Finding Number: 2024-006 Agency: Department of Health & Human Services Federal Program: Epidemiology and Laboratory Capacity for Infectious Diseases ALN: 93.323 Grant Number: Various Compliance Requirement: Cash Management Category: Significant Deficiency in Internal Control over Compliance Criteria 2 CFR 200.302 states that each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state's own funds. 2 CFR 200.333 states that financial records, supporting documents, statistical records, and all other non-Federal entity records must be retained for a period of three years from the date of submission of the final expenditure report. For Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. Condition During our procedures, we found the following exceptions: a) In a sample of fifteen (25) cash drawdown petitions for Epidemiology and Laboratory Capacity for Infectious Diseases, we observed transactions with the check issued after the required time lapsed in accordance with the program advance type request. Cause Programs have not established written procedures and internal controls to properly follow up the finance division in order to pay to the suppliers and service providers on a timely basis. Effect Failure to minimize the time elapsed between the drawdown from the US Treasury to the actual check issue date may result in the calculation and determination by the Federal grantors of interest costs on the average balance of funds held beyond the reasonable time. This situation may also expose the PRDH to possible sanctions by federal grantors, such as withholding payments, or other special conditions. Questioned Costs None Perspective Information Finding represents a significant and repetitive problem. The Department will reinforce procedures over the disbursement process to ensure that all program payments are made within the 3 days timeframe. Prior Year Audit Finding None Recommendation The PRDH should establish written procedures that payments are issued promptly after the drawdown is made. This will minimize the time elapsed between the drawdown and the payment of funds. The PRDH should also establish a procedure to periodically monitor the cash balances of Federal programs for the possible identification, investigation, and resolution of unused funds. Views of responsible officials The PRDOH is working with the Finance Department to establish and strengthen our internal controls to ensure all payments comply with the guidelines established by the Federal Government. On the other hand, the PRDOH is working and verifying our own written internal procedures to ensure that payments are issued promptly after the drawdown is made. Responsible Officials Mrs. Sylvianette Luna Anavitate Program Director 787-765-2929 ext. 3121 Mr. Bryan Santos Martínez Financial and Accountant Analyst 787-765-2929 ext. 3361 Estimated Completion Date The Completion date for the revised procedures will be by December 2025.
Finding Number: 2024-006 Agency: Department of Health & Human Services Federal Program: Epidemiology and Laboratory Capacity for Infectious Diseases ALN: 93.323 Grant Number: Various Compliance Requirement: Cash Management Category: Significant Deficiency in Internal Control over Compliance Criteria 2 CFR 200.302 states that each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state's own funds. 2 CFR 200.333 states that financial records, supporting documents, statistical records, and all other non-Federal entity records must be retained for a period of three years from the date of submission of the final expenditure report. For Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. Condition During our procedures, we found the following exceptions: a) In a sample of fifteen (25) cash drawdown petitions for Epidemiology and Laboratory Capacity for Infectious Diseases, we observed transactions with the check issued after the required time lapsed in accordance with the program advance type request. Cause Programs have not established written procedures and internal controls to properly follow up the finance division in order to pay to the suppliers and service providers on a timely basis. Effect Failure to minimize the time elapsed between the drawdown from the US Treasury to the actual check issue date may result in the calculation and determination by the Federal grantors of interest costs on the average balance of funds held beyond the reasonable time. This situation may also expose the PRDH to possible sanctions by federal grantors, such as withholding payments, or other special conditions. Questioned Costs None Perspective Information Finding represents a significant and repetitive problem. The Department will reinforce procedures over the disbursement process to ensure that all program payments are made within the 3 days timeframe. Prior Year Audit Finding None Recommendation The PRDH should establish written procedures that payments are issued promptly after the drawdown is made. This will minimize the time elapsed between the drawdown and the payment of funds. The PRDH should also establish a procedure to periodically monitor the cash balances of Federal programs for the possible identification, investigation, and resolution of unused funds. Views of responsible officials The PRDOH is working with the Finance Department to establish and strengthen our internal controls to ensure all payments comply with the guidelines established by the Federal Government. On the other hand, the PRDOH is working and verifying our own written internal procedures to ensure that payments are issued promptly after the drawdown is made. Responsible Officials Mrs. Sylvianette Luna Anavitate Program Director 787-765-2929 ext. 3121 Mr. Bryan Santos Martínez Financial and Accountant Analyst 787-765-2929 ext. 3361 Estimated Completion Date The Completion date for the revised procedures will be by December 2025.
Finding Number: 2024-005 Agency: Department of Health & Human Services Federal Program: Maternal and Child Health Services Block Grant to the State ALN: 93.994 Grant Number: Various Compliance Requirement: Cash Management Category: Significant Deficiency in Internal Control over Compliance Criteria 2 CFR 200.302 states that each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state's own funds. 2 CFR 200.333 states that financial records, supporting documents, statistical records, and all other non-Federal entity records must be retained for a period of three years from the date of submission of the final expenditure report. For Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. Condition During our procedures, we found the following exceptions: a) In a sample of fifteen (25) cash drawdown petitions for Maternal and Child Health Services Block Grant to the State, we observed transactions with the check issued after the required time lapsed in accordance with the program advance type request. Cause Programs have not established written procedures and internal controls to properly follow up the finance division in order to pay to the suppliers and service providers on a timely basis. Effect Failure to minimize the time elapsed between the drawdown from the US Treasury to the actual check issue date may result in the calculation and determination by the Federal grantors of interest costs on the average balance of funds held beyond the reasonable time. This situation may also expose the PRDH to possible sanctions by federal grantors, such as withholding payments, or other special conditions. Questioned Costs None Perspective Information Finding represents a significant and repetitive problem. The Department will reinforce procedures over the disbursement process to ensure that all program payments are made within the 3 days timeframe. Prior Year Audit Finding None Recommendation The PRDH should establish written procedures that payments are issued promptly after the drawdown is made. This will minimize the time elapsed between the drawdown and the payment of funds. The PRDH should also establish a procedure to periodically monitor the cash balances of Federal programs for the possible identification, investigation, and resolution of unused funds. Views of responsible officials The PRDOH is working with the Finance Department to establish and strengthen our internal controls to ensure all payments comply with the guidelines established by the Federal Government. On the other hand, the PRDOH is working and verifying our own written procedures to ensure that payments are issued promptly after the drawdown is made. Responsible Officials Dr. Manuel Vargas Bernier Program Director 787-765-2929 ext. 4583 Mrs. Diana Ferrer Rivera Senior Accountant 787-765-2929 ext. 4551 Mrs. Lydia Magaly Cabrera Accountant 787-765-2929 ext. 4587 Estimated Completion Date The Completion date for the revised procedures will be by December 2025.
Finding 2024-002: Support for Schedule of Expenditures of Federal Awards in the Accounting System Information on the Federal Programs: ALN 14.235 Criteria or Specific Requirement: In accordance with CFR 200.302 (financial management) the auditee must be able to identify all Federal awards received and expenses and the Federal programs under which they were received. Condition: Detailed invoices were available to support the amounts reported on the Schedule of Expenditures of Federal Awards (SEFA), however, the expenses had not been accurately classified by award within the general ledger. It is not possible to extract a program income statement to support the expenditures reported for each grant within the Federal program from the accounting system. Cause: Although they do have categories set up by program, NEW was not tracking the charges reimbursed by the Federal Government separately within the general ledger. Effect or Potential Effect: If the information on the SEFA cannot be traced back to the information within the accounting system, there is an increased potential for inaccurate reporting. Questioned Costs: None noted. Context: The account structure was not set up to track the expenses charged to the Federal Government separately from other programs. Identification as a Repeat Finding, if Applicable: Finding 2022-002, 2023-002 Recommendation: We recommend that NEW ensure that support for the Schedule of Expenditures of Federal Awards (SEFA) can be extracted from the accounting system.
Finding 2024-002: Support for Schedule of Expenditures of Federal Awards in the Accounting System Information on the Federal Programs: ALN 14.235 Criteria or Specific Requirement: In accordance with CFR 200.302 (financial management) the auditee must be able to identify all Federal awards received and expenses and the Federal programs under which they were received. Condition: Detailed invoices were available to support the amounts reported on the Schedule of Expenditures of Federal Awards (SEFA), however, the expenses had not been accurately classified by award within the general ledger. It is not possible to extract a program income statement to support the expenditures reported for each grant within the Federal program from the accounting system. Cause: Although they do have categories set up by program, NEW was not tracking the charges reimbursed by the Federal Government separately within the general ledger. Effect or Potential Effect: If the information on the SEFA cannot be traced back to the information within the accounting system, there is an increased potential for inaccurate reporting. Questioned Costs: None noted. Context: The account structure was not set up to track the expenses charged to the Federal Government separately from other programs. Identification as a Repeat Finding, if Applicable: Finding 2022-002, 2023-002 Recommendation: We recommend that NEW ensure that support for the Schedule of Expenditures of Federal Awards (SEFA) can be extracted from the accounting system.
Finding 2024-002: Support for Schedule of Expenditures of Federal Awards in the Accounting System Information on the Federal Programs: ALN 14.235 Criteria or Specific Requirement: In accordance with CFR 200.302 (financial management) the auditee must be able to identify all Federal awards received and expenses and the Federal programs under which they were received. Condition: Detailed invoices were available to support the amounts reported on the Schedule of Expenditures of Federal Awards (SEFA), however, the expenses had not been accurately classified by award within the general ledger. It is not possible to extract a program income statement to support the expenditures reported for each grant within the Federal program from the accounting system. Cause: Although they do have categories set up by program, NEW was not tracking the charges reimbursed by the Federal Government separately within the general ledger. Effect or Potential Effect: If the information on the SEFA cannot be traced back to the information within the accounting system, there is an increased potential for inaccurate reporting. Questioned Costs: None noted. Context: The account structure was not set up to track the expenses charged to the Federal Government separately from other programs. Identification as a Repeat Finding, if Applicable: Finding 2022-002, 2023-002 Recommendation: We recommend that NEW ensure that support for the Schedule of Expenditures of Federal Awards (SEFA) can be extracted from the accounting system.
Finding 2024-002: Support for Schedule of Expenditures of Federal Awards in the Accounting System Information on the Federal Programs: ALN 14.235 Criteria or Specific Requirement: In accordance with CFR 200.302 (financial management) the auditee must be able to identify all Federal awards received and expenses and the Federal programs under which they were received. Condition: Detailed invoices were available to support the amounts reported on the Schedule of Expenditures of Federal Awards (SEFA), however, the expenses had not been accurately classified by award within the general ledger. It is not possible to extract a program income statement to support the expenditures reported for each grant within the Federal program from the accounting system. Cause: Although they do have categories set up by program, NEW was not tracking the charges reimbursed by the Federal Government separately within the general ledger. Effect or Potential Effect: If the information on the SEFA cannot be traced back to the information within the accounting system, there is an increased potential for inaccurate reporting. Questioned Costs: None noted. Context: The account structure was not set up to track the expenses charged to the Federal Government separately from other programs. Identification as a Repeat Finding, if Applicable: Finding 2022-002, 2023-002 Recommendation: We recommend that NEW ensure that support for the Schedule of Expenditures of Federal Awards (SEFA) can be extracted from the accounting system.
Assistance Listing Number: 21.027 Program Title: Coronavirus State and Local Fiscal Recovery Funds Federal Award Number: N/A Federal Award Year: 2023/2024 Pass Through Entity: Chicago Cook Workforce Partnership Criteria: In accordance with 2 CFR 200.303, the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non- Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: The Organization is either lacking or has nonconforming written policies and procedures for the following administrative functions, required by0 the Uniform Guidance: 1. Financial management - 2 CFR 200.302(b)(6) - spacing 2. Allowable Costs - 2 CFR 200.302(b)(7) 3. Federal payment - 2 CFR 200.305(b)(1) 4. Procurement - 2 CFR 200.318(a) and 2 CFR 200.318(c)(1) 5. Competition - 2 CFR 200.319(d) 6. Methods of procurement to be followed - 2 CFR 200.320 7. Compensation (Personal Services) - 2 CFR 200.430(a)(1) 8. Compensation (Fringe Benefits - Leave) - 2 CFR 200.431(b)(1) 9. Relocation costs of employees - 2 CFR 200.464(a)(2) 10. Travel costs - 2 CFR 200.474 Questioned Costs: There are no questioned costs related to the items described above. Context: The conditions outlined above are based on our review of the Organization’s policies and procedures, which were found to be not in accordance with Uniform Guidance. Cause: The Organization was not aware of the specific Uniform Guidance requirements for certain written policies and procedures. Effect: The Organization did not have these policies and procedures in place to reasonably ensure that program functions are achieved effectively, efficiently and in compliance with Federal statutes, regulations, and the terms and conditions of the award. The Organization was not in compliance with the administrative requirements set forth in the Uniform Guidance. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Organization design procedures and implement internal control procedures to ensure that the Uniform Guidance administrative requirements are met. Views of Responsible Officials and Corrective Action Plan: See corrective action plan attached to financial statements.
Finding 2024-003 – Fiscal Management (Material Weakness) CFDA Title and Number: 20.513 (5310) Enhanced Mobility of Seniors and Individuals with Disabilities. Name of Federal Agency: Department of Transportation Internal Control over Compliance: Cash Management CFDA Title and Number: 20.509 (5311) Operating Assistance. Formula Grants for Rural. Name of Federal Agency: Department of Transportation Internal Control over Compliance: Cash Management Criteria: 2 CFR Part 200.302(b)(1) The financial management system of each non-federal entity must provide for the following: Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. 200.302(b)(2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in 200.328 and 200.329. Condition: During portions of the fiscal year, the District prepared reimbursement calculations relying on an internally developed spreadsheet tool, rather than using amounts solely obtained from the general ledger and supporting documentation. The reimbursement reports were prepared by management with limited review. Conflicts over review and other monitoring procedures occurred, and were not always resolved. Complete supporting documentation for the claimed costs were not always available. Claims and other financial reports due to ODOT were regularly submitted after the due dates. The late and/or unsubstantiated filings have resulted in lost claims for the District, and potential refunding of reimbursements received. Cause: Internal control procedures assuring timely and accurate preparation of reports and filing of the reimbursement requests were not designed or implemented adequately. Maintaining sufficient and accurate supporting documentation for each report was not possible because original data was not relied upon by management, to complete the reports and reimbursement requests. Effect or Potential Effect: The lack of effective internal control activities over cash management, including financial reporting, allowed for reporting and claims errors, from simple calculation errors to requests for reimbursements of unauthorized purposes. Improper financial reporting to the ODOT occurred regularly. Lack of timely filing of reimbursement requests for amounts claimed, resulted in lost revenues and claims that may be required to be returned. Questioned Cost: No Context: Delays in filing reimbursement claims, delays in filing financial reports to ODOT, and internal disputes regarding completion of grant reimbursement request procedures were evident. Weak or nonexistent controls over cash management, including fiscal management, may result in lost revenues and risks of creating unnecessary liabilities in the form of refunds due to ODOT. Repeat of a Prior-Year Finding: Yes Recommendation: The District should design and implement internal control policies and procedures for cash management, including fiscal management and financial reporting. Monitoring, information and communication control activities should also be designed and implemented as part of the effort the reduce the risk of continued matters of noncompliance related to cash management. District's Response: The District acknowledges the weaknesses and its intention of correcting weaknesses. Corrective Action Plan: The District’s General Manager resigned effective September 13, 2024. The Board has adopted a plan to procure qualified professional assistance to evaluate and restructure the organization and assist in daily management activities until a new General Manager can be hired and trained. Additional assistance for resolving these deficiencies has been offered by ODOT and accepted by the Board. Planned Implementation Date: September 30, 2024 Responsible Persons: District Board, Umpqua Public Transit District
Finding 2024-003 – Fiscal Management (Material Weakness) CFDA Title and Number: 20.513 (5310) Enhanced Mobility of Seniors and Individuals with Disabilities. Name of Federal Agency: Department of Transportation Internal Control over Compliance: Cash Management CFDA Title and Number: 20.509 (5311) Operating Assistance. Formula Grants for Rural. Name of Federal Agency: Department of Transportation Internal Control over Compliance: Cash Management Criteria: 2 CFR Part 200.302(b)(1) The financial management system of each non-federal entity must provide for the following: Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. 200.302(b)(2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in 200.328 and 200.329. Condition: During portions of the fiscal year, the District prepared reimbursement calculations relying on an internally developed spreadsheet tool, rather than using amounts solely obtained from the general ledger and supporting documentation. The reimbursement reports were prepared by management with limited review. Conflicts over review and other monitoring procedures occurred, and were not always resolved. Complete supporting documentation for the claimed costs were not always available. Claims and other financial reports due to ODOT were regularly submitted after the due dates. The late and/or unsubstantiated filings have resulted in lost claims for the District, and potential refunding of reimbursements received. Cause: Internal control procedures assuring timely and accurate preparation of reports and filing of the reimbursement requests were not designed or implemented adequately. Maintaining sufficient and accurate supporting documentation for each report was not possible because original data was not relied upon by management, to complete the reports and reimbursement requests. Effect or Potential Effect: The lack of effective internal control activities over cash management, including financial reporting, allowed for reporting and claims errors, from simple calculation errors to requests for reimbursements of unauthorized purposes. Improper financial reporting to the ODOT occurred regularly. Lack of timely filing of reimbursement requests for amounts claimed, resulted in lost revenues and claims that may be required to be returned. Questioned Cost: No Context: Delays in filing reimbursement claims, delays in filing financial reports to ODOT, and internal disputes regarding completion of grant reimbursement request procedures were evident. Weak or nonexistent controls over cash management, including fiscal management, may result in lost revenues and risks of creating unnecessary liabilities in the form of refunds due to ODOT. Repeat of a Prior-Year Finding: Yes Recommendation: The District should design and implement internal control policies and procedures for cash management, including fiscal management and financial reporting. Monitoring, information and communication control activities should also be designed and implemented as part of the effort the reduce the risk of continued matters of noncompliance related to cash management. District's Response: The District acknowledges the weaknesses and its intention of correcting weaknesses. Corrective Action Plan: The District’s General Manager resigned effective September 13, 2024. The Board has adopted a plan to procure qualified professional assistance to evaluate and restructure the organization and assist in daily management activities until a new General Manager can be hired and trained. Additional assistance for resolving these deficiencies has been offered by ODOT and accepted by the Board. Planned Implementation Date: September 30, 2024 Responsible Persons: District Board, Umpqua Public Transit District
Finding 2024-003 – Fiscal Management (Material Weakness) CFDA Title and Number: 20.513 (5310) Enhanced Mobility of Seniors and Individuals with Disabilities. Name of Federal Agency: Department of Transportation Internal Control over Compliance: Cash Management CFDA Title and Number: 20.509 (5311) Operating Assistance. Formula Grants for Rural. Name of Federal Agency: Department of Transportation Internal Control over Compliance: Cash Management Criteria: 2 CFR Part 200.302(b)(1) The financial management system of each non-federal entity must provide for the following: Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. 200.302(b)(2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in 200.328 and 200.329. Condition: During portions of the fiscal year, the District prepared reimbursement calculations relying on an internally developed spreadsheet tool, rather than using amounts solely obtained from the general ledger and supporting documentation. The reimbursement reports were prepared by management with limited review. Conflicts over review and other monitoring procedures occurred, and were not always resolved. Complete supporting documentation for the claimed costs were not always available. Claims and other financial reports due to ODOT were regularly submitted after the due dates. The late and/or unsubstantiated filings have resulted in lost claims for the District, and potential refunding of reimbursements received. Cause: Internal control procedures assuring timely and accurate preparation of reports and filing of the reimbursement requests were not designed or implemented adequately. Maintaining sufficient and accurate supporting documentation for each report was not possible because original data was not relied upon by management, to complete the reports and reimbursement requests. Effect or Potential Effect: The lack of effective internal control activities over cash management, including financial reporting, allowed for reporting and claims errors, from simple calculation errors to requests for reimbursements of unauthorized purposes. Improper financial reporting to the ODOT occurred regularly. Lack of timely filing of reimbursement requests for amounts claimed, resulted in lost revenues and claims that may be required to be returned. Questioned Cost: No Context: Delays in filing reimbursement claims, delays in filing financial reports to ODOT, and internal disputes regarding completion of grant reimbursement request procedures were evident. Weak or nonexistent controls over cash management, including fiscal management, may result in lost revenues and risks of creating unnecessary liabilities in the form of refunds due to ODOT. Repeat of a Prior-Year Finding: Yes Recommendation: The District should design and implement internal control policies and procedures for cash management, including fiscal management and financial reporting. Monitoring, information and communication control activities should also be designed and implemented as part of the effort the reduce the risk of continued matters of noncompliance related to cash management. District's Response: The District acknowledges the weaknesses and its intention of correcting weaknesses. Corrective Action Plan: The District’s General Manager resigned effective September 13, 2024. The Board has adopted a plan to procure qualified professional assistance to evaluate and restructure the organization and assist in daily management activities until a new General Manager can be hired and trained. Additional assistance for resolving these deficiencies has been offered by ODOT and accepted by the Board. Planned Implementation Date: September 30, 2024 Responsible Persons: District Board, Umpqua Public Transit District
Finding 2024-003 – Fiscal Management (Material Weakness) CFDA Title and Number: 20.513 (5310) Enhanced Mobility of Seniors and Individuals with Disabilities. Name of Federal Agency: Department of Transportation Internal Control over Compliance: Cash Management CFDA Title and Number: 20.509 (5311) Operating Assistance. Formula Grants for Rural. Name of Federal Agency: Department of Transportation Internal Control over Compliance: Cash Management Criteria: 2 CFR Part 200.302(b)(1) The financial management system of each non-federal entity must provide for the following: Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. 200.302(b)(2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in 200.328 and 200.329. Condition: During portions of the fiscal year, the District prepared reimbursement calculations relying on an internally developed spreadsheet tool, rather than using amounts solely obtained from the general ledger and supporting documentation. The reimbursement reports were prepared by management with limited review. Conflicts over review and other monitoring procedures occurred, and were not always resolved. Complete supporting documentation for the claimed costs were not always available. Claims and other financial reports due to ODOT were regularly submitted after the due dates. The late and/or unsubstantiated filings have resulted in lost claims for the District, and potential refunding of reimbursements received. Cause: Internal control procedures assuring timely and accurate preparation of reports and filing of the reimbursement requests were not designed or implemented adequately. Maintaining sufficient and accurate supporting documentation for each report was not possible because original data was not relied upon by management, to complete the reports and reimbursement requests. Effect or Potential Effect: The lack of effective internal control activities over cash management, including financial reporting, allowed for reporting and claims errors, from simple calculation errors to requests for reimbursements of unauthorized purposes. Improper financial reporting to the ODOT occurred regularly. Lack of timely filing of reimbursement requests for amounts claimed, resulted in lost revenues and claims that may be required to be returned. Questioned Cost: No Context: Delays in filing reimbursement claims, delays in filing financial reports to ODOT, and internal disputes regarding completion of grant reimbursement request procedures were evident. Weak or nonexistent controls over cash management, including fiscal management, may result in lost revenues and risks of creating unnecessary liabilities in the form of refunds due to ODOT. Repeat of a Prior-Year Finding: Yes Recommendation: The District should design and implement internal control policies and procedures for cash management, including fiscal management and financial reporting. Monitoring, information and communication control activities should also be designed and implemented as part of the effort the reduce the risk of continued matters of noncompliance related to cash management. District's Response: The District acknowledges the weaknesses and its intention of correcting weaknesses. Corrective Action Plan: The District’s General Manager resigned effective September 13, 2024. The Board has adopted a plan to procure qualified professional assistance to evaluate and restructure the organization and assist in daily management activities until a new General Manager can be hired and trained. Additional assistance for resolving these deficiencies has been offered by ODOT and accepted by the Board. Planned Implementation Date: September 30, 2024 Responsible Persons: District Board, Umpqua Public Transit District
