Assistance Listings number and name: 12.401 National Guard Military Operations and Maintenance (O&M) Projects Award numbers and years: W912L2-21-2-1000, October 1, 2020 through September 30, 2021; W912L2-22-2-1000, October 1, 2021 through September 30, 2022 Federal agency: U.S. Department of Defense Compliance requirements: Activities allowed or unallowed and allowable costs/cost principles Questioned costs: $125,288 Condition—Contrary to federal regulations and its policies, the Department of Emergency Military Affairs (Department) did not always retain documentation supporting the payroll costs it charged to the program. Specifically, the Department had not retained the personnel action forms supporting and approving employees’ pay rates and authorizing them to work on the program for 4 of 21 employees we tested, as follows: • $123,968 for 3 employees’ annual payroll costs and employee-related expenses for which each employee’s salaries and wages and authorization to work on the program were not supported by documented personnel action forms. • $1,320 for 1 employee whose previous personnel action form authorized their working on the program but whose most recent pay rate increase was not supported by a documented personnel action form. Effect—The Department’s failure to retain documentation supporting payroll costs could potentially result in the Department being required to return monies spent on unallowable costs to the federal agency or adjust its program’s costs so that monies are spent for allowable costs.1 During fiscal year 2022, the Department paid 323 employees $15,486,984 of salaries and wages, including employee-related expenses, that were charged to the program. There is a risk that the Department could have potentially charged additional payroll costs to the program without maintaining the required supporting documentation. Finally, the Department is at risk that this finding applies to other federal programs it administers. Cause—The Department’s Administrative Services Office (Office) was not adequately trained to follow the documentation and record retention policy. Specifically, the Office reported that it did not retain the personnel action records as they were unaware that all employee personnel records were required to be retained for 5 years after an employee’s termination. Instead, the Office interpreted the policy to only require these documents to be retained for 5 years after the documents were originally created. Criteria—The Department’s record retention policies require its Administrative Services Office to retain for 5 years after an employee’s termination all the employee’s employment records, including personnel action forms authorizing employee pay rate changes and program assignments.2 Federal regulation requires the Department to retain all records related to a federal program for a period of 3 years from the date the program’s final report was submitted to the federal awarding agency or pass-through grantor (2 CFR §200.334). Also, federal regulation requires the Department to maintain records for salaries and wages charged to federal awards that accurately reflect the work performed and are supported by policies and internal controls to ensure they are accurate, allowable, and properly allocated (2 CFR §200.430[i][1][i]). Further, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Ensure documentation is retained for all personnel actions to demonstrate employees’ salaries and wages, including employee-related expenses, are authorized to be charged to the program. 2. Review all employee personnel files for employees currently paid under the program to ensure the required documentation has been retained. If the documentation has not been retained, program management should review the employees’ activities to ensure they are allowable under the program and prepare and retain the required documentation. Further, if employee activities are determined to be unallowable, coordinate with the U.S. Department of Defense to adjust future federal reimbursement requests or repay any unallowable costs the Department charged to the program. 3. Train its Administrative Services Office and Department employees who are responsible for administering federal programs on the documentation and record retention requirements for payroll costs charged to federal programs. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 Federal Uniform Guidance requires federal awarding agencies to follow up on audit findings and issue a management decision to ensure the recipient, the Office, takes appropriate and timely corrective action (2 CFR §200.513[c]). Further, it requires that federal awarding agencies’ management decisions clearly state whether or not the audit finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action, as directed by the federal awarding agencies (2 CFR §200.521). 2 Arizona Department of Emergency Military Affairs (DEMA), State Human Resources Administration. (2007, October). DEMA Directive 20.1, section 1.3. Retrieved 9/13/2023 from https://dema.az.gov/sites/default/files/2023-08/20.1_State_Human_Resources_Administration_20071001.pdf.
Allowable Costs – Ryan White Part B HIV Care Formula Grants – Federal Assistance Listing Number 93.917; Award Period: Year ended June 30, 2022; Pass-through entity names: Virginia Department of Health and Northern Virginia Regional Commission Recommendation: We recommend the Organization implement a process to first record time into the payroll system based on timesheets, then further implement a review process to compare the payroll register hours to the approved timesheets. Views of Responsible Officials: The auditee agrees with this recommendation and has taken the necessary steps to prevent a re-occurrence. Lack of timesheets and pay rates resulted in the inability to show that time and payroll were accurately recorded. This resulted in additional procedures during the audit process being performed to obtain reasonable assurance over these balances. Criteria: Per 2 CFR §200.430(i), non-federal entities are required to maintain records that accurately reflect work performed. These records must be supported by a system of internal control which provides reasonable assurance that the time being charged is accurate, allowable and properly allocated, are incorporated in the official records, such as payroll records, reasonably reflect the employee’s total activity, provide a time or percentage breakdown on all activities, both federally and non-federally funded, for the employee, and comply with the non-federal entity’s pre-established accounting practices and procedures. Condition: The Organization allowed payroll related costs to be submitted for reimbursement under the grant for time that did not match approved timesheets. This is not in compliance with program allowable cost requirements. Cause: There is a lack of review of payroll registers to compare to timesheets to ensure the proper amount of hours are submitted for reimbursement. Effect: The Organization billed the incorrect amount of payroll and related costs to the federal program, resulting in questioned costs. Questioned Costs: The amount of payroll and related costs discovered to be incorrect was a net amount of $25, which when projected onto the remaining payroll and related costs that were not tested, amounted to $1,038. Context: Timesheets of numerous employees were found to not match the hours used in calculating payroll to be submitted for reimbursement to the grant.
