal controls to ensure compliance with program requirements through the effort certification and project reporting processes, and budget reconciliation requirements. However, we agree there are areas for improvement int terms of staff and PI training, and available resources to monitor contribution and documentation of committed levels of effort. The University will implement the following improvements: ? The University offers multiple training courses to research administrators and principal investigators on management of sponsored awards. We will update our training materials and provide additional training on documentation of effort for PIs and key personnel, and prior approval requirements for reductions in effort. ? Update guidance and instructions for effort certifications to ensure all devoted effort is properly accounted for during the effort certification process. ? Develop exception reports to provide additional oversight to monitor deviations from committed effort for PIs and key personnel. Auditor?s Remarks We thank the University for its cooperation and assistance throughout the audit. We will review the status of the University?s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 308, Revision of budget and program plans, states in part: (a) The approved budget for the Federal award summarizes the financial aspects of the project or program as approved during the Federal award process. It may include either the Federal and non-Federal share (see definition for Federal share in ? 200.1) or only the Federal share, depending upon Federal awarding agency requirements. The budget and program plans include considerations for performance and program evaluation purposes whenever required in accordance with the terms and conditions of the award. (b) Recipients are required to report deviations from budget or project scope or objective, and request prior approvals from Federal awarding agencies for budget and program plan revisions, in accordance with this section. (c) For non-construction Federal awards, recipients must request prior approvals from Federal awarding agencies for the following program or budget-related reasons: (1) Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval). (2) Change in a key person specified in the application or the Federal award. (3) The disengagement from the project for more than three months, or a 25 percent reduction in time devoted to the project, by the approved project director or principal investigator. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
2022-002 The University of Washington did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. Assistance Listing Number and Title: Various, Research and Development Cluster ? University of Washington Federal Grantor Name: Various Federal Award/Contract Number: Various Pass-through Entity Name: Various Pass-through Award/Contract Number: Various Applicable Compliance Component: Special Tests and Provisions: Key Personnel Known Questioned Cost Amount: None Background The federal government sponsors research and development (R&D) activities under a variety of types of awards. Most commonly, these are grants, cooperative agreements, and contracts to achieve objectives agreed upon between the federal awarding agency and the non-federal entity. The types of R&D conducted under these awards vary widely. Grants for R&D are awarded to non-federal entities on the basis of applications or proposals submitted to federal agencies or pass-through entities. An award is then negotiated that will include the purpose of the project, the amount of the award and the terms and conditions. R&D awards may include staffing proposals that specify key personnel who will work on the project, as well as the extent of their planned involvement. One of these key personnel is typically a principal investigator (PI) who contributes to the scientific development or execution of a project in a substantive, measurable way. The non-federal entity is required to meet key personnel commitments specified in the award and may be required to obtain approval from the grantor for certain types of changes. The University of Washington (University) is the largest recipient of federal R&D awards in the state of Washington. The University expended funds from 2,396 separate awards for the R&D grants, with expenditures totaling approximately $1.02 billion of the almost $1.17 billion expended statewide during the audit period. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The University did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. To determine if the University complied with key personnel requirements, we reviewed the University?s internal controls over monitoring key personnel time and effort and also examined grant awards to determine if key personnel identified in the application/proposal and award were involved in the project as required. We used a statistical sampling method to randomly select and examine 59 unique budget numbers assigned to R&D programs out of a total population of 7,486. We examined these samples and found: ? Four instances where we could not determine whether the University properly monitored key personnel time and effort to ensure that they met award requirements identified in the grant application/proposal and award were involved in the project as required. ? Two instances where key personnel were not involved in the project as required. Specifically, we found: o One award for which the PI was required to spend approximately 16 percent of their time on the award, but spent less than 5 percent o One award where the PI was required to spend 2 percent of their time on the award, but only spent .67 percent We consider these internal control deficiencies to be a significant deficiency. This issue was not reported as a finding in the prior audit. Cause of Condition While we determined the University had policies