Finding 2024-003 – Fiscal Management (Material Weakness) CFDA Title and Number: 20.513 (5310) Enhanced Mobility of Seniors and Individuals with Disabilities. Name of Federal Agency: Department of Transportation Internal Control over Compliance: Cash Management CFDA Title and Number: 20.509 (5311) Operating Assistance. Formula Grants for Rural. Name of Federal Agency: Department of Transportation Internal Control over Compliance: Cash Management Criteria: 2 CFR Part 200.302(b)(1) The financial management system of each non-federal entity must provide for the following: Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. 200.302(b)(2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in 200.328 and 200.329. Condition: During portions of the fiscal year, the District prepared reimbursement calculations relying on an internally developed spreadsheet tool, rather than using amounts solely obtained from the general ledger and supporting documentation. The reimbursement reports were prepared by management with limited review. Conflicts over review and other monitoring procedures occurred, and were not always resolved. Complete supporting documentation for the claimed costs were not always available. Claims and other financial reports due to ODOT were regularly submitted after the due dates. The late and/or unsubstantiated filings have resulted in lost claims for the District, and potential refunding of reimbursements received. Cause: Internal control procedures assuring timely and accurate preparation of reports and filing of the reimbursement requests were not designed or implemented adequately. Maintaining sufficient and accurate supporting documentation for each report was not possible because original data was not relied upon by management, to complete the reports and reimbursement requests. Effect or Potential Effect: The lack of effective internal control activities over cash management, including financial reporting, allowed for reporting and claims errors, from simple calculation errors to requests for reimbursements of unauthorized purposes. Improper financial reporting to the ODOT occurred regularly. Lack of timely filing of reimbursement requests for amounts claimed, resulted in lost revenues and claims that may be required to be returned. Questioned Cost: No Context: Delays in filing reimbursement claims, delays in filing financial reports to ODOT, and internal disputes regarding completion of grant reimbursement request procedures were evident. Weak or nonexistent controls over cash management, including fiscal management, may result in lost revenues and risks of creating unnecessary liabilities in the form of refunds due to ODOT. Repeat of a Prior-Year Finding: Yes Recommendation: The District should design and implement internal control policies and procedures for cash management, including fiscal management and financial reporting. Monitoring, information and communication control activities should also be designed and implemented as part of the effort the reduce the risk of continued matters of noncompliance related to cash management. District's Response: The District acknowledges the weaknesses and its intention of correcting weaknesses. Corrective Action Plan: The District’s General Manager resigned effective September 13, 2024. The Board has adopted a plan to procure qualified professional assistance to evaluate and restructure the organization and assist in daily management activities until a new General Manager can be hired and trained. Additional assistance for resolving these deficiencies has been offered by ODOT and accepted by the Board. Planned Implementation Date: September 30, 2024 Responsible Persons: District Board, Umpqua Public Transit District
Finding 2024-003 – Fiscal Management (Material Weakness) CFDA Title and Number: 20.513 (5310) Enhanced Mobility of Seniors and Individuals with Disabilities. Name of Federal Agency: Department of Transportation Internal Control over Compliance: Cash Management CFDA Title and Number: 20.509 (5311) Operating Assistance. Formula Grants for Rural. Name of Federal Agency: Department of Transportation Internal Control over Compliance: Cash Management Criteria: 2 CFR Part 200.302(b)(1) The financial management system of each non-federal entity must provide for the following: Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. 200.302(b)(2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in 200.328 and 200.329. Condition: During portions of the fiscal year, the District prepared reimbursement calculations relying on an internally developed spreadsheet tool, rather than using amounts solely obtained from the general ledger and supporting documentation. The reimbursement reports were prepared by management with limited review. Conflicts over review and other monitoring procedures occurred, and were not always resolved. Complete supporting documentation for the claimed costs were not always available. Claims and other financial reports due to ODOT were regularly submitted after the due dates. The late and/or unsubstantiated filings have resulted in lost claims for the District, and potential refunding of reimbursements received. Cause: Internal control procedures assuring timely and accurate preparation of reports and filing of the reimbursement requests were not designed or implemented adequately. Maintaining sufficient and accurate supporting documentation for each report was not possible because original data was not relied upon by management, to complete the reports and reimbursement requests. Effect or Potential Effect: The lack of effective internal control activities over cash management, including financial reporting, allowed for reporting and claims errors, from simple calculation errors to requests for reimbursements of unauthorized purposes. Improper financial reporting to the ODOT occurred regularly. Lack of timely filing of reimbursement requests for amounts claimed, resulted in lost revenues and claims that may be required to be returned. Questioned Cost: No Context: Delays in filing reimbursement claims, delays in filing financial reports to ODOT, and internal disputes regarding completion of grant reimbursement request procedures were evident. Weak or nonexistent controls over cash management, including fiscal management, may result in lost revenues and risks of creating unnecessary liabilities in the form of refunds due to ODOT. Repeat of a Prior-Year Finding: Yes Recommendation: The District should design and implement internal control policies and procedures for cash management, including fiscal management and financial reporting. Monitoring, information and communication control activities should also be designed and implemented as part of the effort the reduce the risk of continued matters of noncompliance related to cash management. District's Response: The District acknowledges the weaknesses and its intention of correcting weaknesses. Corrective Action Plan: The District’s General Manager resigned effective September 13, 2024. The Board has adopted a plan to procure qualified professional assistance to evaluate and restructure the organization and assist in daily management activities until a new General Manager can be hired and trained. Additional assistance for resolving these deficiencies has been offered by ODOT and accepted by the Board. Planned Implementation Date: September 30, 2024 Responsible Persons: District Board, Umpqua Public Transit District
2024-018. USU Extension Extra Services Compensation Program Non-Compliance with Uniform Guidance (Finding Type: Significant Deficiency, Reportable Noncompliance) Federal Agency: Various Assistance Listing Number and Title: Various Federal Award Number: Various Questioned Costs: Undetermined Pass-through Entity: Various Prior Year Single Audit Report Finding Number: N/A Utah State University’s (University) Internal Audit performed a review of the University’s Extension Service (Extension) within the College of Agriculture and Applied Science. The review determined that Extension’s Extra Service Compensation (ESC) program violates Uniform Guidance requirements and University policy, bypasses critical internal controls, and provides employees with additional compensation for extra-service work related to their primary job duties without sponsor approval. Extension’s mission, under the University’s land grant mission, provides research-based programs and resources to Utah’s population using a mix of local, state, federal and sponsored funding. To incentivize its personnel to apply for grants, Extension created an ESC program that allowed personnel to replace a portion of their primary position institution-funded salary with grant-funded salary. Personnel could then request up to 20 percent of their primary position salary through an ESC secondary position funded with the replaced institution-funded salary. However, Extension’s justified purpose for the ESC secondary position was “caused by and associated with the grant.” In doing so, Extension made it possible to bypass the University’s policy and internal controls for extra-service pay by obscuring the work duties and funding source for the secondary position. Below is an illustrative example from the USU Internal Audit Report of an ESC professor with an institutional base salary of $50,000: Payment to Employee Before Receiving Award (Source: USU Internal Audit Report IAS-23-53) Uniform Guidance maintains strict requirements with regard to the allowability of compensation, including special consideration for substantial increases, particularly with: • federal award ratios (2 CFR 200.430(e)), • institutional base salary charges, including federal award proportionate shares (2 CFR 200.430(h)(2)), • prior approvals by federal awarding agencies for incidental activities with supplemental compensation (2 CFR 200.430(h)(1)), • intra-institution consulting within higher education (2 CFR 200.430(h)(3)), • institutional policy definitions to conclusively determine work resulting in extra service pay (2 CFR 200.430(h)(4), and • relevant internal controls (2 CFR 200.302(b)(4). Internal Audit cites that the ESC program does not comply with Uniform Guidance, as well as University policy (Extra-Service Compensation Policy 376), which formalizes the University’s approach to compliance with Uniform Guidance for these activities. Internal Audit identified that University personnel did not follow or were unfamiliar with established policies in addition to procedural changes that did not require sufficient level of documentation for proper approvals. Detailed fieldwork by Internal Audit identified instances of questioned costs for funding (both federal and non-federal) in excess of $25,000. Fieldwork covered the period between January 1, 2020 and June 14, 2023, but also identified evidence of noncompliance as far back as 2009 to 2018. After Internal Audit issued its report in September 2024, the University took action to begin determining the potential financial impact of noncompliance through an external third-party. A report by this external third-party has not been completed as of the date of this finding; therefore, the amount of questioned costs related to federal programs cannot be determined. The University has also taken steps to immediately address policy and control deficiencies across the institution. Recommendations: We recommend the University do the following relative to University-wide procedures: 1. Determine the potential financial impact of noncompliance with grant sponsors. 2. Evaluate and improve its policies and required documentation for extra-service compensation. 3. Evaluate and improve its internal controls for sponsored program compensation. 4. Provide adequate training to University personnel regarding sponsored programs compensation compliance. USU’s Response: Utah State University (“USU”) generally agrees with Finding One. As detailed in USU internal audit IAS-23-53, USU Extension established a program to incentivize and reward its personnel to apply for grants (referred to by Extension and within USU internal audit IAS-23-53 as the “incentive program”). While the Uniform Guidance permits incentive programs (see CFR 200.430(f)) and such programs are readily used by universities, the USU Extension incentive program was established and carried out in manner that violated USU’s policy governing extra service compensation (“ESC”) and in a manner that bypassed critical internal controls. Notably, USU Internal Audit IAS-23-53 tested compliance with USU’s extra-service compensation policy but did not review actual costs charged to federal sponsors as this was outside the scope of the audit. Consistent with the recommendations to determine the potential impact of noncompliance, USU worked with an outside consultant to review payment of ESC to all employees working on federal grants. This work identified (1) limited instances when salaries directly charged to sponsored projects included extra service compensation in the base salary and (2) limited instances when extra service compensation was charged to federal sponsors without sponsor approval. The majority of ESC payments made pursuant the USU Extension incentive program was not charged to grant sponsor or included in the institutional base salary charged to the grant. Accordingly, noncompliance with the Uniform Guidance clauses related to compensation costs was limited to a small subset of payments made under the USU Extension incentive program. Based on these findings, USU agrees with the corrective actions recommended and, as outlined in the corrective action plan summary below, has already completed and/or initiated these actions.
2024-018. USU Extension Extra Services Compensation Program Non-Compliance with Uniform Guidance (Finding Type: Significant Deficiency, Reportable Noncompliance) Federal Agency: Various Assistance Listing Number and Title: Various Federal Award Number: Various Questioned Costs: Undetermined Pass-through Entity: Various Prior Year Single Audit Report Finding Number: N/A Utah State University’s (University) Internal Audit performed a review of the University’s Extension Service (Extension) within the College of Agriculture and Applied Science. The review determined that Extension’s Extra Service Compensation (ESC) program violates Uniform Guidance requirements and University policy, bypasses critical internal controls, and provides employees with additional compensation for extra-service work related to their primary job duties without sponsor approval. Extension’s mission, under the University’s land grant mission, provides research-based programs and resources to Utah’s population using a mix of local, state, federal and sponsored funding. To incentivize its personnel to apply for grants, Extension created an ESC program that allowed personnel to replace a portion of their primary position institution-funded salary with grant-funded salary. Personnel could then request up to 20 percent of their primary position salary through an ESC secondary position funded with the replaced institution-funded salary. However, Extension’s justified purpose for the ESC secondary position was “caused by and associated with the grant.” In doing so, Extension made it possible to bypass the University’s policy and internal controls for extra-service pay by obscuring the work duties and funding source for the secondary position. Below is an illustrative example from the USU Internal Audit Report of an ESC professor with an institutional base salary of $50,000: Payment to Employee Before Receiving Award (Source: USU Internal Audit Report IAS-23-53) Uniform Guidance maintains strict requirements with regard to the allowability of compensation, including special consideration for substantial increases, particularly with: • federal award ratios (2 CFR 200.430(e)), • institutional base salary charges, including federal award proportionate shares (2 CFR 200.430(h)(2)), • prior approvals by federal awarding agencies for incidental activities with supplemental compensation (2 CFR 200.430(h)(1)), • intra-institution consulting within higher education (2 CFR 200.430(h)(3)), • institutional policy definitions to conclusively determine work resulting in extra service pay (2 CFR 200.430(h)(4), and • relevant internal controls (2 CFR 200.302(b)(4). Internal Audit cites that the ESC program does not comply with Uniform Guidance, as well as University policy (Extra-Service Compensation Policy 376), which formalizes the University’s approach to compliance with Uniform Guidance for these activities. Internal Audit identified that University personnel did not follow or were unfamiliar with established policies in addition to procedural changes that did not require sufficient level of documentation for proper approvals. Detailed fieldwork by Internal Audit identified instances of questioned costs for funding (both federal and non-federal) in excess of $25,000. Fieldwork covered the period between January 1, 2020 and June 14, 2023, but also identified evidence of noncompliance as far back as 2009 to 2018. After Internal Audit issued its report in September 2024, the University took action to begin determining the potential financial impact of noncompliance through an external third-party. A report by this external third-party has not been completed as of the date of this finding; therefore, the amount of questioned costs related to federal programs cannot be determined. The University has also taken steps to immediately address policy and control deficiencies across the institution. Recommendations: We recommend the University do the following relative to University-wide procedures: 1. Determine the potential financial impact of noncompliance with grant sponsors. 2. Evaluate and improve its policies and required documentation for extra-service compensation. 3. Evaluate and improve its internal controls for sponsored program compensation. 4. Provide adequate training to University personnel regarding sponsored programs compensation compliance. USU’s Response: Utah State University (“USU”) generally agrees with Finding One. As detailed in USU internal audit IAS-23-53, USU Extension established a program to incentivize and reward its personnel to apply for grants (referred to by Extension and within USU internal audit IAS-23-53 as the “incentive program”). While the Uniform Guidance permits incentive programs (see CFR 200.430(f)) and such programs are readily used by universities, the USU Extension incentive program was established and carried out in manner that violated USU’s policy governing extra service compensation (“ESC”) and in a manner that bypassed critical internal controls. Notably, USU Internal Audit IAS-23-53 tested compliance with USU’s extra-service compensation policy but did not review actual costs charged to federal sponsors as this was outside the scope of the audit. Consistent with the recommendations to determine the potential impact of noncompliance, USU worked with an outside consultant to review payment of ESC to all employees working on federal grants. This work identified (1) limited instances when salaries directly charged to sponsored projects included extra service compensation in the base salary and (2) limited instances when extra service compensation was charged to federal sponsors without sponsor approval. The majority of ESC payments made pursuant the USU Extension incentive program was not charged to grant sponsor or included in the institutional base salary charged to the grant. Accordingly, noncompliance with the Uniform Guidance clauses related to compensation costs was limited to a small subset of payments made under the USU Extension incentive program. Based on these findings, USU agrees with the corrective actions recommended and, as outlined in the corrective action plan summary below, has already completed and/or initiated these actions.
2024-018. USU Extension Extra Services Compensation Program Non-Compliance with Uniform Guidance (Finding Type: Significant Deficiency, Reportable Noncompliance) Federal Agency: Various Assistance Listing Number and Title: Various Federal Award Number: Various Questioned Costs: Undetermined Pass-through Entity: Various Prior Year Single Audit Report Finding Number: N/A Utah State University’s (University) Internal Audit performed a review of the University’s Extension Service (Extension) within the College of Agriculture and Applied Science. The review determined that Extension’s Extra Service Compensation (ESC) program violates Uniform Guidance requirements and University policy, bypasses critical internal controls, and provides employees with additional compensation for extra-service work related to their primary job duties without sponsor approval. Extension’s mission, under the University’s land grant mission, provides research-based programs and resources to Utah’s population using a mix of local, state, federal and sponsored funding. To incentivize its personnel to apply for grants, Extension created an ESC program that allowed personnel to replace a portion of their primary position institution-funded salary with grant-funded salary. Personnel could then request up to 20 percent of their primary position salary through an ESC secondary position funded with the replaced institution-funded salary. However, Extension’s justified purpose for the ESC secondary position was “caused by and associated with the grant.” In doing so, Extension made it possible to bypass the University’s policy and internal controls for extra-service pay by obscuring the work duties and funding source for the secondary position. Below is an illustrative example from the USU Internal Audit Report of an ESC professor with an institutional base salary of $50,000: Payment to Employee Before Receiving Award (Source: USU Internal Audit Report IAS-23-53) Uniform Guidance maintains strict requirements with regard to the allowability of compensation, including special consideration for substantial increases, particularly with: • federal award ratios (2 CFR 200.430(e)), • institutional base salary charges, including federal award proportionate shares (2 CFR 200.430(h)(2)), • prior approvals by federal awarding agencies for incidental activities with supplemental compensation (2 CFR 200.430(h)(1)), • intra-institution consulting within higher education (2 CFR 200.430(h)(3)), • institutional policy definitions to conclusively determine work resulting in extra service pay (2 CFR 200.430(h)(4), and • relevant internal controls (2 CFR 200.302(b)(4). Internal Audit cites that the ESC program does not comply with Uniform Guidance, as well as University policy (Extra-Service Compensation Policy 376), which formalizes the University’s approach to compliance with Uniform Guidance for these activities. Internal Audit identified that University personnel did not follow or were unfamiliar with established policies in addition to procedural changes that did not require sufficient level of documentation for proper approvals. Detailed fieldwork by Internal Audit identified instances of questioned costs for funding (both federal and non-federal) in excess of $25,000. Fieldwork covered the period between January 1, 2020 and June 14, 2023, but also identified evidence of noncompliance as far back as 2009 to 2018. After Internal Audit issued its report in September 2024, the University took action to begin determining the potential financial impact of noncompliance through an external third-party. A report by this external third-party has not been completed as of the date of this finding; therefore, the amount of questioned costs related to federal programs cannot be determined. The University has also taken steps to immediately address policy and control deficiencies across the institution. Recommendations: We recommend the University do the following relative to University-wide procedures: 1. Determine the potential financial impact of noncompliance with grant sponsors. 2. Evaluate and improve its policies and required documentation for extra-service compensation. 3. Evaluate and improve its internal controls for sponsored program compensation. 4. Provide adequate training to University personnel regarding sponsored programs compensation compliance. USU’s Response: Utah State University (“USU”) generally agrees with Finding One. As detailed in USU internal audit IAS-23-53, USU Extension established a program to incentivize and reward its personnel to apply for grants (referred to by Extension and within USU internal audit IAS-23-53 as the “incentive program”). While the Uniform Guidance permits incentive programs (see CFR 200.430(f)) and such programs are readily used by universities, the USU Extension incentive program was established and carried out in manner that violated USU’s policy governing extra service compensation (“ESC”) and in a manner that bypassed critical internal controls. Notably, USU Internal Audit IAS-23-53 tested compliance with USU’s extra-service compensation policy but did not review actual costs charged to federal sponsors as this was outside the scope of the audit. Consistent with the recommendations to determine the potential impact of noncompliance, USU worked with an outside consultant to review payment of ESC to all employees working on federal grants. This work identified (1) limited instances when salaries directly charged to sponsored projects included extra service compensation in the base salary and (2) limited instances when extra service compensation was charged to federal sponsors without sponsor approval. The majority of ESC payments made pursuant the USU Extension incentive program was not charged to grant sponsor or included in the institutional base salary charged to the grant. Accordingly, noncompliance with the Uniform Guidance clauses related to compensation costs was limited to a small subset of payments made under the USU Extension incentive program. Based on these findings, USU agrees with the corrective actions recommended and, as outlined in the corrective action plan summary below, has already completed and/or initiated these actions.
2024-018. USU Extension Extra Services Compensation Program Non-Compliance with Uniform Guidance (Finding Type: Significant Deficiency, Reportable Noncompliance) Federal Agency: Various Assistance Listing Number and Title: Various Federal Award Number: Various Questioned Costs: Undetermined Pass-through Entity: Various Prior Year Single Audit Report Finding Number: N/A Utah State University’s (University) Internal Audit performed a review of the University’s Extension Service (Extension) within the College of Agriculture and Applied Science. The review determined that Extension’s Extra Service Compensation (ESC) program violates Uniform Guidance requirements and University policy, bypasses critical internal controls, and provides employees with additional compensation for extra-service work related to their primary job duties without sponsor approval. Extension’s mission, under the University’s land grant mission, provides research-based programs and resources to Utah’s population using a mix of local, state, federal and sponsored funding. To incentivize its personnel to apply for grants, Extension created an ESC program that allowed personnel to replace a portion of their primary position institution-funded salary with grant-funded salary. Personnel could then request up to 20 percent of their primary position salary through an ESC secondary position funded with the replaced institution-funded salary. However, Extension’s justified purpose for the ESC secondary position was “caused by and associated with the grant.” In doing so, Extension made it possible to bypass the University’s policy and internal controls for extra-service pay by obscuring the work duties and funding source for the secondary position. Below is an illustrative example from the USU Internal Audit Report of an ESC professor with an institutional base salary of $50,000: Payment to Employee Before Receiving Award (Source: USU Internal Audit Report IAS-23-53) Uniform Guidance maintains strict requirements with regard to the allowability of compensation, including special consideration for substantial increases, particularly with: • federal award ratios (2 CFR 200.430(e)), • institutional base salary charges, including federal award proportionate shares (2 CFR 200.430(h)(2)), • prior approvals by federal awarding agencies for incidental activities with supplemental compensation (2 CFR 200.430(h)(1)), • intra-institution consulting within higher education (2 CFR 200.430(h)(3)), • institutional policy definitions to conclusively determine work resulting in extra service pay (2 CFR 200.430(h)(4), and • relevant internal controls (2 CFR 200.302(b)(4). Internal Audit cites that the ESC program does not comply with Uniform Guidance, as well as University policy (Extra-Service Compensation Policy 376), which formalizes the University’s approach to compliance with Uniform Guidance for these activities. Internal Audit identified that University personnel did not follow or were unfamiliar with established policies in addition to procedural changes that did not require sufficient level of documentation for proper approvals. Detailed fieldwork by Internal Audit identified instances of questioned costs for funding (both federal and non-federal) in excess of $25,000. Fieldwork covered the period between January 1, 2020 and June 14, 2023, but also identified evidence of noncompliance as far back as 2009 to 2018. After Internal Audit issued its report in September 2024, the University took action to begin determining the potential financial impact of noncompliance through an external third-party. A report by this external third-party has not been completed as of the date of this finding; therefore, the amount of questioned costs related to federal programs cannot be determined. The University has also taken steps to immediately address policy and control deficiencies across the institution. Recommendations: We recommend the University do the following relative to University-wide procedures: 1. Determine the potential financial impact of noncompliance with grant sponsors. 2. Evaluate and improve its policies and required documentation for extra-service compensation. 3. Evaluate and improve its internal controls for sponsored program compensation. 4. Provide adequate training to University personnel regarding sponsored programs compensation compliance. USU’s Response: Utah State University (“USU”) generally agrees with Finding One. As detailed in USU internal audit IAS-23-53, USU Extension established a program to incentivize and reward its personnel to apply for grants (referred to by Extension and within USU internal audit IAS-23-53 as the “incentive program”). While the Uniform Guidance permits incentive programs (see CFR 200.430(f)) and such programs are readily used by universities, the USU Extension incentive program was established and carried out in manner that violated USU’s policy governing extra service compensation (“ESC”) and in a manner that bypassed critical internal controls. Notably, USU Internal Audit IAS-23-53 tested compliance with USU’s extra-service compensation policy but did not review actual costs charged to federal sponsors as this was outside the scope of the audit. Consistent with the recommendations to determine the potential impact of noncompliance, USU worked with an outside consultant to review payment of ESC to all employees working on federal grants. This work identified (1) limited instances when salaries directly charged to sponsored projects included extra service compensation in the base salary and (2) limited instances when extra service compensation was charged to federal sponsors without sponsor approval. The majority of ESC payments made pursuant the USU Extension incentive program was not charged to grant sponsor or included in the institutional base salary charged to the grant. Accordingly, noncompliance with the Uniform Guidance clauses related to compensation costs was limited to a small subset of payments made under the USU Extension incentive program. Based on these findings, USU agrees with the corrective actions recommended and, as outlined in the corrective action plan summary below, has already completed and/or initiated these actions.
