Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Finding 2022 011 Federal Program Title ? COVID-19 - National Organizations of State and Local Officials Assistance Listing No. ? 93.011 Federal Agency ? U.S. Department of Health and Human Services Federal Award Numbers ? 1 U3SHS42192-01-00 and 1 G32HS42670-01-00 Grant Award Periods ? June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, respectively Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Additionally, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University did not follow their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not adhere to the HHS Grants Policy which requires after-the-fact activity reports. Additionally, the University did not adhere to their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our fourteen sampled effort verification reports that were noncompliant. One effort verification report was not certified as the employee resigned and an effort verification report was not initiated as part of their exit procedures. Additionally, the employee?s supervisor also resigned. Lastly, one effort verification report was not certified within the 30-calendar day policy. Total payroll and fringe totaled approximately $320,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles specific to effort reporting. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that there was a missing management review control to prevent noncompliance specific to the timeliness of the certifications of effort reports contributed to the noncompliance with the activities allowed/unallowed and allowable costs/cost principles specific to effort reporting. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure that certification of effort reports complies with both federal requirements and University policy. Additionally, we recommend the University take a fresh look at policies and procedures in place when an employee resigns to consider whether exit procedures should include the initiation and certification of an effort verification report prior to departure.
Finding 2022 011 Federal Program Title ? COVID-19 - National Organizations of State and Local Officials Assistance Listing No. ? 93.011 Federal Agency ? U.S. Department of Health and Human Services Federal Award Numbers ? 1 U3SHS42192-01-00 and 1 G32HS42670-01-00 Grant Award Periods ? June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, respectively Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Additionally, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University did not follow their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not adhere to the HHS Grants Policy which requires after-the-fact activity reports. Additionally, the University did not adhere to their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our fourteen sampled effort verification reports that were noncompliant. One effort verification report was not certified as the employee resigned and an effort verification report was not initiated as part of their exit procedures. Additionally, the employee?s supervisor also resigned. Lastly, one effort verification report was not certified within the 30-calendar day policy. Total payroll and fringe totaled approximately $320,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles specific to effort reporting. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that there was a missing management review control to prevent noncompliance specific to the timeliness of the certifications of effort reports contributed to the noncompliance with the activities allowed/unallowed and allowable costs/cost principles specific to effort reporting. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure that certification of effort reports complies with both federal requirements and University policy. Additionally, we recommend the University take a fresh look at policies and procedures in place when an employee resigns to consider whether exit procedures should include the initiation and certification of an effort verification report prior to departure.
Finding 2022 011 Federal Program Title ? COVID-19 - National Organizations of State and Local Officials Assistance Listing No. ? 93.011 Federal Agency ? U.S. Department of Health and Human Services Federal Award Numbers ? 1 U3SHS42192-01-00 and 1 G32HS42670-01-00 Grant Award Periods ? June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, respectively Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Additionally, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University did not follow their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not adhere to the HHS Grants Policy which requires after-the-fact activity reports. Additionally, the University did not adhere to their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our fourteen sampled effort verification reports that were noncompliant. One effort verification report was not certified as the employee resigned and an effort verification report was not initiated as part of their exit procedures. Additionally, the employee?s supervisor also resigned. Lastly, one effort verification report was not certified within the 30-calendar day policy. Total payroll and fringe totaled approximately $320,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles specific to effort reporting. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that there was a missing management review control to prevent noncompliance specific to the timeliness of the certifications of effort reports contributed to the noncompliance with the activities allowed/unallowed and allowable costs/cost principles specific to effort reporting. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure that certification of effort reports complies with both federal requirements and University policy. Additionally, we recommend the University take a fresh look at policies and procedures in place when an employee resigns to consider whether exit procedures should include the initiation and certification of an effort verification report prior to departure.