and procedures to ensure that key personnel are involved in the grant projects as required, there were not policies or procedures to ensure that there was sufficient University level oversight to ensure key personnel commitments were met. Effect of Condition By not establishing adequate internal controls, the University cannot reasonably ensure it meets the key personnel requirement. Recommendation We recommend the University improve its internal controls to ensure key personnel identified in the application/proposal and award were involved in the project as required. In addition, if the University identifies key personnel commitments are not going to meet required levels, ensure that federal awarding agency approval is obtained when required. University?s Response The University has established internal controls to ensure compliance with program requirements through the effort certification and project reporting processes, and budget reconciliation requirements. However, we agree there are areas for improvement int terms of staff and PI training, and available resources to monitor contribution and documentation of committed levels of effort. The University will implement the following improvements: ? The University offers multiple training courses to research administrators and principal investigators on management of sponsored awards. We will update our training materials and provide additional training on documentation of effort for PIs and key personnel, and prior approval requirements for reductions in effort. ? Update guidance and instructions for effort certifications to ensure all devoted effort is properly accounted for during the effort certification process. ? Develop exception reports to provide additional oversight to monitor deviations from committed effort for PIs and key personnel. Auditor?s Remarks We thank the University for its cooperation and assistance throughout the audit. We will review the status of the University?s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 308, Revision of budget and program plans, states in part: (a) The approved budget for the Federal award summarizes the financial aspects of the project or program as approved during the Federal award process. It may include either the Federal and non-Federal share (see definition for Federal share in ? 200.1) or only the Federal share, depending upon Federal awarding agency requirements. The budget and program plans include considerations for performance and program evaluation purposes whenever required in accordance with the terms and conditions of the award. (b) Recipients are required to report deviations from budget or project scope or objective, and request prior approvals from Federal awarding agencies for budget and program plan revisions, in accordance with this section. (c) For non-construction Federal awards, recipients must request prior approvals from Federal awarding agencies for the following program or budget-related reasons: (1) Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval). (2) Change in a key person specified in the application or the Federal award. (3) The disengagement from the project for more than three months, or a 25 percent reduction in time devoted to the project, by the approved project director or principal investigator. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
2022-002 The University of Washington did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. Assistance Listing Number and Title: Various, Research and Development Cluster ? University of Washington Federal Grantor Name: Various Federal Award/Contract Number: Various Pass-through Entity Name: Various Pass-through Award/Contract Number: Various Applicable Compliance Component: Special Tests and Provisions: Key Personnel Known Questioned Cost Amount: None Background The federal government sponsors research and development (R&D) activities under a variety of types of awards. Most commonly, these are grants, cooperative agreements, and contracts to achieve objectives agreed upon between the federal awarding agency and the non-federal entity. The types of R&D conducted under these awards vary widely. Grants for R&D are awarded to non-federal entities on the basis of applications or proposals submitted to federal agencies or pass-through entities. An award is then negotiated that will include the purpose of the project, the amount of the award and the terms and conditions. R&D awards may include staffing proposals that specify key personnel who will work on the project, as well as the extent of their planned involvement. One of these key personnel is typically a principal investigator (PI) who contributes to the scientific development or execution of a project in a substantive, measurable way. The non-federal entity is required to meet key personnel commitments specified in the award and may be required to obtain approval from the grantor for certain types of changes. The University of Washington (University) is the largest recipient of federal R&D awards in the state of Washington. The University expended funds from 2,396 separate awards for the R&D grants, with expenditures totaling approximately $1.02 billion of the almost $1.17 billion expended statewide during the audit period. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The University did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. To determine if the University complied with key personnel requirements, we reviewed the University?s internal controls over monitoring key personnel time and effort and also examined grant awards to determine if key personnel identified in the application/proposal and award were involved in the project as required. We used a statistical sampling method to randomly select and examine 59 unique budget numbers assigned to R&D programs out of a total population of 7,486. We examined these samples and found: ? Four instances where we could not determine whether the University properly monitored key personnel time and effort to ensure that they met award requirements identified in the grant application/proposal and award were involved in the project as required. ? Two instances where key personnel were not involved in the project as required. Specifically, we found: o One award for which the PI was required to spend approximately 16 percent of their time on the award, but spent less than 5 percent o One award where the PI was required to spend 2 percent of their time on the award, but only spent .67 percent We consider these internal control deficiencies to be a significant deficiency. This issue was not reported as a finding in the prior audit. Cause of Condition While we determined the University had policies and procedures to ensure that key personnel are involved in the grant projects as required, there were not policies or procedures to ensure that there was sufficient University level oversight to ensure key personnel commitments were met. Effect of Condition By not establishing adequate internal controls, the University cannot reasonably ensure it meets the key personnel requirement. Recommendation We recommend the University improve its internal controls to ensure key personnel identified in the application/proposal and award were involved in the project as required. In addition, if the University identifies key personnel commitments are not going to meet required levels, ensure that federal awarding agency approval is obtained when required. University?s Response The University has established internal controls to ensure compliance with program requirements through the effort certification and project reporting processes, and budget reconciliation requirements. However, we agree there are areas for improvement int terms of staff and PI training, and available resources to monitor contribution and documentation of committed levels of effort. The University will implement the following improvements: ? The University offers multiple training courses to research administrators and principal investigators on management of sponsored awards. We will update our training materials and provide additional training on documentation of effort for PIs and key personnel, and prior approval requirements for reductions in effort. ? Update guidance and instructions for effort certifications to ensure all devoted effort is properly accounted for during the effort certification process. ? Develop exception reports to provide additional oversight to monitor deviations from committed effort for PIs and key personnel. Auditor?s Remarks We thank the University for its cooperation and assistance throughout the audit. We will review the status of the University?s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 308, Revision of budget and program plans, states in part: (a) The approved budget for the Federal award summarizes the financial aspects of the project or program as approved during the Federal award process. It may include either the Federal and non-Federal share (see definition for Federal share in ? 200.1) or only the Federal share, depending upon Federal awarding agency requirements. The budget and program plans include considerations for performance and program evaluation purposes whenever required in accordance with the terms and conditions of the award. (b) Recipients are required to report deviations from budget or project scope or objective, and request prior approvals from Federal awarding agencies for budget and program plan revisions, in accordance with this section. (c) For non-construction Federal awards, recipients must request prior approvals from Federal awarding agencies for the following program or budget-related reasons: (1) Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval). (2) Change in a key person specified in the application or the Federal award. (3) The disengagement from the project for more than three months, or a 25 percent reduction in time devoted to the project, by the approved project director or principal investigator. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
2022-002 The University of Washington did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. Assistance Listing Number and Title: Various, Research and Development Cluster ? University of Washington Federal Grantor Name: Various Federal Award/Contract Number: Various Pass-through Entity Name: Various Pass-through Award/Contract Number: Various Applicable Compliance Component: Special Tests and Provisions: Key Personnel Known Questioned Cost Amount: None Background The federal government sponsors research and development (R&D) activities under a variety of types of awards. Most commonly, these are grants, cooperative agreements, and contracts to achieve objectives agreed upon between the federal awarding agency and the non-federal entity. The types of R&D conducted under these awards vary widely. Grants for R&D are awarded to non-federal entities on the basis of applications or proposals submitted to federal agencies or pass-through entities. An award is then negotiated that will include the purpose of the project, the amount of the award and the terms and conditions. R&D awards may include staffing proposals that specify key personnel who will work on the project, as well as the extent of their planned involvement. One of these key personnel is typically a principal investigator (PI) who contributes to the scientific development or execution of a project in a substantive, measurable way. The non-federal entity is required to meet key personnel commitments specified in the award and may be required to obtain approval from the grantor for certain types of changes. The University of Washington (University) is the largest recipient of federal R&D awards in the state of Washington. The University expended funds from 2,396 separate awards for the R&D grants, with expenditures totaling approximately $1.02 billion of the almost $1.17 billion expended statewide during the audit period. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The University did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. To determine if the University complied with key personnel requirements, we reviewed the University?s internal controls over monitoring key personnel time and effort and also examined grant awards to determine if key personnel identified in the application/proposal and award were involved in the project as required. We used a statistical sampling method to randomly select and examine 59 unique budget numbers assigned to R&D programs out of a total population of 7,486. We examined these samples and found: ? Four instances where we could not determine whether the University properly monitored key personnel time and effort to ensure that they met award requirements identified in the grant application/proposal and award were involved in the project as required. ? Two instances where key personnel were not involved in the project as required. Specifically, we found: o One award for which the PI was required to spend approximately 16 percent of their time on the award, but spent less than 5 percent o One award where the PI was required to spend 2 percent of their time on the award, but only spent .67 percent We consider these internal control deficiencies to be a significant deficiency. This issue was not reported as a finding in the prior audit. Cause of Condition While we determined the University had policies and procedures to ensure that key personnel are involved in the grant projects as required, there were not policies or procedures to ensure that there was sufficient University level oversight to ensure key personnel commitments were met. Effect of Condition By not establishing adequate internal controls, the University cannot reasonably ensure it meets the key personnel requirement. Recommendation We recommend the University improve its internal controls to ensure key personnel identified in the application/proposal and award were involved in the project as required. In addition, if the University identifies key personnel commitments are not going to meet required levels, ensure that federal awarding agency approval is obtained when required. University?s Response The University has established internal controls to ensure compliance with program requirements through the effort certification and project reporting processes, and budget reconciliation requirements. However, we agree there are areas for improvement int terms of staff and PI training, and available resources to monitor contribution and documentation of committed levels of effort. The University will implement the following improvements: ? The University offers multiple training courses to research administrators and principal investigators on management of sponsored awards. We will update our training materials and provide additional training on documentation of effort for PIs and key personnel, and prior approval requirements for reductions in effort. ? Update guidance and instructions for effort certifications to ensure all devoted effort is properly accounted for during the effort certification process. ? Develop exception reports to provide additional oversight to monitor deviations from committed effort for PIs and key personnel. Auditor?s Remarks We thank the University for its cooperation and assistance throughout the audit. We will review the status of the University?s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 308, Revision of budget and program plans, states in part: (a) The approved budget for the Federal award summarizes the financial aspects of the project or program as approved during the Federal award process. It may include either the Federal and non-Federal share (see definition for Federal share in ? 200.1) or only the Federal share, depending upon Federal awarding agency requirements. The budget and program plans include considerations for performance and program evaluation purposes whenever required in accordance with the terms and conditions of the award. (b) Recipients are required to report deviations from budget or project scope or objective, and request prior approvals from Federal awarding agencies for budget and program plan revisions, in accordance with this section. (c) For non-construction Federal awards, recipients must request prior approvals from Federal awarding agencies for the following program or budget-related reasons: (1) Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval). (2) Change in a key person specified in the application or the Federal award. (3) The disengagement from the project for more than three months, or a 25 percent reduction in time devoted to the project, by the approved project director or principal investigator. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
2022-002 The University of Washington did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. Assistance Listing Number and Title: Various, Research and Development Cluster ? University of Washington Federal Grantor Name: Various Federal Award/Contract Number: Various Pass-through Entity Name: Various Pass-through Award/Contract Number: Various Applicable Compliance Component: Special Tests and Provisions: Key Personnel Known Questioned Cost Amount: None Background The federal government sponsors research and development (R&D) activities under a variety of types of awards. Most commonly, these are grants, cooperative agreements, and contracts to achieve objectives agreed upon between the federal awarding agency and the non-federal entity. The types of R&D conducted under these awards vary widely. Grants for R&D are awarded to non-federal entities on the basis of applications or proposals submitted