2024-018. USU Extension Extra Services Compensation Program Non-Compliance with Uniform Guidance (Finding Type: Significant Deficiency, Reportable Noncompliance) Federal Agency: Various Assistance Listing Number and Title: Various Federal Award Number: Various Questioned Costs: Undetermined Pass-through Entity: Various Prior Year Single Audit Report Finding Number: N/A Utah State University’s (University) Internal Audit performed a review of the University’s Extension Service (Extension) within the College of Agriculture and Applied Science. The review determined that Extension’s Extra Service Compensation (ESC) program violates Uniform Guidance requirements and University policy, bypasses critical internal controls, and provides employees with additional compensation for extra-service work related to their primary job duties without sponsor approval. Extension’s mission, under the University’s land grant mission, provides research-based programs and resources to Utah’s population using a mix of local, state, federal and sponsored funding. To incentivize its personnel to apply for grants, Extension created an ESC program that allowed personnel to replace a portion of their primary position institution-funded salary with grant-funded salary. Personnel could then request up to 20 percent of their primary position salary through an ESC secondary position funded with the replaced institution-funded salary. However, Extension’s justified purpose for the ESC secondary position was “caused by and associated with the grant.” In doing so, Extension made it possible to bypass the University’s policy and internal controls for extra-service pay by obscuring the work duties and funding source for the secondary position. Below is an illustrative example from the USU Internal Audit Report of an ESC professor with an institutional base salary of $50,000: Payment to Employee Before Receiving Award (Source: USU Internal Audit Report IAS-23-53) Uniform Guidance maintains strict requirements with regard to the allowability of compensation, including special consideration for substantial increases, particularly with: • federal award ratios (2 CFR 200.430(e)), • institutional base salary charges, including federal award proportionate shares (2 CFR 200.430(h)(2)), • prior approvals by federal awarding agencies for incidental activities with supplemental compensation (2 CFR 200.430(h)(1)), • intra-institution consulting within higher education (2 CFR 200.430(h)(3)), • institutional policy definitions to conclusively determine work resulting in extra service pay (2 CFR 200.430(h)(4), and • relevant internal controls (2 CFR 200.302(b)(4). Internal Audit cites that the ESC program does not comply with Uniform Guidance, as well as University policy (Extra-Service Compensation Policy 376), which formalizes the University’s approach to compliance with Uniform Guidance for these activities. Internal Audit identified that University personnel did not follow or were unfamiliar with established policies in addition to procedural changes that did not require sufficient level of documentation for proper approvals. Detailed fieldwork by Internal Audit identified instances of questioned costs for funding (both federal and non-federal) in excess of $25,000. Fieldwork covered the period between January 1, 2020 and June 14, 2023, but also identified evidence of noncompliance as far back as 2009 to 2018. After Internal Audit issued its report in September 2024, the University took action to begin determining the potential financial impact of noncompliance through an external third-party. A report by this external third-party has not been completed as of the date of this finding; therefore, the amount of questioned costs related to federal programs cannot be determined. The University has also taken steps to immediately address policy and control deficiencies across the institution. Recommendations: We recommend the University do the following relative to University-wide procedures: 1. Determine the potential financial impact of noncompliance with grant sponsors. 2. Evaluate and improve its policies and required documentation for extra-service compensation. 3. Evaluate and improve its internal controls for sponsored program compensation. 4. Provide adequate training to University personnel regarding sponsored programs compensation compliance. USU’s Response: Utah State University (“USU”) generally agrees with Finding One. As detailed in USU internal audit IAS-23-53, USU Extension established a program to incentivize and reward its personnel to apply for grants (referred to by Extension and within USU internal audit IAS-23-53 as the “incentive program”). While the Uniform Guidance permits incentive programs (see CFR 200.430(f)) and such programs are readily used by universities, the USU Extension incentive program was established and carried out in manner that violated USU’s policy governing extra service compensation (“ESC”) and in a manner that bypassed critical internal controls. Notably, USU Internal Audit IAS-23-53 tested compliance with USU’s extra-service compensation policy but did not review actual costs charged to federal sponsors as this was outside the scope of the audit. Consistent with the recommendations to determine the potential impact of noncompliance, USU worked with an outside consultant to review payment of ESC to all employees working on federal grants. This work identified (1) limited instances when salaries directly charged to sponsored projects included extra service compensation in the base salary and (2) limited instances when extra service compensation was charged to federal sponsors without sponsor approval. The majority of ESC payments made pursuant the USU Extension incentive program was not charged to grant sponsor or included in the institutional base salary charged to the grant. Accordingly, noncompliance with the Uniform Guidance clauses related to compensation costs was limited to a small subset of payments made under the USU Extension incentive program. Based on these findings, USU agrees with the corrective actions recommended and, as outlined in the corrective action plan summary below, has already completed and/or initiated these actions.
2024-018. USU Extension Extra Services Compensation Program Non-Compliance with Uniform Guidance (Finding Type: Significant Deficiency, Reportable Noncompliance) Federal Agency: Various Assistance Listing Number and Title: Various Federal Award Number: Various Questioned Costs: Undetermined Pass-through Entity: Various Prior Year Single Audit Report Finding Number: N/A Utah State University’s (University) Internal Audit performed a review of the University’s Extension Service (Extension) within the College of Agriculture and Applied Science. The review determined that Extension’s Extra Service Compensation (ESC) program violates Uniform Guidance requirements and University policy, bypasses critical internal controls, and provides employees with additional compensation for extra-service work related to their primary job duties without sponsor approval. Extension’s mission, under the University’s land grant mission, provides research-based programs and resources to Utah’s population using a mix of local, state, federal and sponsored funding. To incentivize its personnel to apply for grants, Extension created an ESC program that allowed personnel to replace a portion of their primary position institution-funded salary with grant-funded salary. Personnel could then request up to 20 percent of their primary position salary through an ESC secondary position funded with the replaced institution-funded salary. However, Extension’s justified purpose for the ESC secondary position was “caused by and associated with the grant.” In doing so, Extension made it possible to bypass the University’s policy and internal controls for extra-service pay by obscuring the work duties and funding source for the secondary position. Below is an illustrative example from the USU Internal Audit Report of an ESC professor with an institutional base salary of $50,000: Payment to Employee Before Receiving Award (Source: USU Internal Audit Report IAS-23-53) Uniform Guidance maintains strict requirements with regard to the allowability of compensation, including special consideration for substantial increases, particularly with: • federal award ratios (2 CFR 200.430(e)), • institutional base salary charges, including federal award proportionate shares (2 CFR 200.430(h)(2)), • prior approvals by federal awarding agencies for incidental activities with supplemental compensation (2 CFR 200.430(h)(1)), • intra-institution consulting within higher education (2 CFR 200.430(h)(3)), • institutional policy definitions to conclusively determine work resulting in extra service pay (2 CFR 200.430(h)(4), and • relevant internal controls (2 CFR 200.302(b)(4). Internal Audit cites that the ESC program does not comply with Uniform Guidance, as well as University policy (Extra-Service Compensation Policy 376), which formalizes the University’s approach to compliance with Uniform Guidance for these activities. Internal Audit identified that University personnel did not follow or were unfamiliar with established policies in addition to procedural changes that did not require sufficient level of documentation for proper approvals. Detailed fieldwork by Internal Audit identified instances of questioned costs for funding (both federal and non-federal) in excess of $25,000. Fieldwork covered the period between January 1, 2020 and June 14, 2023, but also identified evidence of noncompliance as far back as 2009 to 2018. After Internal Audit issued its report in September 2024, the University took action to begin determining the potential financial impact of noncompliance through an external third-party. A report by this external third-party has not been completed as of the date of this finding; therefore, the amount of questioned costs related to federal programs cannot be determined. The University has also taken steps to immediately address policy and control deficiencies across the institution. Recommendations: We recommend the University do the following relative to University-wide procedures: 1. Determine the potential financial impact of noncompliance with grant sponsors. 2. Evaluate and improve its policies and required documentation for extra-service compensation. 3. Evaluate and improve its internal controls for sponsored program compensation. 4. Provide adequate training to University personnel regarding sponsored programs compensation compliance. USU’s Response: Utah State University (“USU”) generally agrees with Finding One. As detailed in USU internal audit IAS-23-53, USU Extension established a program to incentivize and reward its personnel to apply for grants (referred to by Extension and within USU internal audit IAS-23-53 as the “incentive program”). While the Uniform Guidance permits incentive programs (see CFR 200.430(f)) and such programs are readily used by universities, the USU Extension incentive program was established and carried out in manner that violated USU’s policy governing extra service compensation (“ESC”) and in a manner that bypassed critical internal controls. Notably, USU Internal Audit IAS-23-53 tested compliance with USU’s extra-service compensation policy but did not review actual costs charged to federal sponsors as this was outside the scope of the audit. Consistent with the recommendations to determine the potential impact of noncompliance, USU worked with an outside consultant to review payment of ESC to all employees working on federal grants. This work identified (1) limited instances when salaries directly charged to sponsored projects included extra service compensation in the base salary and (2) limited instances when extra service compensation was charged to federal sponsors without sponsor approval. The majority of ESC payments made pursuant the USU Extension incentive program was not charged to grant sponsor or included in the institutional base salary charged to the grant. Accordingly, noncompliance with the Uniform Guidance clauses related to compensation costs was limited to a small subset of payments made under the USU Extension incentive program. Based on these findings, USU agrees with the corrective actions recommended and, as outlined in the corrective action plan summary below, has already completed and/or initiated these actions.
2024-018. USU Extension Extra Services Compensation Program Non-Compliance with Uniform Guidance (Finding Type: Significant Deficiency, Reportable Noncompliance) Federal Agency: Various Assistance Listing Number and Title: Various Federal Award Number: Various Questioned Costs: Undetermined Pass-through Entity: Various Prior Year Single Audit Report Finding Number: N/A Utah State University’s (University) Internal Audit performed a review of the University’s Extension Service (Extension) within the College of Agriculture and Applied Science. The review determined that Extension’s Extra Service Compensation (ESC) program violates Uniform Guidance requirements and University policy, bypasses critical internal controls, and provides employees with additional compensation for extra-service work related to their primary job duties without sponsor approval. Extension’s mission, under the University’s land grant mission, provides research-based programs and resources to Utah’s population using a mix of local, state, federal and sponsored funding. To incentivize its personnel to apply for grants, Extension created an ESC program that allowed personnel to replace a portion of their primary position institution-funded salary with grant-funded salary. Personnel could then request up to 20 percent of their primary position salary through an ESC secondary position funded with the replaced institution-funded salary. However, Extension’s justified purpose for the ESC secondary position was “caused by and associated with the grant.” In doing so, Extension made it possible to bypass the University’s policy and internal controls for extra-service pay by obscuring the work duties and funding source for the secondary position. Below is an illustrative example from the USU Internal Audit Report of an ESC professor with an institutional base salary of $50,000: Payment to Employee Before Receiving Award (Source: USU Internal Audit Report IAS-23-53) Uniform Guidance maintains strict requirements with regard to the allowability of compensation, including special consideration for substantial increases, particularly with: • federal award ratios (2 CFR 200.430(e)), • institutional base salary charges, including federal award proportionate shares (2 CFR 200.430(h)(2)), • prior approvals by federal awarding agencies for incidental activities with supplemental compensation (2 CFR 200.430(h)(1)), • intra-institution consulting within higher education (2 CFR 200.430(h)(3)), • institutional policy definitions to conclusively determine work resulting in extra service pay (2 CFR 200.430(h)(4), and • relevant internal controls (2 CFR 200.302(b)(4). Internal Audit cites that the ESC program does not comply with Uniform Guidance, as well as University policy (Extra-Service Compensation Policy 376), which formalizes the University’s approach to compliance with Uniform Guidance for these activities. Internal Audit identified that University personnel did not follow or were unfamiliar with established policies in addition to procedural changes that did not require sufficient level of documentation for proper approvals. Detailed fieldwork by Internal Audit identified instances of questioned costs for funding (both federal and non-federal) in excess of $25,000. Fieldwork covered the period between January 1, 2020 and June 14, 2023, but also identified evidence of noncompliance as far back as 2009 to 2018. After Internal Audit issued its report in September 2024, the University took action to begin determining the potential financial impact of noncompliance through an external third-party. A report by this external third-party has not been completed as of the date of this finding; therefore, the amount of questioned costs related to federal programs cannot be determined. The University has also taken steps to immediately address policy and control deficiencies across the institution. Recommendations: We recommend the University do the following relative to University-wide procedures: 1. Determine the potential financial impact of noncompliance with grant sponsors. 2. Evaluate and improve its policies and required documentation for extra-service compensation. 3. Evaluate and improve its internal controls for sponsored program compensation. 4. Provide adequate training to University personnel regarding sponsored programs compensation compliance. USU’s Response: Utah State University (“USU”) generally agrees with Finding One. As detailed in USU internal audit IAS-23-53, USU Extension established a program to incentivize and reward its personnel to apply for grants (referred to by Extension and within USU internal audit IAS-23-53 as the “incentive program”). While the Uniform Guidance permits incentive programs (see CFR 200.430(f)) and such programs are readily used by universities, the USU Extension incentive program was established and carried out in manner that violated USU’s policy governing extra service compensation (“ESC”) and in a manner that bypassed critical internal controls. Notably, USU Internal Audit IAS-23-53 tested compliance with USU’s extra-service compensation policy but did not review actual costs charged to federal sponsors as this was outside the scope of the audit. Consistent with the recommendations to determine the potential impact of noncompliance, USU worked with an outside consultant to review payment of ESC to all employees working on federal grants. This work identified (1) limited instances when salaries directly charged to sponsored projects included extra service compensation in the base salary and (2) limited instances when extra service compensation was charged to federal sponsors without sponsor approval. The majority of ESC payments made pursuant the USU Extension incentive program was not charged to grant sponsor or included in the institutional base salary charged to the grant. Accordingly, noncompliance with the Uniform Guidance clauses related to compensation costs was limited to a small subset of payments made under the USU Extension incentive program. Based on these findings, USU agrees with the corrective actions recommended and, as outlined in the corrective action plan summary below, has already completed and/or initiated these actions.
2024-018. USU Extension Extra Services Compensation Program Non-Compliance with Uniform Guidance (Finding Type: Significant Deficiency, Reportable Noncompliance) Federal Agency: Various Assistance Listing Number and Title: Various Federal Award Number: Various Questioned Costs: Undetermined Pass-through Entity: Various Prior Year Single Audit Report Finding Number: N/A Utah State University’s (University) Internal Audit performed a review of the University’s Extension Service (Extension) within the College of Agriculture and Applied Science. The review determined that Extension’s Extra Service Compensation (ESC) program violates Uniform Guidance requirements and University policy, bypasses critical internal controls, and provides employees with additional compensation for extra-service work related to their primary job duties without sponsor approval. Extension’s mission, under the University’s land grant mission, provides research-based programs and resources to Utah’s population using a mix of local, state, federal and sponsored funding. To incentivize its personnel to apply for grants, Extension created an ESC program that allowed personnel to replace a portion of their primary position institution-funded salary with grant-funded salary. Personnel could then request up to 20 percent of their primary position salary through an ESC secondary position funded with the replaced institution-funded salary. However, Extension’s justified purpose for the ESC secondary position was “caused by and associated with the grant.” In doing so, Extension made it possible to bypass the University’s policy and internal controls for extra-service pay by obscuring the work duties and funding source for the secondary position. Below is an illustrative example from the USU Internal Audit Report of an ESC professor with an institutional base salary of $50,000: Payment to Employee Before Receiving Award (Source: USU Internal Audit Report IAS-23-53) Uniform Guidance maintains strict requirements with regard to the allowability of compensation, including special consideration for substantial increases, particularly with: • federal award ratios (2 CFR 200.430(e)), • institutional base salary charges, including federal award proportionate shares (2 CFR 200.430(h)(2)), • prior approvals by federal awarding agencies for incidental activities with supplemental compensation (2 CFR 200.430(h)(1)), • intra-institution consulting within higher education (2 CFR 200.430(h)(3)), • institutional policy definitions to conclusively determine work resulting in extra service pay (2 CFR 200.430(h)(4), and • relevant internal controls (2 CFR 200.302(b)(4). Internal Audit cites that the ESC program does not comply with Uniform Guidance, as well as University policy (Extra-Service Compensation Policy 376), which formalizes the University’s approach to compliance with Uniform Guidance for these activities. Internal Audit identified that University personnel did not follow or were unfamiliar with established policies in addition to procedural changes that did not require sufficient level of documentation for proper approvals. Detailed fieldwork by Internal Audit identified instances of questioned costs for funding (both federal and non-federal) in excess of $25,000. Fieldwork covered the period between January 1, 2020 and June 14, 2023, but also identified evidence of noncompliance as far back as 2009 to 2018. After Internal Audit issued its report in September 2024, the University took action to begin determining the potential financial impact of noncompliance through an external third-party. A report by this external third-party has not been completed as of the date of this finding; therefore, the amount of questioned costs related to federal programs cannot be determined. The University has also taken steps to immediately address policy and control deficiencies across the institution. Recommendations: We recommend the University do the following relative to University-wide procedures: 1. Determine the potential financial impact of noncompliance with grant sponsors. 2. Evaluate and improve its policies and required documentation for extra-service compensation. 3. Evaluate and improve its internal controls for sponsored program compensation. 4. Provide adequate training to University personnel regarding sponsored programs compensation compliance. USU’s Response: Utah State University (“USU”) generally agrees with Finding One. As detailed in USU internal audit IAS-23-53, USU Extension established a program to incentivize and reward its personnel to apply for grants (referred to by Extension and within USU internal audit IAS-23-53 as the “incentive program”). While the Uniform Guidance permits incentive programs (see CFR 200.430(f)) and such programs are readily used by universities, the USU Extension incentive program was established and carried out in manner that violated USU’s policy governing extra service compensation (“ESC”) and in a manner that bypassed critical internal controls. Notably, USU Internal Audit IAS-23-53 tested compliance with USU’s extra-service compensation policy but did not review actual costs charged to federal sponsors as this was outside the scope of the audit. Consistent with the recommendations to determine the potential impact of noncompliance, USU worked with an outside consultant to review payment of ESC to all employees working on federal grants. This work identified (1) limited instances when salaries directly charged to sponsored projects included extra service compensation in the base salary and (2) limited instances when extra service compensation was charged to federal sponsors without sponsor approval. The majority of ESC payments made pursuant the USU Extension incentive program was not charged to grant sponsor or included in the institutional base salary charged to the grant. Accordingly, noncompliance with the Uniform Guidance clauses related to compensation costs was limited to a small subset of payments made under the USU Extension incentive program. Based on these findings, USU agrees with the corrective actions recommended and, as outlined in the corrective action plan summary below, has already completed and/or initiated these actions.
2024-018. USU Extension Extra Services Compensation Program Non-Compliance with Uniform Guidance (Finding Type: Significant Deficiency, Reportable Noncompliance) Federal Agency: Various Assistance Listing Number and Title: Various Federal Award Number: Various Questioned Costs: Undetermined Pass-through Entity: Various Prior Year Single Audit Report Finding Number: N/A Utah State University’s (University) Internal Audit performed a review of the University’s Extension Service (Extension) within the College of Agriculture and Applied Science. The review determined that Extension’s Extra Service Compensation (ESC) program violates Uniform Guidance requirements and University policy, bypasses critical internal controls, and provides employees with additional compensation for extra-service work related to their primary job duties without sponsor approval. Extension’s mission, under the University’s land grant mission, provides research-based programs and resources to Utah’s population using a mix of local, state, federal and sponsored funding. To incentivize its personnel to apply for grants, Extension created an ESC program that allowed personnel to replace a portion of their primary position institution-funded salary with grant-funded salary. Personnel could then request up to 20 percent of their primary position salary through an ESC secondary position funded with the replaced institution-funded salary. However, Extension’s justified purpose for the ESC secondary position was “caused by and associated with the grant.” In doing so, Extension made it possible to bypass the University’s policy and internal controls for extra-service pay by obscuring the work duties and funding source for the secondary position. Below is an illustrative example from the USU Internal Audit Report of an ESC professor with an institutional base salary of $50,000: Payment to Employee Before Receiving Award (Source: USU Internal Audit Report IAS-23-53) Uniform Guidance maintains strict requirements with regard to the allowability of compensation, including special consideration for substantial increases, particularly with: • federal award ratios (2 CFR 200.430(e)), • institutional base salary charges, including federal award proportionate shares (2 CFR 200.430(h)(2)), • prior approvals by federal awarding agencies for incidental activities with supplemental compensation (2 CFR 200.430(h)(1)), • intra-institution consulting within higher education (2 CFR 200.430(h)(3)), • institutional policy definitions to conclusively determine work resulting in extra service pay (2 CFR 200.430(h)(4), and • relevant internal controls (2 CFR 200.302(b)(4). Internal Audit cites that the ESC program does not comply with Uniform Guidance, as well as University policy (Extra-Service Compensation Policy 376), which formalizes the University’s approach to compliance with Uniform Guidance for these activities. Internal Audit identified that University personnel did not follow or were unfamiliar with established policies in addition to procedural changes that did not require sufficient level of documentation for proper approvals. Detailed fieldwork by Internal Audit identified instances of questioned costs for funding (both federal and non-federal) in excess of $25,000. Fieldwork covered the period between January 1, 2020 and June 14, 2023, but also identified evidence of noncompliance as far back as 2009 to 2018. After Internal Audit issued its report in September 2024, the University took action to begin determining the potential financial impact of noncompliance through an external third-party. A report by this external third-party has not been completed as of the date of this finding; therefore, the amount of questioned costs related to federal programs cannot be determined. The University has also taken steps to immediately address policy and control deficiencies across the institution. Recommendations: We recommend the University do the following relative to University-wide procedures: 1. Determine the potential financial impact of noncompliance with grant sponsors. 2. Evaluate and improve its policies and required documentation for extra-service compensation. 3. Evaluate and improve its internal controls for sponsored program compensation. 4. Provide adequate training to University personnel regarding sponsored programs compensation compliance. USU’s Response: Utah State University (“USU”) generally agrees with Finding One. As detailed in USU internal audit IAS-23-53, USU Extension established a program to incentivize and reward its personnel to apply for grants (referred to by Extension and within USU internal audit IAS-23-53 as the “incentive program”). While the Uniform Guidance permits incentive programs (see CFR 200.430(f)) and such programs are readily used by universities, the USU Extension incentive program was established and carried out in manner that violated USU’s policy governing extra service compensation (“ESC”) and in a manner that bypassed critical internal controls. Notably, USU Internal Audit IAS-23-53 tested compliance with USU’s extra-service compensation policy but did not review actual costs charged to federal sponsors as this was outside the scope of the audit. Consistent with the recommendations to determine the potential impact of noncompliance, USU worked with an outside consultant to review payment of ESC to all employees working on federal grants. This work identified (1) limited instances when salaries directly charged to sponsored projects included extra service compensation in the base salary and (2) limited instances when extra service compensation was charged to federal sponsors without sponsor approval. The majority of ESC payments made pursuant the USU Extension incentive program was not charged to grant sponsor or included in the institutional base salary charged to the grant. Accordingly, noncompliance with the Uniform Guidance clauses related to compensation costs was limited to a small subset of payments made under the USU Extension incentive program. Based on these findings, USU agrees with the corrective actions recommended and, as outlined in the corrective action plan summary below, has already completed and/or initiated these actions.
2024-018. USU Extension Extra Services Compensation Program Non-Compliance with Uniform Guidance (Finding Type: Significant Deficiency, Reportable Noncompliance) Federal Agency: Various Assistance Listing Number and Title: Various Federal Award Number: Various Questioned Costs: Undetermined Pass-through Entity: Various Prior Year Single Audit Report Finding Number: N/A Utah State University’s (University) Internal Audit performed a review of the University’s Extension Service (Extension) within the College of Agriculture and Applied Science. The review determined that Extension’s Extra Service Compensation (ESC) program violates Uniform Guidance requirements and University policy, bypasses critical internal controls, and provides employees with additional compensation for extra-service work related to their primary job duties without sponsor approval. Extension’s mission, under the University’s land grant mission, provides research-based programs and resources to Utah’s population using a mix of local, state, federal and sponsored funding. To incentivize its personnel to apply for grants, Extension created an ESC program that allowed personnel to replace a portion of their primary position institution-funded salary with grant-funded salary. Personnel could then request up to 20 percent of their primary position salary through an ESC secondary position funded with the replaced institution-funded salary. However, Extension’s justified purpose for the ESC secondary position was “caused by and associated with the grant.” In doing so, Extension made it possible to bypass the University’s policy and internal controls for extra-service pay by obscuring the work duties and funding source for the secondary position. Below is an illustrative example from the USU Internal Audit Report of an ESC professor with an institutional base salary of $50,000: Payment to Employee Before Receiving Award (Source: USU Internal Audit Report IAS-23-53) Uniform Guidance maintains strict requirements with regard to the allowability of compensation, including special consideration for substantial increases, particularly with: • federal award ratios (2 CFR 200.430(e)), • institutional base salary charges, including federal award proportionate shares (2 CFR 200.430(h)(2)), • prior approvals by federal awarding agencies for incidental activities with supplemental compensation (2 CFR 200.430(h)(1)), • intra-institution consulting within higher education (2 CFR 200.430(h)(3)), • institutional policy definitions to conclusively determine work resulting in extra service pay (2 CFR 200.430(h)(4), and • relevant internal controls (2 CFR 200.302(b)(4). Internal Audit cites that the ESC program does not comply with Uniform Guidance, as well as University policy (Extra-Service Compensation Policy 376), which formalizes the University’s approach to compliance with Uniform Guidance for these activities. Internal Audit identified that University personnel did not follow or were unfamiliar with established policies in addition to procedural changes that did not require sufficient level of documentation for proper approvals. Detailed fieldwork by Internal Audit identified instances of questioned costs for funding (both federal and non-federal) in excess of $25,000. Fieldwork covered the period between January 1, 2020 and June 14, 2023, but also identified evidence of noncompliance as far back as 2009 to 2018. After Internal Audit issued its report in September 2024, the University took action to begin determining the potential financial impact of noncompliance through an external third-party. A report by this external third-party has not been completed as of the date of this finding; therefore, the amount of questioned costs related to federal programs cannot be determined. The University has also taken steps to immediately address policy and control deficiencies across the institution. Recommendations: We recommend the University do the following relative to University-wide procedures: 1. Determine the potential financial impact of noncompliance with grant sponsors. 2. Evaluate and improve its policies and required documentation for extra-service compensation. 3. Evaluate and improve its internal controls for sponsored program compensation. 4. Provide adequate training to University personnel regarding sponsored programs compensation compliance. USU’s Response: Utah State University (“USU”) generally agrees with Finding One. As detailed in USU internal audit IAS-23-53, USU Extension established a program to incentivize and reward its personnel to apply for grants (referred to by Extension and within USU internal audit IAS-23-53 as the “incentive program”). While the Uniform Guidance permits incentive programs (see CFR 200.430(f)) and such programs are readily used by universities, the USU Extension incentive program was established and carried out in manner that violated USU’s policy governing extra service compensation (“ESC”) and in a manner that bypassed critical internal controls. Notably, USU Internal Audit IAS-23-53 tested compliance with USU’s extra-service compensation policy but did not review actual costs charged to federal sponsors as this was outside the scope of the audit. Consistent with the recommendations to determine the potential impact of noncompliance, USU worked with an outside consultant to review payment of ESC to all employees working on federal grants. This work identified (1) limited instances when salaries directly charged to sponsored projects included extra service compensation in the base salary and (2) limited instances when extra service compensation was charged to federal sponsors without sponsor approval. The majority of ESC payments made pursuant the USU Extension incentive program was not charged to grant sponsor or included in the institutional base salary charged to the grant. Accordingly, noncompliance with the Uniform Guidance clauses related to compensation costs was limited to a small subset of payments made under the USU Extension incentive program. Based on these findings, USU agrees with the corrective actions recommended and, as outlined in the corrective action plan summary below, has already completed and/or initiated these actions.