2022-049 The Department of Children, Youth, and Families did not have adequate internal controls over and did not comply with some Public Assistance Cost Allocation Plan requirements. Assistance Listing Number and Title: 93.658 Foster Care Title IV-E 93.658 COVID-19 Foster Care Title IV-E 93.659 Adoption Assistance 93.659 COVID-19 Adoption Assistance Federal Grantor Name: U.S. Department of Health and Human Services Federal Award/Contract Number: 2102WAFOST; 2202WAFOST; 2102WAADPT; 2202WAADPT Pass-through Entity Name: None Pass-through Award/Contract Number: None Applicable Compliance Component: Activities Allowed or Unallowed Allowable Costs/Cost Principles Known Questioned Cost Amount: None Background The Department of Children, Youth, and Families uses the Random Moment Time Study (RMTS) to allocate costs for its headquarters and regional operations to the proper state and federal programs. Department staff generally work on multiple programs and cases throughout a workday, which makes maintaining a timesheet difficult and time consuming. The RMTS simplifies how the Department allocates the cost of time and effort to state and federal programs. The RMTS is a sampling tool that the Department uses to generate statistically valid statewide estimates of various activities employees have performed. The Department also uses a system called FamLink, which allows staff to work on client cases, document information, generate samples and compile RMTS results. The Department?s use of the RMTS is included in its Public Assistance Cost Allocation Plan (PACAP) with the federal grantor. The PACAP is approved annually and outlines the general operating policies and procedures that the RMTS staff must follow. For the RMTS to properly calculate the percentages of activities Department staff have performed, it must start by identifying a sampling universe that is accurate and complete. The sampling universe lists the eligible worker types to be included and is updated monthly to ensure all eligible workers are included in the sample. The RMTS Coordinators and RMTS Headquarters (HQ) are responsible for keeping the list of sample workers current. To ensure the sample worker population is complete, the RMTS HQ runs the worker report, filters it, and then communicates the report to the RMTS Coordinators to verify proper workers are included, excluded, or documented with the right worker type to maintain an accurate RMTS population. The RMTS Coordinators send the RMTS HQ emails informing them of the changes that need to be made to assigned workers and the unassigned workers. The RMTS HQ will then update the workers? profiles in FamLink as updates come in. Sampled workers are responsible for completing an accurate and timely RMTS sample within three business days. The RMTS HQ performs a quality control review of all completed samples to ensure staff are completing them correctly. At the end of the month, the Department uses FamLink to summarize the sample results for the month. The results are then compiled and used to fill out the Cost Allocation Base Data Input Sheets for each RMTS base. The results are then entered into the Cost Allocation System. During fiscal year 2022, the Department used the RMTS to allocate about $34.8 million to the Foster Care-Title IV-E and Adoption Assistance programs. Federal regulations require recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. In the prior three audits, we reported the Department did not have adequate internal controls over and did not comply with some PACAP requirements. The prior finding numbers are 2021-042, 2020-044 and 2019-044. Description of Condition The Department did not have adequate internal controls over and did not comply with some PACAP requirements. We randomly selected five out of the 12 monthly employee updates to determine whether the sampling universe was complete. The RMTS HQ Program Manager is responsible for creating monthly employee reports that show current staff who are in the sampling population, as well as a report of employees who may be RMTS eligible. The Program Manager forwards these reports to the RMTS Coordinators asking for updates of employees on each report. Once the Program Manager receives the RMTS Coordinators? responses, the Program Manager updates FamLink to ensure the sampling universe is complete. For all five of the sampled months that we examined, the Department was unable to demonstrate the RMTS sampling universe was completed due to a lack of documentation. We consider these internal control deficiencies to be a material weakness, which led to material noncompliance. Cause of Condition The Department did not retain documentation detailing which workers were added and removed from the sampling universe each month. Because of this, it was not possible to verify the completeness of the RMTS population. Effect of Condition The Department?s inadequate internal controls affected the integrity of its RMTS sampling universe. An erroneous sample could cause the costs the Department has charged to federally funded programs for its headquarters and regional operations to be unallowable, according to the PACAP. Recommendation We recommend the Department ensure staff follow its own established procedures to ensure RMTS sampling populations are accurate and complete. Department?s Response The Department maintains that the sampling universe is accurate and complete. There is not a deficiency with the integrity of the RMTS sample and the Department complies with federal requirements. The Department?s RMTS instructions included in the federally approved Public Assistance Cost Allocation Plan (PACAP) are more restrictive than federal requirements. Communication with the Regional RMTS Coordinators occurs regularly and cost pools are updated within the parameters identified within the RMTS instructions. The HQ RMTS Coordinator pulls three monthly reports from FamLink, the Child Welfare case management