to federal agencies or pass-through entities. An award is then negotiated that will include the purpose of the project, the amount of the award and the terms and conditions. R&D awards may include staffing proposals that specify key personnel who will work on the project, as well as the extent of their planned involvement. One of these key personnel is typically a principal investigator (PI) who contributes to the scientific development or execution of a project in a substantive, measurable way. The non-federal entity is required to meet key personnel commitments specified in the award and may be required to obtain approval from the grantor for certain types of changes. The University of Washington (University) is the largest recipient of federal R&D awards in the state of Washington. The University expended funds from 2,396 separate awards for the R&D grants, with expenditures totaling approximately $1.02 billion of the almost $1.17 billion expended statewide during the audit period. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Description of Condition The University did not have adequate internal controls to ensure key personnel commitments specified in grant proposals or awards were met. To determine if the University complied with key personnel requirements, we reviewed the University?s internal controls over monitoring key personnel time and effort and also examined grant awards to determine if key personnel identified in the application/proposal and award were involved in the project as required. We used a statistical sampling method to randomly select and examine 59 unique budget numbers assigned to R&D programs out of a total population of 7,486. We examined these samples and found: ? Four instances where we could not determine whether the University properly monitored key personnel time and effort to ensure that they met award requirements identified in the grant application/proposal and award were involved in the project as required. ? Two instances where key personnel were not involved in the project as required. Specifically, we found: o One award for which the PI was required to spend approximately 16 percent of their time on the award, but spent less than 5 percent o One award where the PI was required to spend 2 percent of their time on the award, but only spent .67 percent We consider these internal control deficiencies to be a significant deficiency. This issue was not reported as a finding in the prior audit. Cause of Condition While we determined the University had policies and procedures to ensure that key personnel are involved in the grant projects as required, there were not policies or procedures to ensure that there was sufficient University level oversight to ensure key personnel commitments were met. Effect of Condition By not establishing adequate internal controls, the University cannot reasonably ensure it meets the key personnel requirement. Recommendation We recommend the University improve its internal controls to ensure key personnel identified in the application/proposal and award were involved in the project as required. In addition, if the University identifies key personnel commitments are not going to meet required levels, ensure that federal awarding agency approval is obtained when required. University?s Response The University has established internal controls to ensure compliance with program requirements through the effort certification and project reporting processes, and budget reconciliation requirements. However, we agree there are areas for improvement int terms of staff and PI training, and available resources to monitor contribution and documentation of committed levels of effort. The University will implement the following improvements: ? The University offers multiple training courses to research administrators and principal investigators on management of sponsored awards. We will update our training materials and provide additional training on documentation of effort for PIs and key personnel, and prior approval requirements for reductions in effort. ? Update guidance and instructions for effort certifications to ensure all devoted effort is properly accounted for during the effort certification process. ? Develop exception reports to provide additional oversight to monitor deviations from committed effort for PIs and key personnel. Auditor?s Remarks We thank the University for its cooperation and assistance throughout the audit. We will review the status of the University?s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 308, Revision of budget and program plans, states in part: (a) The approved budget for the Federal award summarizes the financial aspects of the project or program as approved during the Federal award process. It may include either the Federal and non-Federal share (see definition for Federal share in ? 200.1) or only the Federal share, depending upon Federal awarding agency requirements. The budget and program plans include considerations for performance and program evaluation purposes whenever required in accordance with the terms and conditions of the award. (b) Recipients are required to report deviations from budget or project scope or objective, and request prior approvals from Federal awarding agencies for budget and program plan revisions, in accordance with this section. (c) For non-construction Federal awards, recipients must request prior approvals from Federal awarding agencies for the following program or budget-related reasons: (1) Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval). (2) Change in a key person specified in the application or the Federal award. (3) The disengagement from the project for more than three months, or a 25 percent reduction in time devoted to the project, by the approved project director or principal investigator. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.