2024-018. USU Extension Extra Services Compensation Program Non-Compliance with Uniform Guidance (Finding Type: Significant Deficiency, Reportable Noncompliance) Federal Agency: Various Assistance Listing Number and Title: Various Federal Award Number: Various Questioned Costs: Undetermined Pass-through Entity: Various Prior Year Single Audit Report Finding Number: N/A Utah State University’s (University) Internal Audit performed a review of the University’s Extension Service (Extension) within the College of Agriculture and Applied Science. The review determined that Extension’s Extra Service Compensation (ESC) program violates Uniform Guidance requirements and University policy, bypasses critical internal controls, and provides employees with additional compensation for extra-service work related to their primary job duties without sponsor approval. Extension’s mission, under the University’s land grant mission, provides research-based programs and resources to Utah’s population using a mix of local, state, federal and sponsored funding. To incentivize its personnel to apply for grants, Extension created an ESC program that allowed personnel to replace a portion of their primary position institution-funded salary with grant-funded salary. Personnel could then request up to 20 percent of their primary position salary through an ESC secondary position funded with the replaced institution-funded salary. However, Extension’s justified purpose for the ESC secondary position was “caused by and associated with the grant.” In doing so, Extension made it possible to bypass the University’s policy and internal controls for extra-service pay by obscuring the work duties and funding source for the secondary position. Below is an illustrative example from the USU Internal Audit Report of an ESC professor with an institutional base salary of $50,000: Payment to Employee Before Receiving Award (Source: USU Internal Audit Report IAS-23-53) Uniform Guidance maintains strict requirements with regard to the allowability of compensation, including special consideration for substantial increases, particularly with: • federal award ratios (2 CFR 200.430(e)), • institutional base salary charges, including federal award proportionate shares (2 CFR 200.430(h)(2)), • prior approvals by federal awarding agencies for incidental activities with supplemental compensation (2 CFR 200.430(h)(1)), • intra-institution consulting within higher education (2 CFR 200.430(h)(3)), • institutional policy definitions to conclusively determine work resulting in extra service pay (2 CFR 200.430(h)(4), and • relevant internal controls (2 CFR 200.302(b)(4). Internal Audit cites that the ESC program does not comply with Uniform Guidance, as well as University policy (Extra-Service Compensation Policy 376), which formalizes the University’s approach to compliance with Uniform Guidance for these activities. Internal Audit identified that University personnel did not follow or were unfamiliar with established policies in addition to procedural changes that did not require sufficient level of documentation for proper approvals. Detailed fieldwork by Internal Audit identified instances of questioned costs for funding (both federal and non-federal) in excess of $25,000. Fieldwork covered the period between January 1, 2020 and June 14, 2023, but also identified evidence of noncompliance as far back as 2009 to 2018. After Internal Audit issued its report in September 2024, the University took action to begin determining the potential financial impact of noncompliance through an external third-party. A report by this external third-party has not been completed as of the date of this finding; therefore, the amount of questioned costs related to federal programs cannot be determined. The University has also taken steps to immediately address policy and control deficiencies across the institution. Recommendations: We recommend the University do the following relative to University-wide procedures: 1. Determine the potential financial impact of noncompliance with grant sponsors. 2. Evaluate and improve its policies and required documentation for extra-service compensation. 3. Evaluate and improve its internal controls for sponsored program compensation. 4. Provide adequate training to University personnel regarding sponsored programs compensation compliance. USU’s Response: Utah State University (“USU”) generally agrees with Finding One. As detailed in USU internal audit IAS-23-53, USU Extension established a program to incentivize and reward its personnel to apply for grants (referred to by Extension and within USU internal audit IAS-23-53 as the “incentive program”). While the Uniform Guidance permits incentive programs (see CFR 200.430(f)) and such programs are readily used by universities, the USU Extension incentive program was established and carried out in manner that violated USU’s policy governing extra service compensation (“ESC”) and in a manner that bypassed critical internal controls. Notably, USU Internal Audit IAS-23-53 tested compliance with USU’s extra-service compensation policy but did not review actual costs charged to federal sponsors as this was outside the scope of the audit. Consistent with the recommendations to determine the potential impact of noncompliance, USU worked with an outside consultant to review payment of ESC to all employees working on federal grants. This work identified (1) limited instances when salaries directly charged to sponsored projects included extra service compensation in the base salary and (2) limited instances when extra service compensation was charged to federal sponsors without sponsor approval. The majority of ESC payments made pursuant the USU Extension incentive program was not charged to grant sponsor or included in the institutional base salary charged to the grant. Accordingly, noncompliance with the Uniform Guidance clauses related to compensation costs was limited to a small subset of payments made under the USU Extension incentive program. Based on these findings, USU agrees with the corrective actions recommended and, as outlined in the corrective action plan summary below, has already completed and/or initiated these actions.
2024-018. USU Extension Extra Services Compensation Program Non-Compliance with Uniform Guidance (Finding Type: Significant Deficiency, Reportable Noncompliance) Federal Agency: Various Assistance Listing Number and Title: Various Federal Award Number: Various Questioned Costs: Undetermined Pass-through Entity: Various Prior Year Single Audit Report Finding Number: N/A Utah State University’s (University) Internal Audit performed a review of the University’s Extension Service (Extension) within the College of Agriculture and Applied Science. The review determined that Extension’s Extra Service Compensation (ESC) program violates Uniform Guidance requirements and University policy, bypasses critical internal controls, and provides employees with additional compensation for extra-service work related to their primary job duties without sponsor approval. Extension’s mission, under the University’s land grant mission, provides research-based programs and resources to Utah’s population using a mix of local, state, federal and sponsored funding. To incentivize its personnel to apply for grants, Extension created an ESC program that allowed personnel to replace a portion of their primary position institution-funded salary with grant-funded salary. Personnel could then request up to 20 percent of their primary position salary through an ESC secondary position funded with the replaced institution-funded salary. However, Extension’s justified purpose for the ESC secondary position was “caused by and associated with the grant.” In doing so, Extension made it possible to bypass the University’s policy and internal controls for extra-service pay by obscuring the work duties and funding source for the secondary position. Below is an illustrative example from the USU Internal Audit Report of an ESC professor with an institutional base salary of $50,000: Payment to Employee Before Receiving Award (Source: USU Internal Audit Report IAS-23-53) Uniform Guidance maintains strict requirements with regard to the allowability of compensation, including special consideration for substantial increases, particularly with: • federal award ratios (2 CFR 200.430(e)), • institutional base salary charges, including federal award proportionate shares (2 CFR 200.430(h)(2)), • prior approvals by federal awarding agencies for incidental activities with supplemental compensation (2 CFR 200.430(h)(1)), • intra-institution consulting within higher education (2 CFR 200.430(h)(3)), • institutional policy definitions to conclusively determine work resulting in extra service pay (2 CFR 200.430(h)(4), and • relevant internal controls (2 CFR 200.302(b)(4). Internal Audit cites that the ESC program does not comply with Uniform Guidance, as well as University policy (Extra-Service Compensation Policy 376), which formalizes the University’s approach to compliance with Uniform Guidance for these activities. Internal Audit identified that University personnel did not follow or were unfamiliar with established policies in addition to procedural changes that did not require sufficient level of documentation for proper approvals. Detailed fieldwork by Internal Audit identified instances of questioned costs for funding (both federal and non-federal) in excess of $25,000. Fieldwork covered the period between January 1, 2020 and June 14, 2023, but also identified evidence of noncompliance as far back as 2009 to 2018. After Internal Audit issued its report in September 2024, the University took action to begin determining the potential financial impact of noncompliance through an external third-party. A report by this external third-party has not been completed as of the date of this finding; therefore, the amount of questioned costs related to federal programs cannot be determined. The University has also taken steps to immediately address policy and control deficiencies across the institution. Recommendations: We recommend the University do the following relative to University-wide procedures: 1. Determine the potential financial impact of noncompliance with grant sponsors. 2. Evaluate and improve its policies and required documentation for extra-service compensation. 3. Evaluate and improve its internal controls for sponsored program compensation. 4. Provide adequate training to University personnel regarding sponsored programs compensation compliance. USU’s Response: Utah State University (“USU”) generally agrees with Finding One. As detailed in USU internal audit IAS-23-53, USU Extension established a program to incentivize and reward its personnel to apply for grants (referred to by Extension and within USU internal audit IAS-23-53 as the “incentive program”). While the Uniform Guidance permits incentive programs (see CFR 200.430(f)) and such programs are readily used by universities, the USU Extension incentive program was established and carried out in manner that violated USU’s policy governing extra service compensation (“ESC”) and in a manner that bypassed critical internal controls. Notably, USU Internal Audit IAS-23-53 tested compliance with USU’s extra-service compensation policy but did not review actual costs charged to federal sponsors as this was outside the scope of the audit. Consistent with the recommendations to determine the potential impact of noncompliance, USU worked with an outside consultant to review payment of ESC to all employees working on federal grants. This work identified (1) limited instances when salaries directly charged to sponsored projects included extra service compensation in the base salary and (2) limited instances when extra service compensation was charged to federal sponsors without sponsor approval. The majority of ESC payments made pursuant the USU Extension incentive program was not charged to grant sponsor or included in the institutional base salary charged to the grant. Accordingly, noncompliance with the Uniform Guidance clauses related to compensation costs was limited to a small subset of payments made under the USU Extension incentive program. Based on these findings, USU agrees with the corrective actions recommended and, as outlined in the corrective action plan summary below, has already completed and/or initiated these actions.
2024-018. USU Extension Extra Services Compensation Program Non-Compliance with Uniform Guidance (Finding Type: Significant Deficiency, Reportable Noncompliance) Federal Agency: Various Assistance Listing Number and Title: Various Federal Award Number: Various Questioned Costs: Undetermined Pass-through Entity: Various Prior Year Single Audit Report Finding Number: N/A Utah State University’s (University) Internal Audit performed a review of the University’s Extension Service (Extension) within the College of Agriculture and Applied Science. The review determined that Extension’s Extra Service Compensation (ESC) program violates Uniform Guidance requirements and University policy, bypasses critical internal controls, and provides employees with additional compensation for extra-service work related to their primary job duties without sponsor approval. Extension’s mission, under the University’s land grant mission, provides research-based programs and resources to Utah’s population using a mix of local, state, federal and sponsored funding. To incentivize its personnel to apply for grants, Extension created an ESC program that allowed personnel to replace a portion of their primary position institution-funded salary with grant-funded salary. Personnel could then request up to 20 percent of their primary position salary through an ESC secondary position funded with the replaced institution-funded salary. However, Extension’s justified purpose for the ESC secondary position was “caused by and associated with the grant.” In doing so, Extension made it possible to bypass the University’s policy and internal controls for extra-service pay by obscuring the work duties and funding source for the secondary position. Below is an illustrative example from the USU Internal Audit Report of an ESC professor with an institutional base salary of $50,000: Payment to Employee Before Receiving Award (Source: USU Internal Audit Report IAS-23-53) Uniform Guidance maintains strict requirements with regard to the allowability of compensation, including special consideration for substantial increases, particularly with: • federal award ratios (2 CFR 200.430(e)), • institutional base salary charges, including federal award proportionate shares (2 CFR 200.430(h)(2)), • prior approvals by federal awarding agencies for incidental activities with supplemental compensation (2 CFR 200.430(h)(1)), • intra-institution consulting within higher education (2 CFR 200.430(h)(3)), • institutional policy definitions to conclusively determine work resulting in extra service pay (2 CFR 200.430(h)(4), and • relevant internal controls (2 CFR 200.302(b)(4). Internal Audit cites that the ESC program does not comply with Uniform Guidance, as well as University policy (Extra-Service Compensation Policy 376), which formalizes the University’s approach to compliance with Uniform Guidance for these activities. Internal Audit identified that University personnel did not follow or were unfamiliar with established policies in addition to procedural changes that did not require sufficient level of documentation for proper approvals. Detailed fieldwork by Internal Audit identified instances of questioned costs for funding (both federal and non-federal) in excess of $25,000. Fieldwork covered the period between January 1, 2020 and June 14, 2023, but also identified evidence of noncompliance as far back as 2009 to 2018. After Internal Audit issued its report in September 2024, the University took action to begin determining the potential financial impact of noncompliance through an external third-party. A report by this external third-party has not been completed as of the date of this finding; therefore, the amount of questioned costs related to federal programs cannot be determined. The University has also taken steps to immediately address policy and control deficiencies across the institution. Recommendations: We recommend the University do the following relative to University-wide procedures: 1. Determine the potential financial impact of noncompliance with grant sponsors. 2. Evaluate and improve its policies and required documentation for extra-service compensation. 3. Evaluate and improve its internal controls for sponsored program compensation. 4. Provide adequate training to University personnel regarding sponsored programs compensation compliance. USU’s Response: Utah State University (“USU”) generally agrees with Finding One. As detailed in USU internal audit IAS-23-53, USU Extension established a program to incentivize and reward its personnel to apply for grants (referred to by Extension and within USU internal audit IAS-23-53 as the “incentive program”). While the Uniform Guidance permits incentive programs (see CFR 200.430(f)) and such programs are readily used by universities, the USU Extension incentive program was established and carried out in manner that violated USU’s policy governing extra service compensation (“ESC”) and in a manner that bypassed critical internal controls. Notably, USU Internal Audit IAS-23-53 tested compliance with USU’s extra-service compensation policy but did not review actual costs charged to federal sponsors as this was outside the scope of the audit. Consistent with the recommendations to determine the potential impact of noncompliance, USU worked with an outside consultant to review payment of ESC to all employees working on federal grants. This work identified (1) limited instances when salaries directly charged to sponsored projects included extra service compensation in the base salary and (2) limited instances when extra service compensation was charged to federal sponsors without sponsor approval. The majority of ESC payments made pursuant the USU Extension incentive program was not charged to grant sponsor or included in the institutional base salary charged to the grant. Accordingly, noncompliance with the Uniform Guidance clauses related to compensation costs was limited to a small subset of payments made under the USU Extension incentive program. Based on these findings, USU agrees with the corrective actions recommended and, as outlined in the corrective action plan summary below, has already completed and/or initiated these actions.
2024-018. USU Extension Extra Services Compensation Program Non-Compliance with Uniform Guidance (Finding Type: Significant Deficiency, Reportable Noncompliance) Federal Agency: Various Assistance Listing Number and Title: Various Federal Award Number: Various Questioned Costs: Undetermined Pass-through Entity: Various Prior Year Single Audit Report Finding Number: N/A Utah State University’s (University) Internal Audit performed a review of the University’s Extension Service (Extension) within the College of Agriculture and Applied Science. The review determined that Extension’s Extra Service Compensation (ESC) program violates Uniform Guidance requirements and University policy, bypasses critical internal controls, and provides employees with additional compensation for extra-service work related to their primary job duties without sponsor approval. Extension’s mission, under the University’s land grant mission, provides research-based programs and resources to Utah’s population using a mix of local, state, federal and sponsored funding. To incentivize its personnel to apply for grants, Extension created an ESC program that allowed personnel to replace a portion of their primary position institution-funded salary with grant-funded salary. Personnel could then request up to 20 percent of their primary position salary through an ESC secondary position funded with the replaced institution-funded salary. However, Extension’s justified purpose for the ESC secondary position was “caused by and associated with the grant.” In doing so, Extension made it possible to bypass the University’s policy and internal controls for extra-service pay by obscuring the work duties and funding source for the secondary position. Below is an illustrative example from the USU Internal Audit Report of an ESC professor with an institutional base salary of $50,000: Payment to Employee Before Receiving Award (Source: USU Internal Audit Report IAS-23-53) Uniform Guidance maintains strict requirements with regard to the allowability of compensation, including special consideration for substantial increases, particularly with: • federal award ratios (2 CFR 200.430(e)), • institutional base salary charges, including federal award proportionate shares (2 CFR 200.430(h)(2)), • prior approvals by federal awarding agencies for incidental activities with supplemental compensation (2 CFR 200.430(h)(1)), • intra-institution consulting within higher education (2 CFR 200.430(h)(3)), • institutional policy definitions to conclusively determine work resulting in extra service pay (2 CFR 200.430(h)(4), and • relevant internal controls (2 CFR 200.302(b)(4). Internal Audit cites that the ESC program does not comply with Uniform Guidance, as well as University policy (Extra-Service Compensation Policy 376), which formalizes the University’s approach to compliance with Uniform Guidance for these activities. Internal Audit identified that University personnel did not follow or were unfamiliar with established policies in addition to procedural changes that did not require sufficient level of documentation for proper approvals. Detailed fieldwork by Internal Audit identified instances of questioned costs for funding (both federal and non-federal) in excess of $25,000. Fieldwork covered the period between January 1, 2020 and June 14, 2023, but also identified evidence of noncompliance as far back as 2009 to 2018. After Internal Audit issued its report in September 2024, the University took action to begin determining the potential financial impact of noncompliance through an external third-party. A report by this external third-party has not been completed as of the date of this finding; therefore, the amount of questioned costs related to federal programs cannot be determined. The University has also taken steps to immediately address policy and control deficiencies across the institution. Recommendations: We recommend the University do the following relative to University-wide procedures: 1. Determine the potential financial impact of noncompliance with grant sponsors. 2. Evaluate and improve its policies and required documentation for extra-service compensation. 3. Evaluate and improve its internal controls for sponsored program compensation. 4. Provide adequate training to University personnel regarding sponsored programs compensation compliance. USU’s Response: Utah State University (“USU”) generally agrees with Finding One. As detailed in USU internal audit IAS-23-53, USU Extension established a program to incentivize and reward its personnel to apply for grants (referred to by Extension and within USU internal audit IAS-23-53 as the “incentive program”). While the Uniform Guidance permits incentive programs (see CFR 200.430(f)) and such programs are readily used by universities, the USU Extension incentive program was established and carried out in manner that violated USU’s policy governing extra service compensation (“ESC”) and in a manner that bypassed critical internal controls. Notably, USU Internal Audit IAS-23-53 tested compliance with USU’s extra-service compensation policy but did not review actual costs charged to federal sponsors as this was outside the scope of the audit. Consistent with the recommendations to determine the potential impact of noncompliance, USU worked with an outside consultant to review payment of ESC to all employees working on federal grants. This work identified (1) limited instances when salaries directly charged to sponsored projects included extra service compensation in the base salary and (2) limited instances when extra service compensation was charged to federal sponsors without sponsor approval. The majority of ESC payments made pursuant the USU Extension incentive program was not charged to grant sponsor or included in the institutional base salary charged to the grant. Accordingly, noncompliance with the Uniform Guidance clauses related to compensation costs was limited to a small subset of payments made under the USU Extension incentive program. Based on these findings, USU agrees with the corrective actions recommended and, as outlined in the corrective action plan summary below, has already completed and/or initiated these actions.
2024-018. USU Extension Extra Services Compensation Program Non-Compliance with Uniform Guidance (Finding Type: Significant Deficiency, Reportable Noncompliance) Federal Agency: Various Assistance Listing Number and Title: Various Federal Award Number: Various Questioned Costs: Undetermined Pass-through Entity: Various Prior Year Single Audit Report Finding Number: N/A Utah State University’s (University) Internal Audit performed a review of the University’s Extension Service (Extension) within the College of Agriculture and Applied Science. The review determined that Extension’s Extra Service Compensation (ESC) program violates Uniform Guidance requirements and University policy, bypasses critical internal controls, and provides employees with additional compensation for extra-service work related to their primary job duties without sponsor approval. Extension’s mission, under the University’s land grant mission, provides research-based programs and resources to Utah’s population using a mix of local, state, federal and sponsored funding. To incentivize its personnel to apply for grants, Extension created an ESC program that allowed personnel to replace a portion of their primary position institution-funded salary with grant-funded salary. Personnel could then request up to 20 percent of their primary position salary through an ESC secondary position funded with the replaced institution-funded salary. However, Extension’s justified purpose for the ESC secondary position was “caused by and associated with the grant.” In doing so, Extension made it possible to bypass the University’s policy and internal controls for extra-service pay by obscuring the work duties and funding source for the secondary position. Below is an illustrative example from the USU Internal Audit Report of an ESC professor with an institutional base salary of $50,000: Payment to Employee Before Receiving Award (Source: USU Internal Audit Report IAS-23-53) Uniform Guidance maintains strict requirements with regard to the allowability of compensation, including special consideration for substantial increases, particularly with: • federal award ratios (2 CFR 200.430(e)), • institutional base salary charges, including federal award proportionate shares (2 CFR 200.430(h)(2)), • prior approvals by federal awarding agencies for incidental activities with supplemental compensation (2 CFR 200.430(h)(1)), • intra-institution consulting within higher education (2 CFR 200.430(h)(3)), • institutional policy definitions to conclusively determine work resulting in extra service pay (2 CFR 200.430(h)(4), and • relevant internal controls (2 CFR 200.302(b)(4). Internal Audit cites that the ESC program does not comply with Uniform Guidance, as well as University policy (Extra-Service Compensation Policy 376), which formalizes the University’s approach to compliance with Uniform Guidance for these activities. Internal Audit identified that University personnel did not follow or were unfamiliar with established policies in addition to procedural changes that did not require sufficient level of documentation for proper approvals. Detailed fieldwork by Internal Audit identified instances of questioned costs for funding (both federal and non-federal) in excess of $25,000. Fieldwork covered the period between January 1, 2020 and June 14, 2023, but also identified evidence of noncompliance as far back as 2009 to 2018. After Internal Audit issued its report in September 2024, the University took action to begin determining the potential financial impact of noncompliance through an external third-party. A report by this external third-party has not been completed as of the date of this finding; therefore, the amount of questioned costs related to federal programs cannot be determined. The University has also taken steps to immediately address policy and control deficiencies across the institution. Recommendations: We recommend the University do the following relative to University-wide procedures: 1. Determine the potential financial impact of noncompliance with grant sponsors. 2. Evaluate and improve its policies and required documentation for extra-service compensation. 3. Evaluate and improve its internal controls for sponsored program compensation. 4. Provide adequate training to University personnel regarding sponsored programs compensation compliance. USU’s Response: Utah State University (“USU”) generally agrees with Finding One. As detailed in USU internal audit IAS-23-53, USU Extension established a program to incentivize and reward its personnel to apply for grants (referred to by Extension and within USU internal audit IAS-23-53 as the “incentive program”). While the Uniform Guidance permits incentive programs (see CFR 200.430(f)) and such programs are readily used by universities, the USU Extension incentive program was established and carried out in manner that violated USU’s policy governing extra service compensation (“ESC”) and in a manner that bypassed critical internal controls. Notably, USU Internal Audit IAS-23-53 tested compliance with USU’s extra-service compensation policy but did not review actual costs charged to federal sponsors as this was outside the scope of the audit. Consistent with the recommendations to determine the potential impact of noncompliance, USU worked with an outside consultant to review payment of ESC to all employees working on federal grants. This work identified (1) limited instances when salaries directly charged to sponsored projects included extra service compensation in the base salary and (2) limited instances when extra service compensation was charged to federal sponsors without sponsor approval. The majority of ESC payments made pursuant the USU Extension incentive program was not charged to grant sponsor or included in the institutional base salary charged to the grant. Accordingly, noncompliance with the Uniform Guidance clauses related to compensation costs was limited to a small subset of payments made under the USU Extension incentive program. Based on these findings, USU agrees with the corrective actions recommended and, as outlined in the corrective action plan summary below, has already completed and/or initiated these actions.