system, which the RMTS is a component of, and the Human Resource Management System to verify worker eligibility and proper classification to strengthen the internal controls around RMTS samples pulled. For these reasons, the Department maintains the position that the sampling universe complies with federal regulations. The Department contracted with the University of Massachusetts, effective October 2022, for the design and implementation of the RMTS mechanism. The Department has updated the RMTS instructions in the PACAP based on the new quarterly process implemented under the University of Massachusetts contract. The new process remains in compliance with federal law while alleviating the department-imposed restrictions and addresses the auditor?s concerns regarding the internal controls applicable to the RMTS worker types included in the sampling universe. Auditor?s Remarks Our audit procedures were designed to determine whether the Department charged only allowable costs to federal grants in compliance with their approved PACAP and federal law. Two CFR 200.430 requires the following: ? The sampling universe must include all employees whose salaries and wages are to be allocated based on sample results ? The entire time period involved must be covered by the sample ? The results must be statistically valid and applied to the period being sampled. During the audit period, the Department was unable to provide sufficient documentation showing the sampling universe was complete. We reaffirm our finding, and we will follow up on the Department?s corrective action during the next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 CFR Part 200, Uniform Guidance, section 516, Audit findings, establishes reporting requirements for audit findings. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Department of Children Youth and Families Public Assistance Cost Allocation Plan, RMTS Program Instructions, page 37, states in part: Headquarters RMTS staff shall be responsible for the following actions: Overseeing the system?s monthly batching of new samples which includes three variables: ? Random Moment Starting Time ? Random Interval Time Random ? Employee List The Headquarters RMTS Staff work with the RMTS Coordinators in order to keep the list of sampled workers current. Worker employment status changes should be reported by the social workers? supervisors to RMTS Coordinators. In addition, HQ Staff need to verify that each worker has an RMTS Worker Type associated with him or her and an RMTS Group linking the worker to his or her coordinator. The Regional RMTS Coordinator shall be responsible for the following actions: Notify HQ RMTS Staff of any updates to their worker list when there is any change in employment status of a worker participating in the RMTS survey within five working days of change. In addition, the coordinator needs to provide HQ RMTS Staff with an appropriate RMTS Worker Type code for each worker added to the system.
2022-049 The Department of Children, Youth, and Families did not have adequate internal controls over and did not comply with some Public Assistance Cost Allocation Plan requirements. Assistance Listing Number and Title: 93.658 Foster Care Title IV-E 93.658 COVID-19 Foster Care Title IV-E 93.659 Adoption Assistance 93.659 COVID-19 Adoption Assistance Federal Grantor Name: U.S. Department of Health and Human Services Federal Award/Contract Number: 2102WAFOST; 2202WAFOST; 2102WAADPT; 2202WAADPT Pass-through Entity Name: None Pass-through Award/Contract Number: None Applicable Compliance Component: Activities Allowed or Unallowed Allowable Costs/Cost Principles Known Questioned Cost Amount: None Background The Department of Children, Youth, and Families uses the Random Moment Time Study (RMTS) to allocate costs for its headquarters and regional operations to the proper state and federal programs. Department staff generally work on multiple programs and cases throughout a workday, which makes maintaining a timesheet difficult and time consuming. The RMTS simplifies how the Department allocates the cost of time and effort to state and federal programs. The RMTS is a sampling tool that the Department uses to generate statistically valid statewide estimates of various activities employees have performed. The Department also uses a system called FamLink, which allows staff to work on client cases, document information, generate samples and compile RMTS results. The Department?s use of the RMTS is included in its Public Assistance Cost Allocation Plan (PACAP) with the federal grantor. The PACAP is approved annually and outlines the general operating policies and procedures that the RMTS staff must follow. For the RMTS to properly calculate the percentages of activities Department staff have performed, it must start by identifying a sampling universe that is accurate and complete. The sampling universe lists the eligible worker types to be included and is updated monthly to ensure all eligible workers are included in the sample. The RMTS Coordinators and RMTS Headquarters (HQ) are responsible for keeping the list of sample workers current. To ensure the sample worker population is complete, the RMTS HQ runs the worker report, filters it, and then communicates the report to the RMTS Coordinators to verify proper workers are included, excluded, or documented with the right worker type to maintain an accurate RMTS population. The RMTS Coordinators send the RMTS HQ emails informing them of the changes that need to be made to assigned workers and the unassigned workers. The RMTS HQ will then update the workers? profiles in FamLink as updates come in. Sampled workers are responsible for completing an accurate and timely RMTS sample within three business days. The RMTS HQ performs a quality control review of all completed samples to ensure staff are completing them correctly. At the end of the month, the Department uses FamLink to summarize the sample