U.S. DEPARTMENT OF EDUCATION PASSED THROUGH ARKANSAS DEPARTMENT OF EDUCATION COVID-19 ELEMENTARY AND SECONDARY SCHOOL EMERGENCY RELIEF FUND - AL NUMBER 84.425D PASS-THROUGH NUMBER 3505 AUDIT PERIOD - YEAR ENDED JUNE 30, 2022 2022-002. Allowable Cost/Cost Principles Criteria or specific requirement: Office of Management and Budget (OMB) 2 CFR section 200.430 established principles for determining the allowable costs incurred by the District under Federal awards. Such costs are to conform to the established written policy of the non-federal entity consistently applied to both federal and non-Federal activities. Condition: In our sample of payroll expenditures, we identified undocumented compensation of $7,685 and improperly awarded incentive pay of $4,700 paid from Federal funds without proper documentation or requirements. Cause: Lack of internal controls over program expenditures. Effect or potential effect: Unallowable costs of $12,385 were paid from COVID-19 Elementary and Secondary School Emergency Relief funds for additional hours and incentive pay. Questioned costs: The amount of questioned costs was $12,385. Context: An examination of COVID-19 Elementary and Secondary School Emergency Relief Fund payroll expenditures for 25 employees totaling $121,905 from a population of 609 employees totaling $3,869,314. Recommendation: The District should contact the Arkansas Division of Elementary and Secondary Education for guidance regarding this matter and implement proper controls over program expenditures. Views of responsible officials: The District acknowledges the finding and would take this opportunity to explain the circumstances surrounding this material weakness. While not an excuse, it in part explains the conditions under which these instances of undocumented compensation occurred. The District has been impacted by multiple staff changes in the Business Office. The District has employed and/or contracted for payroll services with four (4) persons and for the role of Business Manager with three (3) persons just during this calendar year alone. The District has taken steps to stabilize the workforce in the Business Office. In addition to addressing the human capital issues, the District will provide additional monitoring support to ensure the implementation of the existing internal controls over program expenditures. The District has already taken steps to recoup compensation that was improperly awarded and paid. As recommended, the District will contact Arkansas Division of Elementary and Secondary (DESE) for guidance regarding this matter.
U.S. DEPARTMENT OF EDUCATION PASSED THROUGH ARKANSAS DEPARTMENT OF EDUCATION COVID-19 ELEMENTARY AND SECONDARY SCHOOL EMERGENCY RELIEF FUND - AL NUMBER 84.425D PASS-THROUGH NUMBER 3505 AUDIT PERIOD - YEAR ENDED JUNE 30, 2022 2022-002. Allowable Cost/Cost Principles Criteria or specific requirement: Office of Management and Budget (OMB) 2 CFR section 200.430 established principles for determining the allowable costs incurred by the District under Federal awards. Such costs are to conform to the established written policy of the non-federal entity consistently applied to both federal and non-Federal activities. Condition: In our sample of payroll expenditures, we identified undocumented compensation of $7,685 and improperly awarded incentive pay of $4,700 paid from Federal funds without proper documentation or requirements. Cause: Lack of internal controls over program expenditures. Effect or potential effect: Unallowable costs of $12,385 were paid from COVID-19 Elementary and Secondary School Emergency Relief funds for additional hours and incentive pay. Questioned costs: The amount of questioned costs was $12,385. Context: An examination of COVID-19 Elementary and Secondary School Emergency Relief Fund payroll expenditures for 25 employees totaling $121,905 from a population of 609 employees totaling $3,869,314. Recommendation: The District should contact the Arkansas Division of Elementary and Secondary Education for guidance regarding this matter and implement proper controls over program expenditures. Views of responsible officials: The District acknowledges the finding and would take this opportunity to explain the circumstances surrounding this material weakness. While not an excuse, it in part explains the conditions under which these instances of undocumented compensation occurred. The District has been impacted by multiple staff changes in the Business Office. The District has employed and/or contracted for payroll services with four (4) persons and for the role of Business Manager with three (3) persons just during this calendar year alone. The District has taken steps to stabilize the workforce in the Business Office. In addition to addressing the human capital issues, the District will provide additional monitoring support to ensure the implementation of the existing internal controls over program expenditures. The District has already taken steps to recoup compensation that was improperly awarded and paid. As recommended, the District will contact Arkansas Division of Elementary and Secondary (DESE) for guidance regarding this matter.
SIGNIFICANT DEFICIENCY 2022-010 Education Stabilization Fund ? Higher Education Emergency Relief Fund ? 84.425 ? Allowable Costs or Cost Principles Criteria or specific requirement Per 2 CFR section 200.430(i), charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. They also must support the distribution of the employee?s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award, a Federal award and non-Federal award, an indirect cost activity and a direct cost activity, two or more indirect activities which are allocated using different allocation bases, or an unallowable activity and a direct or indirect cost activity. Condition Admin expenses reported under the program did not have proper supporting documentation to reflect the salary or wages associated with the specific grant activities. Cause The College has not been required to make use of such records in the past with other grants or funding; therefore, they were not aware of this requirement associated with the HEERF program. Effect Inaccurate payroll costs may be reported under the program. Context The total amount of admin expenses is $7,200. Recommendation We recommend that the College review its controls and ensure that controls are implemented that meet Federal requirements related to payroll documentation. Views of responsible officials and planned corrective actions See corrective action plan.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is 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.