2024-018. USU Extension Extra Services Compensation Program Non-Compliance with Uniform Guidance (Finding Type: Significant Deficiency, Reportable Noncompliance) Federal Agency: Various Assistance Listing Number and Title: Various Federal Award Number: Various Questioned Costs: Undetermined Pass-through Entity: Various Prior Year Single Audit Report Finding Number: N/A Utah State University’s (University) Internal Audit performed a review of the University’s Extension Service (Extension) within the College of Agriculture and Applied Science. The review determined that Extension’s Extra Service Compensation (ESC) program violates Uniform Guidance requirements and University policy, bypasses critical internal controls, and provides employees with additional compensation for extra-service work related to their primary job duties without sponsor approval. Extension’s mission, under the University’s land grant mission, provides research-based programs and resources to Utah’s population using a mix of local, state, federal and sponsored funding. To incentivize its personnel to apply for grants, Extension created an ESC program that allowed personnel to replace a portion of their primary position institution-funded salary with grant-funded salary. Personnel could then request up to 20 percent of their primary position salary through an ESC secondary position funded with the replaced institution-funded salary. However, Extension’s justified purpose for the ESC secondary position was “caused by and associated with the grant.” In doing so, Extension made it possible to bypass the University’s policy and internal controls for extra-service pay by obscuring the work duties and funding source for the secondary position. Below is an illustrative example from the USU Internal Audit Report of an ESC professor with an institutional base salary of $50,000: Payment to Employee Before Receiving Award (Source: USU Internal Audit Report IAS-23-53) Uniform Guidance maintains strict requirements with regard to the allowability of compensation, including special consideration for substantial increases, particularly with: • federal award ratios (2 CFR 200.430(e)), • institutional base salary charges, including federal award proportionate shares (2 CFR 200.430(h)(2)), • prior approvals by federal awarding agencies for incidental activities with supplemental compensation (2 CFR 200.430(h)(1)), • intra-institution consulting within higher education (2 CFR 200.430(h)(3)), • institutional policy definitions to conclusively determine work resulting in extra service pay (2 CFR 200.430(h)(4), and • relevant internal controls (2 CFR 200.302(b)(4). Internal Audit cites that the ESC program does not comply with Uniform Guidance, as well as University policy (Extra-Service Compensation Policy 376), which formalizes the University’s approach to compliance with Uniform Guidance for these activities. Internal Audit identified that University personnel did not follow or were unfamiliar with established policies in addition to procedural changes that did not require sufficient level of documentation for proper approvals. Detailed fieldwork by Internal Audit identified instances of questioned costs for funding (both federal and non-federal) in excess of $25,000. Fieldwork covered the period between January 1, 2020 and June 14, 2023, but also identified evidence of noncompliance as far back as 2009 to 2018. After Internal Audit issued its report in September 2024, the University took action to begin determining the potential financial impact of noncompliance through an external third-party. A report by this external third-party has not been completed as of the date of this finding; therefore, the amount of questioned costs related to federal programs cannot be determined. The University has also taken steps to immediately address policy and control deficiencies across the institution. Recommendations: We recommend the University do the following relative to University-wide procedures: 1. Determine the potential financial impact of noncompliance with grant sponsors. 2. Evaluate and improve its policies and required documentation for extra-service compensation. 3. Evaluate and improve its internal controls for sponsored program compensation. 4. Provide adequate training to University personnel regarding sponsored programs compensation compliance. USU’s Response: Utah State University (“USU”) generally agrees with Finding One. As detailed in USU internal audit IAS-23-53, USU Extension established a program to incentivize and reward its personnel to apply for grants (referred to by Extension and within USU internal audit IAS-23-53 as the “incentive program”). While the Uniform Guidance permits incentive programs (see CFR 200.430(f)) and such programs are readily used by universities, the USU Extension incentive program was established and carried out in manner that violated USU’s policy governing extra service compensation (“ESC”) and in a manner that bypassed critical internal controls. Notably, USU Internal Audit IAS-23-53 tested compliance with USU’s extra-service compensation policy but did not review actual costs charged to federal sponsors as this was outside the scope of the audit. Consistent with the recommendations to determine the potential impact of noncompliance, USU worked with an outside consultant to review payment of ESC to all employees working on federal grants. This work identified (1) limited instances when salaries directly charged to sponsored projects included extra service compensation in the base salary and (2) limited instances when extra service compensation was charged to federal sponsors without sponsor approval. The majority of ESC payments made pursuant the USU Extension incentive program was not charged to grant sponsor or included in the institutional base salary charged to the grant. Accordingly, noncompliance with the Uniform Guidance clauses related to compensation costs was limited to a small subset of payments made under the USU Extension incentive program. Based on these findings, USU agrees with the corrective actions recommended and, as outlined in the corrective action plan summary below, has already completed and/or initiated these actions.
2024-018. USU Extension Extra Services Compensation Program Non-Compliance with Uniform Guidance (Finding Type: Significant Deficiency, Reportable Noncompliance) Federal Agency: Various Assistance Listing Number and Title: Various Federal Award Number: Various Questioned Costs: Undetermined Pass-through Entity: Various Prior Year Single Audit Report Finding Number: N/A Utah State University’s (University) Internal Audit performed a review of the University’s Extension Service (Extension) within the College of Agriculture and Applied Science. The review determined that Extension’s Extra Service Compensation (ESC) program violates Uniform Guidance requirements and University policy, bypasses critical internal controls, and provides employees with additional compensation for extra-service work related to their primary job duties without sponsor approval. Extension’s mission, under the University’s land grant mission, provides research-based programs and resources to Utah’s population using a mix of local, state, federal and sponsored funding. To incentivize its personnel to apply for grants, Extension created an ESC program that allowed personnel to replace a portion of their primary position institution-funded salary with grant-funded salary. Personnel could then request up to 20 percent of their primary position salary through an ESC secondary position funded with the replaced institution-funded salary. However, Extension’s justified purpose for the ESC secondary position was “caused by and associated with the grant.” In doing so, Extension made it possible to bypass the University’s policy and internal controls for extra-service pay by obscuring the work duties and funding source for the secondary position. Below is an illustrative example from the USU Internal Audit Report of an ESC professor with an institutional base salary of $50,000: Payment to Employee Before Receiving Award (Source: USU Internal Audit Report IAS-23-53) Uniform Guidance maintains strict requirements with regard to the allowability of compensation, including special consideration for substantial increases, particularly with: • federal award ratios (2 CFR 200.430(e)), • institutional base salary charges, including federal award proportionate shares (2 CFR 200.430(h)(2)), • prior approvals by federal awarding agencies for incidental activities with supplemental compensation (2 CFR 200.430(h)(1)), • intra-institution consulting within higher education (2 CFR 200.430(h)(3)), • institutional policy definitions to conclusively determine work resulting in extra service pay (2 CFR 200.430(h)(4), and • relevant internal controls (2 CFR 200.302(b)(4). Internal Audit cites that the ESC program does not comply with Uniform Guidance, as well as University policy (Extra-Service Compensation Policy 376), which formalizes the University’s approach to compliance with Uniform Guidance for these activities. Internal Audit identified that University personnel did not follow or were unfamiliar with established policies in addition to procedural changes that did not require sufficient level of documentation for proper approvals. Detailed fieldwork by Internal Audit identified instances of questioned costs for funding (both federal and non-federal) in excess of $25,000. Fieldwork covered the period between January 1, 2020 and June 14, 2023, but also identified evidence of noncompliance as far back as 2009 to 2018. After Internal Audit issued its report in September 2024, the University took action to begin determining the potential financial impact of noncompliance through an external third-party. A report by this external third-party has not been completed as of the date of this finding; therefore, the amount of questioned costs related to federal programs cannot be determined. The University has also taken steps to immediately address policy and control deficiencies across the institution. Recommendations: We recommend the University do the following relative to University-wide procedures: 1. Determine the potential financial impact of noncompliance with grant sponsors. 2. Evaluate and improve its policies and required documentation for extra-service compensation. 3. Evaluate and improve its internal controls for sponsored program compensation. 4. Provide adequate training to University personnel regarding sponsored programs compensation compliance. USU’s Response: Utah State University (“USU”) generally agrees with Finding One. As detailed in USU internal audit IAS-23-53, USU Extension established a program to incentivize and reward its personnel to apply for grants (referred to by Extension and within USU internal audit IAS-23-53 as the “incentive program”). While the Uniform Guidance permits incentive programs (see CFR 200.430(f)) and such programs are readily used by universities, the USU Extension incentive program was established and carried out in manner that violated USU’s policy governing extra service compensation (“ESC”) and in a manner that bypassed critical internal controls. Notably, USU Internal Audit IAS-23-53 tested compliance with USU’s extra-service compensation policy but did not review actual costs charged to federal sponsors as this was outside the scope of the audit. Consistent with the recommendations to determine the potential impact of noncompliance, USU worked with an outside consultant to review payment of ESC to all employees working on federal grants. This work identified (1) limited instances when salaries directly charged to sponsored projects included extra service compensation in the base salary and (2) limited instances when extra service compensation was charged to federal sponsors without sponsor approval. The majority of ESC payments made pursuant the USU Extension incentive program was not charged to grant sponsor or included in the institutional base salary charged to the grant. Accordingly, noncompliance with the Uniform Guidance clauses related to compensation costs was limited to a small subset of payments made under the USU Extension incentive program. Based on these findings, USU agrees with the corrective actions recommended and, as outlined in the corrective action plan summary below, has already completed and/or initiated these actions.
2024-018. USU Extension Extra Services Compensation Program Non-Compliance with Uniform Guidance (Finding Type: Significant Deficiency, Reportable Noncompliance) Federal Agency: Various Assistance Listing Number and Title: Various Federal Award Number: Various Questioned Costs: Undetermined Pass-through Entity: Various Prior Year Single Audit Report Finding Number: N/A Utah State University’s (University) Internal Audit performed a review of the University’s Extension Service (Extension) within the College of Agriculture and Applied Science. The review determined that Extension’s Extra Service Compensation (ESC) program violates Uniform Guidance requirements and University policy, bypasses critical internal controls, and provides employees with additional compensation for extra-service work related to their primary job duties without sponsor approval. Extension’s mission, under the University’s land grant mission, provides research-based programs and resources to Utah’s population using a mix of local, state, federal and sponsored funding. To incentivize its personnel to apply for grants, Extension created an ESC program that allowed personnel to replace a portion of their primary position institution-funded salary with grant-funded salary. Personnel could then request up to 20 percent of their primary position salary through an ESC secondary position funded with the replaced institution-funded salary. However, Extension’s justified purpose for the ESC secondary position was “caused by and associated with the grant.” In doing so, Extension made it possible to bypass the University’s policy and internal controls for extra-service pay by obscuring the work duties and funding source for the secondary position. Below is an illustrative example from the USU Internal Audit Report of an ESC professor with an institutional base salary of $50,000: Payment to Employee Before Receiving Award (Source: USU Internal Audit Report IAS-23-53) Uniform Guidance maintains strict requirements with regard to the allowability of compensation, including special consideration for substantial increases, particularly with: • federal award ratios (2 CFR 200.430(e)), • institutional base salary charges, including federal award proportionate shares (2 CFR 200.430(h)(2)), • prior approvals by federal awarding agencies for incidental activities with supplemental compensation (2 CFR 200.430(h)(1)), • intra-institution consulting within higher education (2 CFR 200.430(h)(3)), • institutional policy definitions to conclusively determine work resulting in extra service pay (2 CFR 200.430(h)(4), and • relevant internal controls (2 CFR 200.302(b)(4). Internal Audit cites that the ESC program does not comply with Uniform Guidance, as well as University policy (Extra-Service Compensation Policy 376), which formalizes the University’s approach to compliance with Uniform Guidance for these activities. Internal Audit identified that University personnel did not follow or were unfamiliar with established policies in addition to procedural changes that did not require sufficient level of documentation for proper approvals. Detailed fieldwork by Internal Audit identified instances of questioned costs for funding (both federal and non-federal) in excess of $25,000. Fieldwork covered the period between January 1, 2020 and June 14, 2023, but also identified evidence of noncompliance as far back as 2009 to 2018. After Internal Audit issued its report in September 2024, the University took action to begin determining the potential financial impact of noncompliance through an external third-party. A report by this external third-party has not been completed as of the date of this finding; therefore, the amount of questioned costs related to federal programs cannot be determined. The University has also taken steps to immediately address policy and control deficiencies across the institution. Recommendations: We recommend the University do the following relative to University-wide procedures: 1. Determine the potential financial impact of noncompliance with grant sponsors. 2. Evaluate and improve its policies and required documentation for extra-service compensation. 3. Evaluate and improve its internal controls for sponsored program compensation. 4. Provide adequate training to University personnel regarding sponsored programs compensation compliance. USU’s Response: Utah State University (“USU”) generally agrees with Finding One. As detailed in USU internal audit IAS-23-53, USU Extension established a program to incentivize and reward its personnel to apply for grants (referred to by Extension and within USU internal audit IAS-23-53 as the “incentive program”). While the Uniform Guidance permits incentive programs (see CFR 200.430(f)) and such programs are readily used by universities, the USU Extension incentive program was established and carried out in manner that violated USU’s policy governing extra service compensation (“ESC”) and in a manner that bypassed critical internal controls. Notably, USU Internal Audit IAS-23-53 tested compliance with USU’s extra-service compensation policy but did not review actual costs charged to federal sponsors as this was outside the scope of the audit. Consistent with the recommendations to determine the potential impact of noncompliance, USU worked with an outside consultant to review payment of ESC to all employees working on federal grants. This work identified (1) limited instances when salaries directly charged to sponsored projects included extra service compensation in the base salary and (2) limited instances when extra service compensation was charged to federal sponsors without sponsor approval. The majority of ESC payments made pursuant the USU Extension incentive program was not charged to grant sponsor or included in the institutional base salary charged to the grant. Accordingly, noncompliance with the Uniform Guidance clauses related to compensation costs was limited to a small subset of payments made under the USU Extension incentive program. Based on these findings, USU agrees with the corrective actions recommended and, as outlined in the corrective action plan summary below, has already completed and/or initiated these actions.
2024-018. USU Extension Extra Services Compensation Program Non-Compliance with Uniform Guidance (Finding Type: Significant Deficiency, Reportable Noncompliance) Federal Agency: Various Assistance Listing Number and Title: Various Federal Award Number: Various Questioned Costs: Undetermined Pass-through Entity: Various Prior Year Single Audit Report Finding Number: N/A Utah State University’s (University) Internal Audit performed a review of the University’s Extension Service (Extension) within the College of Agriculture and Applied Science. The review determined that Extension’s Extra Service Compensation (ESC) program violates Uniform Guidance requirements and University policy, bypasses critical internal controls, and provides employees with additional compensation for extra-service work related to their primary job duties without sponsor approval. Extension’s mission, under the University’s land grant mission, provides research-based programs and resources to Utah’s population using a mix of local, state, federal and sponsored funding. To incentivize its personnel to apply for grants, Extension created an ESC program that allowed personnel to replace a portion of their primary position institution-funded salary with grant-funded salary. Personnel could then request up to 20 percent of their primary position salary through an ESC secondary position funded with the replaced institution-funded salary. However, Extension’s justified purpose for the ESC secondary position was “caused by and associated with the grant.” In doing so, Extension made it possible to bypass the University’s policy and internal controls for extra-service pay by obscuring the work duties and funding source for the secondary position. Below is an illustrative example from the USU Internal Audit Report of an ESC professor with an institutional base salary of $50,000: Payment to Employee Before Receiving Award (Source: USU Internal Audit Report IAS-23-53) Uniform Guidance maintains strict requirements with regard to the allowability of compensation, including special consideration for substantial increases, particularly with: • federal award ratios (2 CFR 200.430(e)), • institutional base salary charges, including federal award proportionate shares (2 CFR 200.430(h)(2)), • prior approvals by federal awarding agencies for incidental activities with supplemental compensation (2 CFR 200.430(h)(1)), • intra-institution consulting within higher education (2 CFR 200.430(h)(3)), • institutional policy definitions to conclusively determine work resulting in extra service pay (2 CFR 200.430(h)(4), and • relevant internal controls (2 CFR 200.302(b)(4). Internal Audit cites that the ESC program does not comply with Uniform Guidance, as well as University policy (Extra-Service Compensation Policy 376), which formalizes the University’s approach to compliance with Uniform Guidance for these activities. Internal Audit identified that University personnel did not follow or were unfamiliar with established policies in addition to procedural changes that did not require sufficient level of documentation for proper approvals. Detailed fieldwork by Internal Audit identified instances of questioned costs for funding (both federal and non-federal) in excess of $25,000. Fieldwork covered the period between January 1, 2020 and June 14, 2023, but also identified evidence of noncompliance as far back as 2009 to 2018. After Internal Audit issued its report in September 2024, the University took action to begin determining the potential financial impact of noncompliance through an external third-party. A report by this external third-party has not been completed as of the date of this finding; therefore, the amount of questioned costs related to federal programs cannot be determined. The University has also taken steps to immediately address policy and control deficiencies across the institution. Recommendations: We recommend the University do the following relative to University-wide procedures: 1. Determine the potential financial impact of noncompliance with grant sponsors. 2. Evaluate and improve its policies and required documentation for extra-service compensation. 3. Evaluate and improve its internal controls for sponsored program compensation. 4. Provide adequate training to University personnel regarding sponsored programs compensation compliance. USU’s Response: Utah State University (“USU”) generally agrees with Finding One. As detailed in USU internal audit IAS-23-53, USU Extension established a program to incentivize and reward its personnel to apply for grants (referred to by Extension and within USU internal audit IAS-23-53 as the “incentive program”). While the Uniform Guidance permits incentive programs (see CFR 200.430(f)) and such programs are readily used by universities, the USU Extension incentive program was established and carried out in manner that violated USU’s policy governing extra service compensation (“ESC”) and in a manner that bypassed critical internal controls. Notably, USU Internal Audit IAS-23-53 tested compliance with USU’s extra-service compensation policy but did not review actual costs charged to federal sponsors as this was outside the scope of the audit. Consistent with the recommendations to determine the potential impact of noncompliance, USU worked with an outside consultant to review payment of ESC to all employees working on federal grants. This work identified (1) limited instances when salaries directly charged to sponsored projects included extra service compensation in the base salary and (2) limited instances when extra service compensation was charged to federal sponsors without sponsor approval. The majority of ESC payments made pursuant the USU Extension incentive program was not charged to grant sponsor or included in the institutional base salary charged to the grant. Accordingly, noncompliance with the Uniform Guidance clauses related to compensation costs was limited to a small subset of payments made under the USU Extension incentive program. Based on these findings, USU agrees with the corrective actions recommended and, as outlined in the corrective action plan summary below, has already completed and/or initiated these actions.
2024-018. USU Extension Extra Services Compensation Program Non-Compliance with Uniform Guidance (Finding Type: Significant Deficiency, Reportable Noncompliance) Federal Agency: Various Assistance Listing Number and Title: Various Federal Award Number: Various Questioned Costs: Undetermined Pass-through Entity: Various Prior Year Single Audit Report Finding Number: N/A Utah State University’s (University) Internal Audit performed a review of the University’s Extension Service (Extension) within the College of Agriculture and Applied Science. The review determined that Extension’s Extra Service Compensation (ESC) program violates Uniform Guidance requirements and University policy, bypasses critical internal controls, and provides employees with additional compensation for extra-service work related to their primary job duties without sponsor approval. Extension’s mission, under the University’s land grant mission, provides research-based programs and resources to Utah’s population using a mix of local, state, federal and sponsored funding. To incentivize its personnel to apply for grants, Extension created an ESC program that allowed personnel to replace a portion of their primary position institution-funded salary with grant-funded salary. Personnel could then request up to 20 percent of their primary position salary through an ESC secondary position funded with the replaced institution-funded salary. However, Extension’s justified purpose for the ESC secondary position was “caused by and associated with the grant.” In doing so, Extension made it possible to bypass the University’s policy and internal controls for extra-service pay by obscuring the work duties and funding source for the secondary position. Below is an illustrative example from the USU Internal Audit Report of an ESC professor with an institutional base salary of $50,000: Payment to Employee Before Receiving Award (Source: USU Internal Audit Report IAS-23-53) Uniform Guidance maintains strict requirements with regard to the allowability of compensation, including special consideration for substantial increases, particularly with: • federal award ratios (2 CFR 200.430(e)), • institutional base salary charges, including federal award proportionate shares (2 CFR 200.430(h)(2)), • prior approvals by federal awarding agencies for incidental activities with supplemental compensation (2 CFR 200.430(h)(1)), • intra-institution consulting within higher education (2 CFR 200.430(h)(3)), • institutional policy definitions to conclusively determine work resulting in extra service pay (2 CFR 200.430(h)(4), and • relevant internal controls (2 CFR 200.302(b)(4). Internal Audit cites that the ESC program does not comply with Uniform Guidance, as well as University policy (Extra-Service Compensation Policy 376), which formalizes the University’s approach to compliance with Uniform Guidance for these activities. Internal Audit identified that University personnel did not follow or were unfamiliar with established policies in addition to procedural changes that did not require sufficient level of documentation for proper approvals. Detailed fieldwork by Internal Audit identified instances of questioned costs for funding (both federal and non-federal) in excess of $25,000. Fieldwork covered the period between January 1, 2020 and June 14, 2023, but also identified evidence of noncompliance as far back as 2009 to 2018. After Internal Audit issued its report in September 2024, the University took action to begin determining the potential financial impact of noncompliance through an external third-party. A report by this external third-party has not been completed as of the date of this finding; therefore, the amount of questioned costs related to federal programs cannot be determined. The University has also taken steps to immediately address policy and control deficiencies across the institution. Recommendations: We recommend the University do the following relative to University-wide procedures: 1. Determine the potential financial impact of noncompliance with grant sponsors. 2. Evaluate and improve its policies and required documentation for extra-service compensation. 3. Evaluate and improve its internal controls for sponsored program compensation. 4. Provide adequate training to University personnel regarding sponsored programs compensation compliance. USU’s Response: Utah State University (“USU”) generally agrees with Finding One. As detailed in USU internal audit IAS-23-53, USU Extension established a program to incentivize and reward its personnel to apply for grants (referred to by Extension and within USU internal audit IAS-23-53 as the “incentive program”). While the Uniform Guidance permits incentive programs (see CFR 200.430(f)) and such programs are readily used by universities, the USU Extension incentive program was established and carried out in manner that violated USU’s policy governing extra service compensation (“ESC”) and in a manner that bypassed critical internal controls. Notably, USU Internal Audit IAS-23-53 tested compliance with USU’s extra-service compensation policy but did not review actual costs charged to federal sponsors as this was outside the scope of the audit. Consistent with the recommendations to determine the potential impact of noncompliance, USU worked with an outside consultant to review payment of ESC to all employees working on federal grants. This work identified (1) limited instances when salaries directly charged to sponsored projects included extra service compensation in the base salary and (2) limited instances when extra service compensation was charged to federal sponsors without sponsor approval. The majority of ESC payments made pursuant the USU Extension incentive program was not charged to grant sponsor or included in the institutional base salary charged to the grant. Accordingly, noncompliance with the Uniform Guidance clauses related to compensation costs was limited to a small subset of payments made under the USU Extension incentive program. Based on these findings, USU agrees with the corrective actions recommended and, as outlined in the corrective action plan summary below, has already completed and/or initiated these actions.