results for the month. The results are then compiled and used to fill out the Cost Allocation Base Data Input Sheets for each RMTS base. The results are then entered into the Cost Allocation System. During fiscal year 2022, the Department used the RMTS to allocate about $34.8 million to the Foster Care-Title IV-E and Adoption Assistance programs. Federal regulations require recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. In the prior three audits, we reported the Department did not have adequate internal controls over and did not comply with some PACAP requirements. The prior finding numbers are 2021-042, 2020-044 and 2019-044. Description of Condition The Department did not have adequate internal controls over and did not comply with some PACAP requirements. We randomly selected five out of the 12 monthly employee updates to determine whether the sampling universe was complete. The RMTS HQ Program Manager is responsible for creating monthly employee reports that show current staff who are in the sampling population, as well as a report of employees who may be RMTS eligible. The Program Manager forwards these reports to the RMTS Coordinators asking for updates of employees on each report. Once the Program Manager receives the RMTS Coordinators? responses, the Program Manager updates FamLink to ensure the sampling universe is complete. For all five of the sampled months that we examined, the Department was unable to demonstrate the RMTS sampling universe was completed due to a lack of documentation. We consider these internal control deficiencies to be a material weakness, which led to material noncompliance. Cause of Condition The Department did not retain documentation detailing which workers were added and removed from the sampling universe each month. Because of this, it was not possible to verify the completeness of the RMTS population. Effect of Condition The Department?s inadequate internal controls affected the integrity of its RMTS sampling universe. An erroneous sample could cause the costs the Department has charged to federally funded programs for its headquarters and regional operations to be unallowable, according to the PACAP. Recommendation We recommend the Department ensure staff follow its own established procedures to ensure RMTS sampling populations are accurate and complete. Department?s Response The Department maintains that the sampling universe is accurate and complete. There is not a deficiency with the integrity of the RMTS sample and the Department complies with federal requirements. The Department?s RMTS instructions included in the federally approved Public Assistance Cost Allocation Plan (PACAP) are more restrictive than federal requirements. Communication with the Regional RMTS Coordinators occurs regularly and cost pools are updated within the parameters identified within the RMTS instructions. The HQ RMTS Coordinator pulls three monthly reports from FamLink, the Child Welfare case management system, which the RMTS is a component of, and the Human Resource Management System to verify worker eligibility and proper classification to strengthen the internal controls around RMTS samples pulled. For these reasons, the Department maintains the position that the sampling universe complies with federal regulations. The Department contracted with the University of Massachusetts, effective October 2022, for the design and implementation of the RMTS mechanism. The Department has updated the RMTS instructions in the PACAP based on the new quarterly process implemented under the University of Massachusetts contract. The new process remains in compliance with federal law while alleviating the department-imposed restrictions and addresses the auditor?s concerns regarding the internal controls applicable to the RMTS worker types included in the sampling universe. Auditor?s Remarks Our audit procedures were designed to determine whether the Department charged only allowable costs to federal grants in compliance with their approved PACAP and federal law. Two CFR 200.430 requires the following: ? The sampling universe must include all employees whose salaries and wages are to be allocated based on sample results ? The entire time period involved must be covered by the sample ? The results must be statistically valid and applied to the period being sampled. During the audit period, the Department was unable to provide sufficient documentation showing the sampling universe was complete. We reaffirm our finding, and we will follow up on the Department?s corrective action during the next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 CFR Part 200, Uniform Guidance, section 516, Audit findings, establishes reporting requirements for audit findings. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Department of Children Youth and Families Public Assistance Cost Allocation Plan, RMTS Program Instructions, page 37, states in part: Headquarters RMTS staff shall be responsible for the following actions: Overseeing the system?s monthly batching of new samples which includes three variables: ? Random Moment Starting Time ? Random Interval Time Random ? Employee List The Headquarters RMTS Staff work with the RMTS Coordinators in order to keep the list of sampled workers current. Worker employment status changes should be reported by the social workers? supervisors to RMTS Coordinators. In addition, HQ Staff need to verify that each worker has an RMTS Worker Type associated with him or her and an RMTS Group linking the worker to his or her coordinator. The Regional RMTS Coordinator shall be responsible for the following actions: Notify HQ RMTS Staff of any updates to their worker list when there is any change in employment status of a worker participating in the RMTS survey within five working days of change. In addition, the coordinator needs to provide HQ RMTS Staff with an appropriate RMTS Worker Type code for each worker added to the system.