2024-018. USU Extension Extra Services Compensation Program Non-Compliance with Uniform Guidance (Finding Type: Significant Deficiency, Reportable Noncompliance) Federal Agency: Various Assistance Listing Number and Title: Various Federal Award Number: Various Questioned Costs: Undetermined Pass-through Entity: Various Prior Year Single Audit Report Finding Number: N/A Utah State University’s (University) Internal Audit performed a review of the University’s Extension Service (Extension) within the College of Agriculture and Applied Science. The review determined that Extension’s Extra Service Compensation (ESC) program violates Uniform Guidance requirements and University policy, bypasses critical internal controls, and provides employees with additional compensation for extra-service work related to their primary job duties without sponsor approval. Extension’s mission, under the University’s land grant mission, provides research-based programs and resources to Utah’s population using a mix of local, state, federal and sponsored funding. To incentivize its personnel to apply for grants, Extension created an ESC program that allowed personnel to replace a portion of their primary position institution-funded salary with grant-funded salary. Personnel could then request up to 20 percent of their primary position salary through an ESC secondary position funded with the replaced institution-funded salary. However, Extension’s justified purpose for the ESC secondary position was “caused by and associated with the grant.” In doing so, Extension made it possible to bypass the University’s policy and internal controls for extra-service pay by obscuring the work duties and funding source for the secondary position. Below is an illustrative example from the USU Internal Audit Report of an ESC professor with an institutional base salary of $50,000: Payment to Employee Before Receiving Award (Source: USU Internal Audit Report IAS-23-53) Uniform Guidance maintains strict requirements with regard to the allowability of compensation, including special consideration for substantial increases, particularly with: • federal award ratios (2 CFR 200.430(e)), • institutional base salary charges, including federal award proportionate shares (2 CFR 200.430(h)(2)), • prior approvals by federal awarding agencies for incidental activities with supplemental compensation (2 CFR 200.430(h)(1)), • intra-institution consulting within higher education (2 CFR 200.430(h)(3)), • institutional policy definitions to conclusively determine work resulting in extra service pay (2 CFR 200.430(h)(4), and • relevant internal controls (2 CFR 200.302(b)(4). Internal Audit cites that the ESC program does not comply with Uniform Guidance, as well as University policy (Extra-Service Compensation Policy 376), which formalizes the University’s approach to compliance with Uniform Guidance for these activities. Internal Audit identified that University personnel did not follow or were unfamiliar with established policies in addition to procedural changes that did not require sufficient level of documentation for proper approvals. Detailed fieldwork by Internal Audit identified instances of questioned costs for funding (both federal and non-federal) in excess of $25,000. Fieldwork covered the period between January 1, 2020 and June 14, 2023, but also identified evidence of noncompliance as far back as 2009 to 2018. After Internal Audit issued its report in September 2024, the University took action to begin determining the potential financial impact of noncompliance through an external third-party. A report by this external third-party has not been completed as of the date of this finding; therefore, the amount of questioned costs related to federal programs cannot be determined. The University has also taken steps to immediately address policy and control deficiencies across the institution. Recommendations: We recommend the University do the following relative to University-wide procedures: 1. Determine the potential financial impact of noncompliance with grant sponsors. 2. Evaluate and improve its policies and required documentation for extra-service compensation. 3. Evaluate and improve its internal controls for sponsored program compensation. 4. Provide adequate training to University personnel regarding sponsored programs compensation compliance. USU’s Response: Utah State University (“USU”) generally agrees with Finding One. As detailed in USU internal audit IAS-23-53, USU Extension established a program to incentivize and reward its personnel to apply for grants (referred to by Extension and within USU internal audit IAS-23-53 as the “incentive program”). While the Uniform Guidance permits incentive programs (see CFR 200.430(f)) and such programs are readily used by universities, the USU Extension incentive program was established and carried out in manner that violated USU’s policy governing extra service compensation (“ESC”) and in a manner that bypassed critical internal controls. Notably, USU Internal Audit IAS-23-53 tested compliance with USU’s extra-service compensation policy but did not review actual costs charged to federal sponsors as this was outside the scope of the audit. Consistent with the recommendations to determine the potential impact of noncompliance, USU worked with an outside consultant to review payment of ESC to all employees working on federal grants. This work identified (1) limited instances when salaries directly charged to sponsored projects included extra service compensation in the base salary and (2) limited instances when extra service compensation was charged to federal sponsors without sponsor approval. The majority of ESC payments made pursuant the USU Extension incentive program was not charged to grant sponsor or included in the institutional base salary charged to the grant. Accordingly, noncompliance with the Uniform Guidance clauses related to compensation costs was limited to a small subset of payments made under the USU Extension incentive program. Based on these findings, USU agrees with the corrective actions recommended and, as outlined in the corrective action plan summary below, has already completed and/or initiated these actions.
2024-018. USU Extension Extra Services Compensation Program Non-Compliance with Uniform Guidance (Finding Type: Significant Deficiency, Reportable Noncompliance) Federal Agency: Various Assistance Listing Number and Title: Various Federal Award Number: Various Questioned Costs: Undetermined Pass-through Entity: Various Prior Year Single Audit Report Finding Number: N/A Utah State University’s (University) Internal Audit performed a review of the University’s Extension Service (Extension) within the College of Agriculture and Applied Science. The review determined that Extension’s Extra Service Compensation (ESC) program violates Uniform Guidance requirements and University policy, bypasses critical internal controls, and provides employees with additional compensation for extra-service work related to their primary job duties without sponsor approval. Extension’s mission, under the University’s land grant mission, provides research-based programs and resources to Utah’s population using a mix of local, state, federal and sponsored funding. To incentivize its personnel to apply for grants, Extension created an ESC program that allowed personnel to replace a portion of their primary position institution-funded salary with grant-funded salary. Personnel could then request up to 20 percent of their primary position salary through an ESC secondary position funded with the replaced institution-funded salary. However, Extension’s justified purpose for the ESC secondary position was “caused by and associated with the grant.” In doing so, Extension made it possible to bypass the University’s policy and internal controls for extra-service pay by obscuring the work duties and funding source for the secondary position. Below is an illustrative example from the USU Internal Audit Report of an ESC professor with an institutional base salary of $50,000: Payment to Employee Before Receiving Award (Source: USU Internal Audit Report IAS-23-53) Uniform Guidance maintains strict requirements with regard to the allowability of compensation, including special consideration for substantial increases, particularly with: • federal award ratios (2 CFR 200.430(e)), • institutional base salary charges, including federal award proportionate shares (2 CFR 200.430(h)(2)), • prior approvals by federal awarding agencies for incidental activities with supplemental compensation (2 CFR 200.430(h)(1)), • intra-institution consulting within higher education (2 CFR 200.430(h)(3)), • institutional policy definitions to conclusively determine work resulting in extra service pay (2 CFR 200.430(h)(4), and • relevant internal controls (2 CFR 200.302(b)(4). Internal Audit cites that the ESC program does not comply with Uniform Guidance, as well as University policy (Extra-Service Compensation Policy 376), which formalizes the University’s approach to compliance with Uniform Guidance for these activities. Internal Audit identified that University personnel did not follow or were unfamiliar with established policies in addition to procedural changes that did not require sufficient level of documentation for proper approvals. Detailed fieldwork by Internal Audit identified instances of questioned costs for funding (both federal and non-federal) in excess of $25,000. Fieldwork covered the period between January 1, 2020 and June 14, 2023, but also identified evidence of noncompliance as far back as 2009 to 2018. After Internal Audit issued its report in September 2024, the University took action to begin determining the potential financial impact of noncompliance through an external third-party. A report by this external third-party has not been completed as of the date of this finding; therefore, the amount of questioned costs related to federal programs cannot be determined. The University has also taken steps to immediately address policy and control deficiencies across the institution. Recommendations: We recommend the University do the following relative to University-wide procedures: 1. Determine the potential financial impact of noncompliance with grant sponsors. 2. Evaluate and improve its policies and required documentation for extra-service compensation. 3. Evaluate and improve its internal controls for sponsored program compensation. 4. Provide adequate training to University personnel regarding sponsored programs compensation compliance. USU’s Response: Utah State University (“USU”) generally agrees with Finding One. As detailed in USU internal audit IAS-23-53, USU Extension established a program to incentivize and reward its personnel to apply for grants (referred to by Extension and within USU internal audit IAS-23-53 as the “incentive program”). While the Uniform Guidance permits incentive programs (see CFR 200.430(f)) and such programs are readily used by universities, the USU Extension incentive program was established and carried out in manner that violated USU’s policy governing extra service compensation (“ESC”) and in a manner that bypassed critical internal controls. Notably, USU Internal Audit IAS-23-53 tested compliance with USU’s extra-service compensation policy but did not review actual costs charged to federal sponsors as this was outside the scope of the audit. Consistent with the recommendations to determine the potential impact of noncompliance, USU worked with an outside consultant to review payment of ESC to all employees working on federal grants. This work identified (1) limited instances when salaries directly charged to sponsored projects included extra service compensation in the base salary and (2) limited instances when extra service compensation was charged to federal sponsors without sponsor approval. The majority of ESC payments made pursuant the USU Extension incentive program was not charged to grant sponsor or included in the institutional base salary charged to the grant. Accordingly, noncompliance with the Uniform Guidance clauses related to compensation costs was limited to a small subset of payments made under the USU Extension incentive program. Based on these findings, USU agrees with the corrective actions recommended and, as outlined in the corrective action plan summary below, has already completed and/or initiated these actions.
2024-018. USU Extension Extra Services Compensation Program Non-Compliance with Uniform Guidance (Finding Type: Significant Deficiency, Reportable Noncompliance) Federal Agency: Various Assistance Listing Number and Title: Various Federal Award Number: Various Questioned Costs: Undetermined Pass-through Entity: Various Prior Year Single Audit Report Finding Number: N/A Utah State University’s (University) Internal Audit performed a review of the University’s Extension Service (Extension) within the College of Agriculture and Applied Science. The review determined that Extension’s Extra Service Compensation (ESC) program violates Uniform Guidance requirements and University policy, bypasses critical internal controls, and provides employees with additional compensation for extra-service work related to their primary job duties without sponsor approval. Extension’s mission, under the University’s land grant mission, provides research-based programs and resources to Utah’s population using a mix of local, state, federal and sponsored funding. To incentivize its personnel to apply for grants, Extension created an ESC program that allowed personnel to replace a portion of their primary position institution-funded salary with grant-funded salary. Personnel could then request up to 20 percent of their primary position salary through an ESC secondary position funded with the replaced institution-funded salary. However, Extension’s justified purpose for the ESC secondary position was “caused by and associated with the grant.” In doing so, Extension made it possible to bypass the University’s policy and internal controls for extra-service pay by obscuring the work duties and funding source for the secondary position. Below is an illustrative example from the USU Internal Audit Report of an ESC professor with an institutional base salary of $50,000: Payment to Employee Before Receiving Award (Source: USU Internal Audit Report IAS-23-53) Uniform Guidance maintains strict requirements with regard to the allowability of compensation, including special consideration for substantial increases, particularly with: • federal award ratios (2 CFR 200.430(e)), • institutional base salary charges, including federal award proportionate shares (2 CFR 200.430(h)(2)), • prior approvals by federal awarding agencies for incidental activities with supplemental compensation (2 CFR 200.430(h)(1)), • intra-institution consulting within higher education (2 CFR 200.430(h)(3)), • institutional policy definitions to conclusively determine work resulting in extra service pay (2 CFR 200.430(h)(4), and • relevant internal controls (2 CFR 200.302(b)(4). Internal Audit cites that the ESC program does not comply with Uniform Guidance, as well as University policy (Extra-Service Compensation Policy 376), which formalizes the University’s approach to compliance with Uniform Guidance for these activities. Internal Audit identified that University personnel did not follow or were unfamiliar with established policies in addition to procedural changes that did not require sufficient level of documentation for proper approvals. Detailed fieldwork by Internal Audit identified instances of questioned costs for funding (both federal and non-federal) in excess of $25,000. Fieldwork covered the period between January 1, 2020 and June 14, 2023, but also identified evidence of noncompliance as far back as 2009 to 2018. After Internal Audit issued its report in September 2024, the University took action to begin determining the potential financial impact of noncompliance through an external third-party. A report by this external third-party has not been completed as of the date of this finding; therefore, the amount of questioned costs related to federal programs cannot be determined. The University has also taken steps to immediately address policy and control deficiencies across the institution. Recommendations: We recommend the University do the following relative to University-wide procedures: 1. Determine the potential financial impact of noncompliance with grant sponsors. 2. Evaluate and improve its policies and required documentation for extra-service compensation. 3. Evaluate and improve its internal controls for sponsored program compensation. 4. Provide adequate training to University personnel regarding sponsored programs compensation compliance. USU’s Response: Utah State University (“USU”) generally agrees with Finding One. As detailed in USU internal audit IAS-23-53, USU Extension established a program to incentivize and reward its personnel to apply for grants (referred to by Extension and within USU internal audit IAS-23-53 as the “incentive program”). While the Uniform Guidance permits incentive programs (see CFR 200.430(f)) and such programs are readily used by universities, the USU Extension incentive program was established and carried out in manner that violated USU’s policy governing extra service compensation (“ESC”) and in a manner that bypassed critical internal controls. Notably, USU Internal Audit IAS-23-53 tested compliance with USU’s extra-service compensation policy but did not review actual costs charged to federal sponsors as this was outside the scope of the audit. Consistent with the recommendations to determine the potential impact of noncompliance, USU worked with an outside consultant to review payment of ESC to all employees working on federal grants. This work identified (1) limited instances when salaries directly charged to sponsored projects included extra service compensation in the base salary and (2) limited instances when extra service compensation was charged to federal sponsors without sponsor approval. The majority of ESC payments made pursuant the USU Extension incentive program was not charged to grant sponsor or included in the institutional base salary charged to the grant. Accordingly, noncompliance with the Uniform Guidance clauses related to compensation costs was limited to a small subset of payments made under the USU Extension incentive program. Based on these findings, USU agrees with the corrective actions recommended and, as outlined in the corrective action plan summary below, has already completed and/or initiated these actions.
2024-018. USU Extension Extra Services Compensation Program Non-Compliance with Uniform Guidance (Finding Type: Significant Deficiency, Reportable Noncompliance) Federal Agency: Various Assistance Listing Number and Title: Various Federal Award Number: Various Questioned Costs: Undetermined Pass-through Entity: Various Prior Year Single Audit Report Finding Number: N/A Utah State University’s (University) Internal Audit performed a review of the University’s Extension Service (Extension) within the College of Agriculture and Applied Science. The review determined that Extension’s Extra Service Compensation (ESC) program violates Uniform Guidance requirements and University policy, bypasses critical internal controls, and provides employees with additional compensation for extra-service work related to their primary job duties without sponsor approval. Extension’s mission, under the University’s land grant mission, provides research-based programs and resources to Utah’s population using a mix of local, state, federal and sponsored funding. To incentivize its personnel to apply for grants, Extension created an ESC program that allowed personnel to replace a portion of their primary position institution-funded salary with grant-funded salary. Personnel could then request up to 20 percent of their primary position salary through an ESC secondary position funded with the replaced institution-funded salary. However, Extension’s justified purpose for the ESC secondary position was “caused by and associated with the grant.” In doing so, Extension made it possible to bypass the University’s policy and internal controls for extra-service pay by obscuring the work duties and funding source for the secondary position. Below is an illustrative example from the USU Internal Audit Report of an ESC professor with an institutional base salary of $50,000: Payment to Employee Before Receiving Award (Source: USU Internal Audit Report IAS-23-53) Uniform Guidance maintains strict requirements with regard to the allowability of compensation, including special consideration for substantial increases, particularly with: • federal award ratios (2 CFR 200.430(e)), • institutional base salary charges, including federal award proportionate shares (2 CFR 200.430(h)(2)), • prior approvals by federal awarding agencies for incidental activities with supplemental compensation (2 CFR 200.430(h)(1)), • intra-institution consulting within higher education (2 CFR 200.430(h)(3)), • institutional policy definitions to conclusively determine work resulting in extra service pay (2 CFR 200.430(h)(4), and • relevant internal controls (2 CFR 200.302(b)(4). Internal Audit cites that the ESC program does not comply with Uniform Guidance, as well as University policy (Extra-Service Compensation Policy 376), which formalizes the University’s approach to compliance with Uniform Guidance for these activities. Internal Audit identified that University personnel did not follow or were unfamiliar with established policies in addition to procedural changes that did not require sufficient level of documentation for proper approvals. Detailed fieldwork by Internal Audit identified instances of questioned costs for funding (both federal and non-federal) in excess of $25,000. Fieldwork covered the period between January 1, 2020 and June 14, 2023, but also identified evidence of noncompliance as far back as 2009 to 2018. After Internal Audit issued its report in September 2024, the University took action to begin determining the potential financial impact of noncompliance through an external third-party. A report by this external third-party has not been completed as of the date of this finding; therefore, the amount of questioned costs related to federal programs cannot be determined. The University has also taken steps to immediately address policy and control deficiencies across the institution. Recommendations: We recommend the University do the following relative to University-wide procedures: 1. Determine the potential financial impact of noncompliance with grant sponsors. 2. Evaluate and improve its policies and required documentation for extra-service compensation. 3. Evaluate and improve its internal controls for sponsored program compensation. 4. Provide adequate training to University personnel regarding sponsored programs compensation compliance. USU’s Response: Utah State University (“USU”) generally agrees with Finding One. As detailed in USU internal audit IAS-23-53, USU Extension established a program to incentivize and reward its personnel to apply for grants (referred to by Extension and within USU internal audit IAS-23-53 as the “incentive program”). While the Uniform Guidance permits incentive programs (see CFR 200.430(f)) and such programs are readily used by universities, the USU Extension incentive program was established and carried out in manner that violated USU’s policy governing extra service compensation (“ESC”) and in a manner that bypassed critical internal controls. Notably, USU Internal Audit IAS-23-53 tested compliance with USU’s extra-service compensation policy but did not review actual costs charged to federal sponsors as this was outside the scope of the audit. Consistent with the recommendations to determine the potential impact of noncompliance, USU worked with an outside consultant to review payment of ESC to all employees working on federal grants. This work identified (1) limited instances when salaries directly charged to sponsored projects included extra service compensation in the base salary and (2) limited instances when extra service compensation was charged to federal sponsors without sponsor approval. The majority of ESC payments made pursuant the USU Extension incentive program was not charged to grant sponsor or included in the institutional base salary charged to the grant. Accordingly, noncompliance with the Uniform Guidance clauses related to compensation costs was limited to a small subset of payments made under the USU Extension incentive program. Based on these findings, USU agrees with the corrective actions recommended and, as outlined in the corrective action plan summary below, has already completed and/or initiated these actions.
2024-018. USU Extension Extra Services Compensation Program Non-Compliance with Uniform Guidance (Finding Type: Significant Deficiency, Reportable Noncompliance) Federal Agency: Various Assistance Listing Number and Title: Various Federal Award Number: Various Questioned Costs: Undetermined Pass-through Entity: Various Prior Year Single Audit Report Finding Number: N/A Utah State University’s (University) Internal Audit performed a review of the University’s Extension Service (Extension) within the College of Agriculture and Applied Science. The review determined that Extension’s Extra Service Compensation (ESC) program violates Uniform Guidance requirements and University policy, bypasses critical internal controls, and provides employees with additional compensation for extra-service work related to their primary job duties without sponsor approval. Extension’s mission, under the University’s land grant mission, provides research-based programs and resources to Utah’s population using a mix of local, state, federal and sponsored funding. To incentivize its personnel to apply for grants, Extension created an ESC program that allowed personnel to replace a portion of their primary position institution-funded salary with grant-funded salary. Personnel could then request up to 20 percent of their primary position salary through an ESC secondary position funded with the replaced institution-funded salary. However, Extension’s justified purpose for the ESC secondary position was “caused by and associated with the grant.” In doing so, Extension made it possible to bypass the University’s policy and internal controls for extra-service pay by obscuring the work duties and funding source for the secondary position. Below is an illustrative example from the USU Internal Audit Report of an ESC professor with an institutional base salary of $50,000: Payment to Employee Before Receiving Award (Source: USU Internal Audit Report IAS-23-53) Uniform Guidance maintains strict requirements with regard to the allowability of compensation, including special consideration for substantial increases, particularly with: • federal award ratios (2 CFR 200.430(e)), • institutional base salary charges, including federal award proportionate shares (2 CFR 200.430(h)(2)), • prior approvals by federal awarding agencies for incidental activities with supplemental compensation (2 CFR 200.430(h)(1)), • intra-institution consulting within higher education (2 CFR 200.430(h)(3)), • institutional policy definitions to conclusively determine work resulting in extra service pay (2 CFR 200.430(h)(4), and • relevant internal controls (2 CFR 200.302(b)(4). Internal Audit cites that the ESC program does not comply with Uniform Guidance, as well as University policy (Extra-Service Compensation Policy 376), which formalizes the University’s approach to compliance with Uniform Guidance for these activities. Internal Audit identified that University personnel did not follow or were unfamiliar with established policies in addition to procedural changes that did not require sufficient level of documentation for proper approvals. Detailed fieldwork by Internal Audit identified instances of questioned costs for funding (both federal and non-federal) in excess of $25,000. Fieldwork covered the period between January 1, 2020 and June 14, 2023, but also identified evidence of noncompliance as far back as 2009 to 2018. After Internal Audit issued its report in September 2024, the University took action to begin determining the potential financial impact of noncompliance through an external third-party. A report by this external third-party has not been completed as of the date of this finding; therefore, the amount of questioned costs related to federal programs cannot be determined. The University has also taken steps to immediately address policy and control deficiencies across the institution. Recommendations: We recommend the University do the following relative to University-wide procedures: 1. Determine the potential financial impact of noncompliance with grant sponsors. 2. Evaluate and improve its policies and required documentation for extra-service compensation. 3. Evaluate and improve its internal controls for sponsored program compensation. 4. Provide adequate training to University personnel regarding sponsored programs compensation compliance. USU’s Response: Utah State University (“USU”) generally agrees with Finding One. As detailed in USU internal audit IAS-23-53, USU Extension established a program to incentivize and reward its personnel to apply for grants (referred to by Extension and within USU internal audit IAS-23-53 as the “incentive program”). While the Uniform Guidance permits incentive programs (see CFR 200.430(f)) and such programs are readily used by universities, the USU Extension incentive program was established and carried out in manner that violated USU’s policy governing extra service compensation (“ESC”) and in a manner that bypassed critical internal controls. Notably, USU Internal Audit IAS-23-53 tested compliance with USU’s extra-service compensation policy but did not review actual costs charged to federal sponsors as this was outside the scope of the audit. Consistent with the recommendations to determine the potential impact of noncompliance, USU worked with an outside consultant to review payment of ESC to all employees working on federal grants. This work identified (1) limited instances when salaries directly charged to sponsored projects included extra service compensation in the base salary and (2) limited instances when extra service compensation was charged to federal sponsors without sponsor approval. The majority of ESC payments made pursuant the USU Extension incentive program was not charged to grant sponsor or included in the institutional base salary charged to the grant. Accordingly, noncompliance with the Uniform Guidance clauses related to compensation costs was limited to a small subset of payments made under the USU Extension incentive program. Based on these findings, USU agrees with the corrective actions recommended and, as outlined in the corrective action plan summary below, has already completed and/or initiated these actions.
2024-018. USU Extension Extra Services Compensation Program Non-Compliance with Uniform Guidance (Finding Type: Significant Deficiency, Reportable Noncompliance) Federal Agency: Various Assistance Listing Number and Title: Various Federal Award Number: Various Questioned Costs: Undetermined Pass-through Entity: Various Prior Year Single Audit Report Finding Number: N/A Utah State University’s (University) Internal Audit performed a review of the University’s Extension Service (Extension) within the College of Agriculture and Applied Science. The review determined that Extension’s Extra Service Compensation (ESC) program violates Uniform Guidance requirements and University policy, bypasses critical internal controls, and provides employees with additional compensation for extra-service work related to their primary job duties without sponsor approval. Extension’s mission, under the University’s land grant mission, provides research-based programs and resources to Utah’s population using a mix of local, state, federal and sponsored funding. To incentivize its personnel to apply for grants, Extension created an ESC program that allowed personnel to replace a portion of their primary position institution-funded salary with grant-funded salary. Personnel could then request up to 20 percent of their primary position salary through an ESC secondary position funded with the replaced institution-funded salary. However, Extension’s justified purpose for the ESC secondary position was “caused by and associated with the grant.” In doing so, Extension made it possible to bypass the University’s policy and internal controls for extra-service pay by obscuring the work duties and funding source for the secondary position. Below is an illustrative example from the USU Internal Audit Report of an ESC professor with an institutional base salary of $50,000: Payment to Employee Before Receiving Award (Source: USU Internal Audit Report IAS-23-53) Uniform Guidance maintains strict requirements with regard to the allowability of compensation, including special consideration for substantial increases, particularly with: • federal award ratios (2 CFR 200.430(e)), • institutional base salary charges, including federal award proportionate shares (2 CFR 200.430(h)(2)), • prior approvals by federal awarding agencies for incidental activities with supplemental compensation (2 CFR 200.430(h)(1)), • intra-institution consulting within higher education (2 CFR 200.430(h)(3)), • institutional policy definitions to conclusively determine work resulting in extra service pay (2 CFR 200.430(h)(4), and • relevant internal controls (2 CFR 200.302(b)(4). Internal Audit cites that the ESC program does not comply with Uniform Guidance, as well as University policy (Extra-Service Compensation Policy 376), which formalizes the University’s approach to compliance with Uniform Guidance for these activities. Internal Audit identified that University personnel did not follow or were unfamiliar with established policies in addition to procedural changes that did not require sufficient level of documentation for proper approvals. Detailed fieldwork by Internal Audit identified instances of questioned costs for funding (both federal and non-federal) in excess of $25,000. Fieldwork covered the period between January 1, 2020 and June 14, 2023, but also identified evidence of noncompliance as far back as 2009 to 2018. After Internal Audit issued its report in September 2024, the University took action to begin determining the potential financial impact of noncompliance through an external third-party. A report by this external third-party has not been completed as of the date of this finding; therefore, the amount of questioned costs related to federal programs cannot be determined. The University has also taken steps to immediately address policy and control deficiencies across the institution. Recommendations: We recommend the University do the following relative to University-wide procedures: 1. Determine the potential financial impact of noncompliance with grant sponsors. 2. Evaluate and improve its policies and required documentation for extra-service compensation. 3. Evaluate and improve its internal controls for sponsored program compensation. 4. Provide adequate training to University personnel regarding sponsored programs compensation compliance. USU’s Response: Utah State University (“USU”) generally agrees with Finding One. As detailed in USU internal audit IAS-23-53, USU Extension established a program to incentivize and reward its personnel to apply for grants (referred to by Extension and within USU internal audit IAS-23-53 as the “incentive program”). While the Uniform Guidance permits incentive programs (see CFR 200.430(f)) and such programs are readily used by universities, the USU Extension incentive program was established and carried out in manner that violated USU’s policy governing extra service compensation (“ESC”) and in a manner that bypassed critical internal controls. Notably, USU Internal Audit IAS-23-53 tested compliance with USU’s extra-service compensation policy but did not review actual costs charged to federal sponsors as this was outside the scope of the audit. Consistent with the recommendations to determine the potential impact of noncompliance, USU worked with an outside consultant to review payment of ESC to all employees working on federal grants. This work identified (1) limited instances when salaries directly charged to sponsored projects included extra service compensation in the base salary and (2) limited instances when extra service compensation was charged to federal sponsors without sponsor approval. The majority of ESC payments made pursuant the USU Extension incentive program was not charged to grant sponsor or included in the institutional base salary charged to the grant. Accordingly, noncompliance with the Uniform Guidance clauses related to compensation costs was limited to a small subset of payments made under the USU Extension incentive program. Based on these findings, USU agrees with the corrective actions recommended and, as outlined in the corrective action plan summary below, has already completed and/or initiated these actions.
2024-018. USU Extension Extra Services Compensation Program Non-Compliance with Uniform Guidance (Finding Type: Significant Deficiency, Reportable Noncompliance) Federal Agency: Various Assistance Listing Number and Title: Various Federal Award Number: Various Questioned Costs: Undetermined Pass-through Entity: Various Prior Year Single Audit Report Finding Number: N/A Utah State University’s (University) Internal Audit performed a review of the University’s Extension Service (Extension) within the College of Agriculture and Applied Science. The review determined that Extension’s Extra Service Compensation (ESC) program violates Uniform Guidance requirements and University policy, bypasses critical internal controls, and provides employees with additional compensation for extra-service work related to their primary job duties without sponsor approval. Extension’s mission, under the University’s land grant mission, provides research-based programs and resources to Utah’s population using a mix of local, state, federal and sponsored funding. To incentivize its personnel to apply for grants, Extension created an ESC program that allowed personnel to replace a portion of their primary position institution-funded salary with grant-funded salary. Personnel could then request up to 20 percent of their primary position salary through an ESC secondary position funded with the replaced institution-funded salary. However, Extension’s justified purpose for the ESC secondary position was “caused by and associated with the grant.” In doing so, Extension made it possible to bypass the University’s policy and internal controls for extra-service pay by obscuring the work duties and funding source for the secondary position. Below is an illustrative example from the USU Internal Audit Report of an ESC professor with an institutional base salary of $50,000: Payment to Employee Before Receiving Award (Source: USU Internal Audit Report IAS-23-53) Uniform Guidance maintains strict requirements with regard to the allowability of compensation, including special consideration for substantial increases, particularly with: • federal award ratios (2 CFR 200.430(e)), • institutional base salary charges, including federal award proportionate shares (2 CFR 200.430(h)(2)), • prior approvals by federal awarding agencies for incidental activities with supplemental compensation (2 CFR 200.430(h)(1)), • intra-institution consulting within higher education (2 CFR 200.430(h)(3)), • institutional policy definitions to conclusively determine work resulting in extra service pay (2 CFR 200.430(h)(4), and • relevant internal controls (2 CFR 200.302(b)(4). Internal Audit cites that the ESC program does not comply with Uniform Guidance, as well as University policy (Extra-Service Compensation Policy 376), which formalizes the University’s approach to compliance with Uniform Guidance for these activities. Internal Audit identified that University personnel did not follow or were unfamiliar with established policies in addition to procedural changes that did not require sufficient level of documentation for proper approvals. Detailed fieldwork by Internal Audit identified instances of questioned costs for funding (both federal and non-federal) in excess of $25,000. Fieldwork covered the period between January 1, 2020 and June 14, 2023, but also identified evidence of noncompliance as far back as 2009 to 2018. After Internal Audit issued its report in September 2024, the University took action to begin determining the potential financial impact of noncompliance through an external third-party. A report by this external third-party has not been completed as of the date of this finding; therefore, the amount of questioned costs related to federal programs cannot be determined. The University has also taken steps to immediately address policy and control deficiencies across the institution. Recommendations: We recommend the University do the following relative to University-wide procedures: 1. Determine the potential financial impact of noncompliance with grant sponsors. 2. Evaluate and improve its policies and required documentation for extra-service compensation. 3. Evaluate and improve its internal controls for sponsored program compensation. 4. Provide adequate training to University personnel regarding sponsored programs compensation compliance. USU’s Response: Utah State University (“USU”) generally agrees with Finding One. As detailed in USU internal audit IAS-23-53, USU Extension established a program to incentivize and reward its personnel to apply for grants (referred to by Extension and within USU internal audit IAS-23-53 as the “incentive program”). While the Uniform Guidance permits incentive programs (see CFR 200.430(f)) and such programs are readily used by universities, the USU Extension incentive program was established and carried out in manner that violated USU’s policy governing extra service compensation (“ESC”) and in a manner that bypassed critical internal controls. Notably, USU Internal Audit IAS-23-53 tested compliance with USU’s extra-service compensation policy but did not review actual costs charged to federal sponsors as this was outside the scope of the audit. Consistent with the recommendations to determine the potential impact of noncompliance, USU worked with an outside consultant to review payment of ESC to all employees working on federal grants. This work identified (1) limited instances when salaries directly charged to sponsored projects included extra service compensation in the base salary and (2) limited instances when extra service compensation was charged to federal sponsors without sponsor approval. The majority of ESC payments made pursuant the USU Extension incentive program was not charged to grant sponsor or included in the institutional base salary charged to the grant. Accordingly, noncompliance with the Uniform Guidance clauses related to compensation costs was limited to a small subset of payments made under the USU Extension incentive program. Based on these findings, USU agrees with the corrective actions recommended and, as outlined in the corrective action plan summary below, has already completed and/or initiated these actions.
2024-018. USU Extension Extra Services Compensation Program Non-Compliance with Uniform Guidance (Finding Type: Significant Deficiency, Reportable Noncompliance) Federal Agency: Various Assistance Listing Number and Title: Various Federal Award Number: Various Questioned Costs: Undetermined Pass-through Entity: Various Prior Year Single Audit Report Finding Number: N/A Utah State University’s (University) Internal Audit performed a review of the University’s Extension Service (Extension) within the College of Agriculture and Applied Science. The review determined that Extension’s Extra Service Compensation (ESC) program violates Uniform Guidance requirements and University policy, bypasses critical internal controls, and provides employees with additional compensation for extra-service work related to their primary job duties without sponsor approval. Extension’s mission, under the University’s land grant mission, provides research-based programs and resources to Utah’s population using a mix of local, state, federal and sponsored funding. To incentivize its personnel to apply for grants, Extension created an ESC program that allowed personnel to replace a portion of their primary position institution-funded salary with grant-funded salary. Personnel could then request up to 20 percent of their primary position salary through an ESC secondary position funded with the replaced institution-funded salary. However, Extension’s justified purpose for the ESC secondary position was “caused by and associated with the grant.” In doing so, Extension made it possible to bypass the University’s policy and internal controls for extra-service pay by obscuring the work duties and funding source for the secondary position. Below is an illustrative example from the USU Internal Audit Report of an ESC professor with an institutional base salary of $50,000: Payment to Employee Before Receiving Award (Source: USU Internal Audit Report IAS-23-53) Uniform Guidance maintains strict requirements with regard to the allowability of compensation, including special consideration for substantial increases, particularly with: • federal award ratios (2 CFR 200.430(e)), • institutional base salary charges, including federal award proportionate shares (2 CFR 200.430(h)(2)), • prior approvals by federal awarding agencies for incidental activities with supplemental compensation (2 CFR 200.430(h)(1)), • intra-institution consulting within higher education (2 CFR 200.430(h)(3)), • institutional policy definitions to conclusively determine work resulting in extra service pay (2 CFR 200.430(h)(4), and • relevant internal controls (2 CFR 200.302(b)(4). Internal Audit cites that the ESC program does not comply with Uniform Guidance, as well as University policy (Extra-Service Compensation Policy 376), which formalizes the University’s approach to compliance with Uniform Guidance for these activities. Internal Audit identified that University personnel did not follow or were unfamiliar with established policies in addition to procedural changes that did not require sufficient level of documentation for proper approvals. Detailed fieldwork by Internal Audit identified instances of questioned costs for funding (both federal and non-federal) in excess of $25,000. Fieldwork covered the period between January 1, 2020 and June 14, 2023, but also identified evidence of noncompliance as far back as 2009 to 2018. After Internal Audit issued its report in September 2024, the University took action to begin determining the potential financial impact of noncompliance through an external third-party. A report by this external third-party has not been completed as of the date of this finding; therefore, the amount of questioned costs related to federal programs cannot be determined. The University has also taken steps to immediately address policy and control deficiencies across the institution. Recommendations: We recommend the University do the following relative to University-wide procedures: 1. Determine the potential financial impact of noncompliance with grant sponsors. 2. Evaluate and improve its policies and required documentation for extra-service compensation. 3. Evaluate and improve its internal controls for sponsored program compensation. 4. Provide adequate training to University personnel regarding sponsored programs compensation compliance. USU’s Response: Utah State University (“USU”) generally agrees with Finding One. As detailed in USU internal audit IAS-23-53, USU Extension established a program to incentivize and reward its personnel to apply for grants (referred to by Extension and within USU internal audit IAS-23-53 as the “incentive program”). While the Uniform Guidance permits incentive programs (see CFR 200.430(f)) and such programs are readily used by universities, the USU Extension incentive program was established and carried out in manner that violated USU’s policy governing extra service compensation (“ESC”) and in a manner that bypassed critical internal controls. Notably, USU Internal Audit IAS-23-53 tested compliance with USU’s extra-service compensation policy but did not review actual costs charged to federal sponsors as this was outside the scope of the audit. Consistent with the recommendations to determine the potential impact of noncompliance, USU worked with an outside consultant to review payment of ESC to all employees working on federal grants. This work identified (1) limited instances when salaries directly charged to sponsored projects included extra service compensation in the base salary and (2) limited instances when extra service compensation was charged to federal sponsors without sponsor approval. The majority of ESC payments made pursuant the USU Extension incentive program was not charged to grant sponsor or included in the institutional base salary charged to the grant. Accordingly, noncompliance with the Uniform Guidance clauses related to compensation costs was limited to a small subset of payments made under the USU Extension incentive program. Based on these findings, USU agrees with the corrective actions recommended and, as outlined in the corrective action plan summary below, has already completed and/or initiated these actions.
2024-018. USU Extension Extra Services Compensation Program Non-Compliance with Uniform Guidance (Finding Type: Significant Deficiency, Reportable Noncompliance) Federal Agency: Various Assistance Listing Number and Title: Various Federal Award Number: Various Questioned Costs: Undetermined Pass-through Entity: Various Prior Year Single Audit Report Finding Number: N/A Utah State University’s (University) Internal Audit performed a review of the University’s Extension Service (Extension) within the College of Agriculture and Applied Science. The review determined that Extension’s Extra Service Compensation (ESC) program violates Uniform Guidance requirements and University policy, bypasses critical internal controls, and provides employees with additional compensation for extra-service work related to their primary job duties without sponsor approval. Extension’s mission, under the University’s land grant mission, provides research-based programs and resources to Utah’s population using a mix of local, state, federal and sponsored funding. To incentivize its personnel to apply for grants, Extension created an ESC program that allowed personnel to replace a portion of their primary position institution-funded salary with grant-funded salary. Personnel could then request up to 20 percent of their primary position salary through an ESC secondary position funded with the replaced institution-funded salary. However, Extension’s justified purpose for the ESC secondary position was “caused by and associated with the grant.” In doing so, Extension made it possible to bypass the University’s policy and internal controls for extra-service pay by obscuring the work duties and funding source for the secondary position. Below is an illustrative example from the USU Internal Audit Report of an ESC professor with an institutional base salary of $50,000: Payment to Employee Before Receiving Award (Source: USU Internal Audit Report IAS-23-53) Uniform Guidance maintains strict requirements with regard to the allowability of compensation, including special consideration for substantial increases, particularly with: • federal award ratios (2 CFR 200.430(e)), • institutional base salary charges, including federal award proportionate shares (2 CFR 200.430(h)(2)), • prior approvals by federal awarding agencies for incidental activities with supplemental compensation (2 CFR 200.430(h)(1)), • intra-institution consulting within higher education (2 CFR 200.430(h)(3)), • institutional policy definitions to conclusively determine work resulting in extra service pay (2 CFR 200.430(h)(4), and • relevant internal controls (2 CFR 200.302(b)(4). Internal Audit cites that the ESC program does not comply with Uniform Guidance, as well as University policy (Extra-Service Compensation Policy 376), which formalizes the University’s approach to compliance with Uniform Guidance for these activities. Internal Audit identified that University personnel did not follow or were unfamiliar with established policies in addition to procedural changes that did not require sufficient level of documentation for proper approvals. Detailed fieldwork by Internal Audit identified instances of questioned costs for funding (both federal and non-federal) in excess of $25,000. Fieldwork covered the period between January 1, 2020 and June 14, 2023, but also identified evidence of noncompliance as far back as 2009 to 2018. After Internal Audit issued its report in September 2024, the University took action to begin determining the potential financial impact of noncompliance through an external third-party. A report by this external third-party has not been completed as of the date of this finding; therefore, the amount of questioned costs related to federal programs cannot be determined. The University has also taken steps to immediately address policy and control deficiencies across the institution. Recommendations: We recommend the University do the following relative to University-wide procedures: 1. Determine the potential financial impact of noncompliance with grant sponsors. 2. Evaluate and improve its policies and required documentation for extra-service compensation. 3. Evaluate and improve its internal controls for sponsored program compensation. 4. Provide adequate training to University personnel regarding sponsored programs compensation compliance. USU’s Response: Utah State University (“USU”) generally agrees with Finding One. As detailed in USU internal audit IAS-23-53, USU Extension established a program to incentivize and reward its personnel to apply for grants (referred to by Extension and within USU internal audit IAS-23-53 as the “incentive program”). While the Uniform Guidance permits incentive programs (see CFR 200.430(f)) and such programs are readily used by universities, the USU Extension incentive program was established and carried out in manner that violated USU’s policy governing extra service compensation (“ESC”) and in a manner that bypassed critical internal controls. Notably, USU Internal Audit IAS-23-53 tested compliance with USU’s extra-service compensation policy but did not review actual costs charged to federal sponsors as this was outside the scope of the audit. Consistent with the recommendations to determine the potential impact of noncompliance, USU worked with an outside consultant to review payment of ESC to all employees working on federal grants. This work identified (1) limited instances when salaries directly charged to sponsored projects included extra service compensation in the base salary and (2) limited instances when extra service compensation was charged to federal sponsors without sponsor approval. The majority of ESC payments made pursuant the USU Extension incentive program was not charged to grant sponsor or included in the institutional base salary charged to the grant. Accordingly, noncompliance with the Uniform Guidance clauses related to compensation costs was limited to a small subset of payments made under the USU Extension incentive program. Based on these findings, USU agrees with the corrective actions recommended and, as outlined in the corrective action plan summary below, has already completed and/or initiated these actions.
2024-018. USU Extension Extra Services Compensation Program Non-Compliance with Uniform Guidance (Finding Type: Significant Deficiency, Reportable Noncompliance) Federal Agency: Various Assistance Listing Number and Title: Various Federal Award Number: Various Questioned Costs: Undetermined Pass-through Entity: Various Prior Year Single Audit Report Finding Number: N/A Utah State University’s (University) Internal Audit performed a review of the University’s Extension Service (Extension) within the College of Agriculture and Applied Science. The review determined that Extension’s Extra Service Compensation (ESC) program violates Uniform Guidance requirements and University policy, bypasses critical internal controls, and provides employees with additional compensation for extra-service work related to their primary job duties without sponsor approval. Extension’s mission, under the University’s land grant mission, provides research-based programs and resources to Utah’s population using a mix of local, state, federal and sponsored funding. To incentivize its personnel to apply for grants, Extension created an ESC program that allowed personnel to replace a portion of their primary position institution-funded salary with grant-funded salary. Personnel could then request up to 20 percent of their primary position salary through an ESC secondary position funded with the replaced institution-funded salary. However, Extension’s justified purpose for the ESC secondary position was “caused by and associated with the grant.” In doing so, Extension made it possible to bypass the University’s policy and internal controls for extra-service pay by obscuring the work duties and funding source for the secondary position. Below is an illustrative example from the USU Internal Audit Report of an ESC professor with an institutional base salary of $50,000: Payment to Employee Before Receiving Award (Source: USU Internal Audit Report IAS-23-53) Uniform Guidance maintains strict requirements with regard to the allowability of compensation, including special consideration for substantial increases, particularly with: • federal award ratios (2 CFR 200.430(e)), • institutional base salary charges, including federal award proportionate shares (2 CFR 200.430(h)(2)), • prior approvals by federal awarding agencies for incidental activities with supplemental compensation (2 CFR 200.430(h)(1)), • intra-institution consulting within higher education (2 CFR 200.430(h)(3)), • institutional policy definitions to conclusively determine work resulting in extra service pay (2 CFR 200.430(h)(4), and • relevant internal controls (2 CFR 200.302(b)(4). Internal Audit cites that the ESC program does not comply with Uniform Guidance, as well as University policy (Extra-Service Compensation Policy 376), which formalizes the University’s approach to compliance with Uniform Guidance for these activities. Internal Audit identified that University personnel did not follow or were unfamiliar with established policies in addition to procedural changes that did not require sufficient level of documentation for proper approvals. Detailed fieldwork by Internal Audit identified instances of questioned costs for funding (both federal and non-federal) in excess of $25,000. Fieldwork covered the period between January 1, 2020 and June 14, 2023, but also identified evidence of noncompliance as far back as 2009 to 2018. After Internal Audit issued its report in September 2024, the University took action to begin determining the potential financial impact of noncompliance through an external third-party. A report by this external third-party has not been completed as of the date of this finding; therefore, the amount of questioned costs related to federal programs cannot be determined. The University has also taken steps to immediately address policy and control deficiencies across the institution. Recommendations: We recommend the University do the following relative to University-wide procedures: 1. Determine the potential financial impact of noncompliance with grant sponsors. 2. Evaluate and improve its policies and required documentation for extra-service compensation. 3. Evaluate and improve its internal controls for sponsored program compensation. 4. Provide adequate training to University personnel regarding sponsored programs compensation compliance. USU’s Response: Utah State University (“USU”) generally agrees with Finding One. As detailed in USU internal audit IAS-23-53, USU Extension established a program to incentivize and reward its personnel to apply for grants (referred to by Extension and within USU internal audit IAS-23-53 as the “incentive program”). While the Uniform Guidance permits incentive programs (see CFR 200.430(f)) and such programs are readily used by universities, the USU Extension incentive program was established and carried out in manner that violated USU’s policy governing extra service compensation (“ESC”) and in a manner that bypassed critical internal controls. Notably, USU Internal Audit IAS-23-53 tested compliance with USU’s extra-service compensation policy but did not review actual costs charged to federal sponsors as this was outside the scope of the audit. Consistent with the recommendations to determine the potential impact of noncompliance, USU worked with an outside consultant to review payment of ESC to all employees working on federal grants. This work identified (1) limited instances when salaries directly charged to sponsored projects included extra service compensation in the base salary and (2) limited instances when extra service compensation was charged to federal sponsors without sponsor approval. The majority of ESC payments made pursuant the USU Extension incentive program was not charged to grant sponsor or included in the institutional base salary charged to the grant. Accordingly, noncompliance with the Uniform Guidance clauses related to compensation costs was limited to a small subset of payments made under the USU Extension incentive program. Based on these findings, USU agrees with the corrective actions recommended and, as outlined in the corrective action plan summary below, has already completed and/or initiated these actions.
2024-018. USU Extension Extra Services Compensation Program Non-Compliance with Uniform Guidance (Finding Type: Significant Deficiency, Reportable Noncompliance) Federal Agency: Various Assistance Listing Number and Title: Various Federal Award Number: Various Questioned Costs: Undetermined Pass-through Entity: Various Prior Year Single Audit Report Finding Number: N/A Utah State University’s (University) Internal Audit performed a review of the University’s Extension Service (Extension) within the College of Agriculture and Applied Science. The review determined that Extension’s Extra Service Compensation (ESC) program violates Uniform Guidance requirements and University policy, bypasses critical internal controls, and provides employees with additional compensation for extra-service work related to their primary job duties without sponsor approval. Extension’s mission, under the University’s land grant mission, provides research-based programs and resources to Utah’s population using a mix of local, state, federal and sponsored funding. To incentivize its personnel to apply for grants, Extension created an ESC program that allowed personnel to replace a portion of their primary position institution-funded salary with grant-funded salary. Personnel could then request up to 20 percent of their primary position salary through an ESC secondary position funded with the replaced institution-funded salary. However, Extension’s justified purpose for the ESC secondary position was “caused by and associated with the grant.” In doing so, Extension made it possible to bypass the University’s policy and internal controls for extra-service pay by obscuring the work duties and funding source for the secondary position. Below is an illustrative example from the USU Internal Audit Report of an ESC professor with an institutional base salary of $50,000: Payment to Employee Before Receiving Award (Source: USU Internal Audit Report IAS-23-53) Uniform Guidance maintains strict requirements with regard to the allowability of compensation, including special consideration for substantial increases, particularly with: • federal award ratios (2 CFR 200.430(e)), • institutional base salary charges, including federal award proportionate shares (2 CFR 200.430(h)(2)), • prior approvals by federal awarding agencies for incidental activities with supplemental compensation (2 CFR 200.430(h)(1)), • intra-institution consulting within higher education (2 CFR 200.430(h)(3)), • institutional policy definitions to conclusively determine work resulting in extra service pay (2 CFR 200.430(h)(4), and • relevant internal controls (2 CFR 200.302(b)(4). Internal Audit cites that the ESC program does not comply with Uniform Guidance, as well as University policy (Extra-Service Compensation Policy 376), which formalizes the University’s approach to compliance with Uniform Guidance for these activities. Internal Audit identified that University personnel did not follow or were unfamiliar with established policies in addition to procedural changes that did not require sufficient level of documentation for proper approvals. Detailed fieldwork by Internal Audit identified instances of questioned costs for funding (both federal and non-federal) in excess of $25,000. Fieldwork covered the period between January 1, 2020 and June 14, 2023, but also identified evidence of noncompliance as far back as 2009 to 2018. After Internal Audit issued its report in September 2024, the University took action to begin determining the potential financial impact of noncompliance through an external third-party. A report by this external third-party has not been completed as of the date of this finding; therefore, the amount of questioned costs related to federal programs cannot be determined. The University has also taken steps to immediately address policy and control deficiencies across the institution. Recommendations: We recommend the University do the following relative to University-wide procedures: 1. Determine the potential financial impact of noncompliance with grant sponsors. 2. Evaluate and improve its policies and required documentation for extra-service compensation. 3. Evaluate and improve its internal controls for sponsored program compensation. 4. Provide adequate training to University personnel regarding sponsored programs compensation compliance. USU’s Response: Utah State University (“USU”) generally agrees with Finding One. As detailed in USU internal audit IAS-23-53, USU Extension established a program to incentivize and reward its personnel to apply for grants (referred to by Extension and within USU internal audit IAS-23-53 as the “incentive program”). While the Uniform Guidance permits incentive programs (see CFR 200.430(f)) and such programs are readily used by universities, the USU Extension incentive program was established and carried out in manner that violated USU’s policy governing extra service compensation (“ESC”) and in a manner that bypassed critical internal controls. Notably, USU Internal Audit IAS-23-53 tested compliance with USU’s extra-service compensation policy but did not review actual costs charged to federal sponsors as this was outside the scope of the audit. Consistent with the recommendations to determine the potential impact of noncompliance, USU worked with an outside consultant to review payment of ESC to all employees working on federal grants. This work identified (1) limited instances when salaries directly charged to sponsored projects included extra service compensation in the base salary and (2) limited instances when extra service compensation was charged to federal sponsors without sponsor approval. The majority of ESC payments made pursuant the USU Extension incentive program was not charged to grant sponsor or included in the institutional base salary charged to the grant. Accordingly, noncompliance with the Uniform Guidance clauses related to compensation costs was limited to a small subset of payments made under the USU Extension incentive program. Based on these findings, USU agrees with the corrective actions recommended and, as outlined in the corrective action plan summary below, has already completed and/or initiated these actions.
2024-018. USU Extension Extra Services Compensation Program Non-Compliance with Uniform Guidance (Finding Type: Significant Deficiency, Reportable Noncompliance) Federal Agency: Various Assistance Listing Number and Title: Various Federal Award Number: Various Questioned Costs: Undetermined Pass-through Entity: Various Prior Year Single Audit Report Finding Number: N/A Utah State University’s (University) Internal Audit performed a review of the University’s Extension Service (Extension) within the College of Agriculture and Applied Science. The review determined that Extension’s Extra Service Compensation (ESC) program violates Uniform Guidance requirements and University policy, bypasses critical internal controls, and provides employees with additional compensation for extra-service work related to their primary job duties without sponsor approval. Extension’s mission, under the University’s land grant mission, provides research-based programs and resources to Utah’s population using a mix of local, state, federal and sponsored funding. To incentivize its personnel to apply for grants, Extension created an ESC program that allowed personnel to replace a portion of their primary position institution-funded salary with grant-funded salary. Personnel could then request up to 20 percent of their primary position salary through an ESC secondary position funded with the replaced institution-funded salary. However, Extension’s justified purpose for the ESC secondary position was “caused by and associated with the grant.” In doing so, Extension made it possible to bypass the University’s policy and internal controls for extra-service pay by obscuring the work duties and funding source for the secondary position. Below is an illustrative example from the USU Internal Audit Report of an ESC professor with an institutional base salary of $50,000: Payment to Employee Before Receiving Award (Source: USU Internal Audit Report IAS-23-53) Uniform Guidance maintains strict requirements with regard to the allowability of compensation, including special consideration for substantial increases, particularly with: • federal award ratios (2 CFR 200.430(e)), • institutional base salary charges, including federal award proportionate shares (2 CFR 200.430(h)(2)), • prior approvals by federal awarding agencies for incidental activities with supplemental compensation (2 CFR 200.430(h)(1)), • intra-institution consulting within higher education (2 CFR 200.430(h)(3)), • institutional policy definitions to conclusively determine work resulting in extra service pay (2 CFR 200.430(h)(4), and • relevant internal controls (2 CFR 200.302(b)(4). Internal Audit cites that the ESC program does not comply with Uniform Guidance, as well as University policy (Extra-Service Compensation Policy 376), which formalizes the University’s approach to compliance with Uniform Guidance for these activities. Internal Audit identified that University personnel did not follow or were unfamiliar with established policies in addition to procedural changes that did not require sufficient level of documentation for proper approvals. Detailed fieldwork by Internal Audit identified instances of questioned costs for funding (both federal and non-federal) in excess of $25,000. Fieldwork covered the period between January 1, 2020 and June 14, 2023, but also identified evidence of noncompliance as far back as 2009 to 2018. After Internal Audit issued its report in September 2024, the University took action to begin determining the potential financial impact of noncompliance through an external third-party. A report by this external third-party has not been completed as of the date of this finding; therefore, the amount of questioned costs related to federal programs cannot be determined. The University has also taken steps to immediately address policy and control deficiencies across the institution. Recommendations: We recommend the University do the following relative to University-wide procedures: 1. Determine the potential financial impact of noncompliance with grant sponsors. 2. Evaluate and improve its policies and required documentation for extra-service compensation. 3. Evaluate and improve its internal controls for sponsored program compensation. 4. Provide adequate training to University personnel regarding sponsored programs compensation compliance. USU’s Response: Utah State University (“USU”) generally agrees with Finding One. As detailed in USU internal audit IAS-23-53, USU Extension established a program to incentivize and reward its personnel to apply for grants (referred to by Extension and within USU internal audit IAS-23-53 as the “incentive program”). While the Uniform Guidance permits incentive programs (see CFR 200.430(f)) and such programs are readily used by universities, the USU Extension incentive program was established and carried out in manner that violated USU’s policy governing extra service compensation (“ESC”) and in a manner that bypassed critical internal controls. Notably, USU Internal Audit IAS-23-53 tested compliance with USU’s extra-service compensation policy but did not review actual costs charged to federal sponsors as this was outside the scope of the audit. Consistent with the recommendations to determine the potential impact of noncompliance, USU worked with an outside consultant to review payment of ESC to all employees working on federal grants. This work identified (1) limited instances when salaries directly charged to sponsored projects included extra service compensation in the base salary and (2) limited instances when extra service compensation was charged to federal sponsors without sponsor approval. The majority of ESC payments made pursuant the USU Extension incentive program was not charged to grant sponsor or included in the institutional base salary charged to the grant. Accordingly, noncompliance with the Uniform Guidance clauses related to compensation costs was limited to a small subset of payments made under the USU Extension incentive program. Based on these findings, USU agrees with the corrective actions recommended and, as outlined in the corrective action plan summary below, has already completed and/or initiated these actions.
2024-018. USU Extension Extra Services Compensation Program Non-Compliance with Uniform Guidance (Finding Type: Significant Deficiency, Reportable Noncompliance) Federal Agency: Various Assistance Listing Number and Title: Various Federal Award Number: Various Questioned Costs: Undetermined Pass-through Entity: Various Prior Year Single Audit Report Finding Number: N/A Utah State University’s (University) Internal Audit performed a review of the University’s Extension Service (Extension) within the College of Agriculture and Applied Science. The review determined that Extension’s Extra Service Compensation (ESC) program violates Uniform Guidance requirements and University policy, bypasses critical internal controls, and provides employees with additional compensation for extra-service work related to their primary job duties without sponsor approval. Extension’s mission, under the University’s land grant mission, provides research-based programs and resources to Utah’s population using a mix of local, state, federal and sponsored funding. To incentivize its personnel to apply for grants, Extension created an ESC program that allowed personnel to replace a portion of their primary position institution-funded salary with grant-funded salary. Personnel could then request up to 20 percent of their primary position salary through an ESC secondary position funded with the replaced institution-funded salary. However, Extension’s justified purpose for the ESC secondary position was “caused by and associated with the grant.” In doing so, Extension made it possible to bypass the University’s policy and internal controls for extra-service pay by obscuring the work duties and funding source for the secondary position. Below is an illustrative example from the USU Internal Audit Report of an ESC professor with an institutional base salary of $50,000: Payment to Employee Before Receiving Award (Source: USU Internal Audit Report IAS-23-53) Uniform Guidance maintains strict requirements with regard to the allowability of compensation, including special consideration for substantial increases, particularly with: • federal award ratios (2 CFR 200.430(e)), • institutional base salary charges, including federal award proportionate shares (2 CFR 200.430(h)(2)), • prior approvals by federal awarding agencies for incidental activities with supplemental compensation (2 CFR 200.430(h)(1)), • intra-institution consulting within higher education (2 CFR 200.430(h)(3)), • institutional policy definitions to conclusively determine work resulting in extra service pay (2 CFR 200.430(h)(4), and • relevant internal controls (2 CFR 200.302(b)(4). Internal Audit cites that the ESC program does not comply with Uniform Guidance, as well as University policy (Extra-Service Compensation Policy 376), which formalizes the University’s approach to compliance with Uniform Guidance for these activities. Internal Audit identified that University personnel did not follow or were unfamiliar with established policies in addition to procedural changes that did not require sufficient level of documentation for proper approvals. Detailed fieldwork by Internal Audit identified instances of questioned costs for funding (both federal and non-federal) in excess of $25,000. Fieldwork covered the period between January 1, 2020 and June 14, 2023, but also identified evidence of noncompliance as far back as 2009 to 2018. After Internal Audit issued its report in September 2024, the University took action to begin determining the potential financial impact of noncompliance through an external third-party. A report by this external third-party has not been completed as of the date of this finding; therefore, the amount of questioned costs related to federal programs cannot be determined. The University has also taken steps to immediately address policy and control deficiencies across the institution. Recommendations: We recommend the University do the following relative to University-wide procedures: 1. Determine the potential financial impact of noncompliance with grant sponsors. 2. Evaluate and improve its policies and required documentation for extra-service compensation. 3. Evaluate and improve its internal controls for sponsored program compensation. 4. Provide adequate training to University personnel regarding sponsored programs compensation compliance. USU’s Response: Utah State University (“USU”) generally agrees with Finding One. As detailed in USU internal audit IAS-23-53, USU Extension established a program to incentivize and reward its personnel to apply for grants (referred to by Extension and within USU internal audit IAS-23-53 as the “incentive program”). While the Uniform Guidance permits incentive programs (see CFR 200.430(f)) and such programs are readily used by universities, the USU Extension incentive program was established and carried out in manner that violated USU’s policy governing extra service compensation (“ESC”) and in a manner that bypassed critical internal controls. Notably, USU Internal Audit IAS-23-53 tested compliance with USU’s extra-service compensation policy but did not review actual costs charged to federal sponsors as this was outside the scope of the audit. Consistent with the recommendations to determine the potential impact of noncompliance, USU worked with an outside consultant to review payment of ESC to all employees working on federal grants. This work identified (1) limited instances when salaries directly charged to sponsored projects included extra service compensation in the base salary and (2) limited instances when extra service compensation was charged to federal sponsors without sponsor approval. The majority of ESC payments made pursuant the USU Extension incentive program was not charged to grant sponsor or included in the institutional base salary charged to the grant. Accordingly, noncompliance with the Uniform Guidance clauses related to compensation costs was limited to a small subset of payments made under the USU Extension incentive program. Based on these findings, USU agrees with the corrective actions recommended and, as outlined in the corrective action plan summary below, has already completed and/or initiated these actions.
2024-018. USU Extension Extra Services Compensation Program Non-Compliance with Uniform Guidance (Finding Type: Significant Deficiency, Reportable Noncompliance) Federal Agency: Various Assistance Listing Number and Title: Various Federal Award Number: Various Questioned Costs: Undetermined Pass-through Entity: Various Prior Year Single Audit Report Finding Number: N/A Utah State University’s (University) Internal Audit performed a review of the University’s Extension Service (Extension) within the College of Agriculture and Applied Science. The review determined that Extension’s Extra Service Compensation (ESC) program violates Uniform Guidance requirements and University policy, bypasses critical internal controls, and provides employees with additional compensation for extra-service work related to their primary job duties without sponsor approval. Extension’s mission, under the University’s land grant mission, provides research-based programs and resources to Utah’s population using a mix of local, state, federal and sponsored funding. To incentivize its personnel to apply for grants, Extension created an ESC program that allowed personnel to replace a portion of their primary position institution-funded salary with grant-funded salary. Personnel could then request up to 20 percent of their primary position salary through an ESC secondary position funded with the replaced institution-funded salary. However, Extension’s justified purpose for the ESC secondary position was “caused by and associated with the grant.” In doing so, Extension made it possible to bypass the University’s policy and internal controls for extra-service pay by obscuring the work duties and funding source for the secondary position. Below is an illustrative example from the USU Internal Audit Report of an ESC professor with an institutional base salary of $50,000: Payment to Employee Before Receiving Award (Source: USU Internal Audit Report IAS-23-53) Uniform Guidance maintains strict requirements with regard to the allowability of compensation, including special consideration for substantial increases, particularly with: • federal award ratios (2 CFR 200.430(e)), • institutional base salary charges, including federal award proportionate shares (2 CFR 200.430(h)(2)), • prior approvals by federal awarding agencies for incidental activities with supplemental compensation (2 CFR 200.430(h)(1)), • intra-institution consulting within higher education (2 CFR 200.430(h)(3)), • institutional policy definitions to conclusively determine work resulting in extra service pay (2 CFR 200.430(h)(4), and • relevant internal controls (2 CFR 200.302(b)(4). Internal Audit cites that the ESC program does not comply with Uniform Guidance, as well as University policy (Extra-Service Compensation Policy 376), which formalizes the University’s approach to compliance with Uniform Guidance for these activities. Internal Audit identified that University personnel did not follow or were unfamiliar with established policies in addition to procedural changes that did not require sufficient level of documentation for proper approvals. Detailed fieldwork by Internal Audit identified instances of questioned costs for funding (both federal and non-federal) in excess of $25,000. Fieldwork covered the period between January 1, 2020 and June 14, 2023, but also identified evidence of noncompliance as far back as 2009 to 2018. After Internal Audit issued its report in September 2024, the University took action to begin determining the potential financial impact of noncompliance through an external third-party. A report by this external third-party has not been completed as of the date of this finding; therefore, the amount of questioned costs related to federal programs cannot be determined. The University has also taken steps to immediately address policy and control deficiencies across the institution. Recommendations: We recommend the University do the following relative to University-wide procedures: 1. Determine the potential financial impact of noncompliance with grant sponsors. 2. Evaluate and improve its policies and required documentation for extra-service compensation. 3. Evaluate and improve its internal controls for sponsored program compensation. 4. Provide adequate training to University personnel regarding sponsored programs compensation compliance. USU’s Response: Utah State University (“USU”) generally agrees with Finding One. As detailed in USU internal audit IAS-23-53, USU Extension established a program to incentivize and reward its personnel to apply for grants (referred to by Extension and within USU internal audit IAS-23-53 as the “incentive program”). While the Uniform Guidance permits incentive programs (see CFR 200.430(f)) and such programs are readily used by universities, the USU Extension incentive program was established and carried out in manner that violated USU’s policy governing extra service compensation (“ESC”) and in a manner that bypassed critical internal controls. Notably, USU Internal Audit IAS-23-53 tested compliance with USU’s extra-service compensation policy but did not review actual costs charged to federal sponsors as this was outside the scope of the audit. Consistent with the recommendations to determine the potential impact of noncompliance, USU worked with an outside consultant to review payment of ESC to all employees working on federal grants. This work identified (1) limited instances when salaries directly charged to sponsored projects included extra service compensation in the base salary and (2) limited instances when extra service compensation was charged to federal sponsors without sponsor approval. The majority of ESC payments made pursuant the USU Extension incentive program was not charged to grant sponsor or included in the institutional base salary charged to the grant. Accordingly, noncompliance with the Uniform Guidance clauses related to compensation costs was limited to a small subset of payments made under the USU Extension incentive program. Based on these findings, USU agrees with the corrective actions recommended and, as outlined in the corrective action plan summary below, has already completed and/or initiated these actions.
2024-018. USU Extension Extra Services Compensation Program Non-Compliance with Uniform Guidance (Finding Type: Significant Deficiency, Reportable Noncompliance) Federal Agency: Various Assistance Listing Number and Title: Various Federal Award Number: Various Questioned Costs: Undetermined Pass-through Entity: Various Prior Year Single Audit Report Finding Number: N/A Utah State University’s (University) Internal Audit performed a review of the University’s Extension Service (Extension) within the College of Agriculture and Applied Science. The review determined that Extension’s Extra Service Compensation (ESC) program violates Uniform Guidance requirements and University policy, bypasses critical internal controls, and provides employees with additional compensation for extra-service work related to their primary job duties without sponsor approval. Extension’s mission, under the University’s land grant mission, provides research-based programs and resources to Utah’s population using a mix of local, state, federal and sponsored funding. To incentivize its personnel to apply for grants, Extension created an ESC program that allowed personnel to replace a portion of their primary position institution-funded salary with grant-funded salary. Personnel could then request up to 20 percent of their primary position salary through an ESC secondary position funded with the replaced institution-funded salary. However, Extension’s justified purpose for the ESC secondary position was “caused by and associated with the grant.” In doing so, Extension made it possible to bypass the University’s policy and internal controls for extra-service pay by obscuring the work duties and funding source for the secondary position. Below is an illustrative example from the USU Internal Audit Report of an ESC professor with an institutional base salary of $50,000: Payment to Employee Before Receiving Award (Source: USU Internal Audit Report IAS-23-53) Uniform Guidance maintains strict requirements with regard to the allowability of compensation, including special consideration for substantial increases, particularly with: • federal award ratios (2 CFR 200.430(e)), • institutional base salary charges, including federal award proportionate shares (2 CFR 200.430(h)(2)), • prior approvals by federal awarding agencies for incidental activities with supplemental compensation (2 CFR 200.430(h)(1)), • intra-institution consulting within higher education (2 CFR 200.430(h)(3)), • institutional policy definitions to conclusively determine work resulting in extra service pay (2 CFR 200.430(h)(4), and • relevant internal controls (2 CFR 200.302(b)(4). Internal Audit cites that the ESC program does not comply with Uniform Guidance, as well as University policy (Extra-Service Compensation Policy 376), which formalizes the University’s approach to compliance with Uniform Guidance for these activities. Internal Audit identified that University personnel did not follow or were unfamiliar with established policies in addition to procedural changes that did not require sufficient level of documentation for proper approvals. Detailed fieldwork by Internal Audit identified instances of questioned costs for funding (both federal and non-federal) in excess of $25,000. Fieldwork covered the period between January 1, 2020 and June 14, 2023, but also identified evidence of noncompliance as far back as 2009 to 2018. After Internal Audit issued its report in September 2024, the University took action to begin determining the potential financial impact of noncompliance through an external third-party. A report by this external third-party has not been completed as of the date of this finding; therefore, the amount of questioned costs related to federal programs cannot be determined. The University has also taken steps to immediately address policy and control deficiencies across the institution. Recommendations: We recommend the University do the following relative to University-wide procedures: 1. Determine the potential financial impact of noncompliance with grant sponsors. 2. Evaluate and improve its policies and required documentation for extra-service compensation. 3. Evaluate and improve its internal controls for sponsored program compensation. 4. Provide adequate training to University personnel regarding sponsored programs compensation compliance. USU’s Response: Utah State University (“USU”) generally agrees with Finding One. As detailed in USU internal audit IAS-23-53, USU Extension established a program to incentivize and reward its personnel to apply for grants (referred to by Extension and within USU internal audit IAS-23-53 as the “incentive program”). While the Uniform Guidance permits incentive programs (see CFR 200.430(f)) and such programs are readily used by universities, the USU Extension incentive program was established and carried out in manner that violated USU’s policy governing extra service compensation (“ESC”) and in a manner that bypassed critical internal controls. Notably, USU Internal Audit IAS-23-53 tested compliance with USU’s extra-service compensation policy but did not review actual costs charged to federal sponsors as this was outside the scope of the audit. Consistent with the recommendations to determine the potential impact of noncompliance, USU worked with an outside consultant to review payment of ESC to all employees working on federal grants. This work identified (1) limited instances when salaries directly charged to sponsored projects included extra service compensation in the base salary and (2) limited instances when extra service compensation was charged to federal sponsors without sponsor approval. The majority of ESC payments made pursuant the USU Extension incentive program was not charged to grant sponsor or included in the institutional base salary charged to the grant. Accordingly, noncompliance with the Uniform Guidance clauses related to compensation costs was limited to a small subset of payments made under the USU Extension incentive program. Based on these findings, USU agrees with the corrective actions recommended and, as outlined in the corrective action plan summary below, has already completed and/or initiated these actions.
2024-018. USU Extension Extra Services Compensation Program Non-Compliance with Uniform Guidance (Finding Type: Significant Deficiency, Reportable Noncompliance) Federal Agency: Various Assistance Listing Number and Title: Various Federal Award Number: Various Questioned Costs: Undetermined Pass-through Entity: Various Prior Year Single Audit Report Finding Number: N/A Utah State University’s (University) Internal Audit performed a review of the University’s Extension Service (Extension) within the College of Agriculture and Applied Science. The review determined that Extension’s Extra Service Compensation (ESC) program violates Uniform Guidance requirements and University policy, bypasses critical internal controls, and provides employees with additional compensation for extra-service work related to their primary job duties without sponsor approval. Extension’s mission, under the University’s land grant mission, provides research-based programs and resources to Utah’s population using a mix of local, state, federal and sponsored funding. To incentivize its personnel to apply for grants, Extension created an ESC program that allowed personnel to replace a portion of their primary position institution-funded salary with grant-funded salary. Personnel could then request up to 20 percent of their primary position salary through an ESC secondary position funded with the replaced institution-funded salary. However, Extension’s justified purpose for the ESC secondary position was “caused by and associated with the grant.” In doing so, Extension made it possible to bypass the University’s policy and internal controls for extra-service pay by obscuring the work duties and funding source for the secondary position. Below is an illustrative example from the USU Internal Audit Report of an ESC professor with an institutional base salary of $50,000: Payment to Employee Before Receiving Award (Source: USU Internal Audit Report IAS-23-53) Uniform Guidance maintains strict requirements with regard to the allowability of compensation, including special consideration for substantial increases, particularly with: • federal award ratios (2 CFR 200.430(e)), • institutional base salary charges, including federal award proportionate shares (2 CFR 200.430(h)(2)), • prior approvals by federal awarding agencies for incidental activities with supplemental compensation (2 CFR 200.430(h)(1)), • intra-institution consulting within higher education (2 CFR 200.430(h)(3)), • institutional policy definitions to conclusively determine work resulting in extra service pay (2 CFR 200.430(h)(4), and • relevant internal controls (2 CFR 200.302(b)(4). Internal Audit cites that the ESC program does not comply with Uniform Guidance, as well as University policy (Extra-Service Compensation Policy 376), which formalizes the University’s approach to compliance with Uniform Guidance for these activities. Internal Audit identified that University personnel did not follow or were unfamiliar with established policies in addition to procedural changes that did not require sufficient level of documentation for proper approvals. Detailed fieldwork by Internal Audit identified instances of questioned costs for funding (both federal and non-federal) in excess of $25,000. Fieldwork covered the period between January 1, 2020 and June 14, 2023, but also identified evidence of noncompliance as far back as 2009 to 2018. After Internal Audit issued its report in September 2024, the University took action to begin determining the potential financial impact of noncompliance through an external third-party. A report by this external third-party has not been completed as of the date of this finding; therefore, the amount of questioned costs related to federal programs cannot be determined. The University has also taken steps to immediately address policy and control deficiencies across the institution. Recommendations: We recommend the University do the following relative to University-wide procedures: 1. Determine the potential financial impact of noncompliance with grant sponsors. 2. Evaluate and improve its policies and required documentation for extra-service compensation. 3. Evaluate and improve its internal controls for sponsored program compensation. 4. Provide adequate training to University personnel regarding sponsored programs compensation compliance. USU’s Response: Utah State University (“USU”) generally agrees with Finding One. As detailed in USU internal audit IAS-23-53, USU Extension established a program to incentivize and reward its personnel to apply for grants (referred to by Extension and within USU internal audit IAS-23-53 as the “incentive program”). While the Uniform Guidance permits incentive programs (see CFR 200.430(f)) and such programs are readily used by universities, the USU Extension incentive program was established and carried out in manner that violated USU’s policy governing extra service compensation (“ESC”) and in a manner that bypassed critical internal controls. Notably, USU Internal Audit IAS-23-53 tested compliance with USU’s extra-service compensation policy but did not review actual costs charged to federal sponsors as this was outside the scope of the audit. Consistent with the recommendations to determine the potential impact of noncompliance, USU worked with an outside consultant to review payment of ESC to all employees working on federal grants. This work identified (1) limited instances when salaries directly charged to sponsored projects included extra service compensation in the base salary and (2) limited instances when extra service compensation was charged to federal sponsors without sponsor approval. The majority of ESC payments made pursuant the USU Extension incentive program was not charged to grant sponsor or included in the institutional base salary charged to the grant. Accordingly, noncompliance with the Uniform Guidance clauses related to compensation costs was limited to a small subset of payments made under the USU Extension incentive program. Based on these findings, USU agrees with the corrective actions recommended and, as outlined in the corrective action plan summary below, has already completed and/or initiated these actions.