Finding Text
2024-001 Activities Allowed or Unallowed and Allowable Costs / Cost Principles
Research and Development Cluster:
National Institutes of Health:
Institutional Career Development Costs (ALN 93.350, grant number 5 UL1 TR001866)
Statistically valid sample: No, and it was not intended to be.
Repeat finding: Not a repeat finding.
Finding Type: Noncompliance
Criteria:
Non-federal entities should ensure that costs are reasonable and necessary for the performance of the Research and Development effort identified in the applicable award.
In accordance with the documentation standards of 2 CFR section s200.430(i), costs of compensation for personal services are allowable to the extent total compensation for individual employees:
a. Is reasonable for the services rendered and conforms to the established written policy of the non-federal entity consistently applied to both federal and non-federal activities;
b. Follows an appointment made in accordance with a non-federal entity’s rules or written policies and meets the requirements of federal statute, where applicable; and
c. Is determined and supported as provided in 2 CFR section 200.430(i), including the charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed.
Condition and context:
In April 2024, University management became aware that a full-time employee of the University was concurrently employed by Duke-NUS Medical School in Singapore since early 2021. The employee had not previously disclosed to the University his affiliation with, and income from, Duke-NUS Medical School, including on his financial conflict of interest in research disclosure forms that the University requires all researchers to complete and in various documents and certifications in connection with several National Institutes of Health (NIH) grants, which supported a portion of his salary.
The University retained external legal counsel to conduct an investigation. After this investigation by external counsel, several actions were taken. First, the University stopped drawing NIH grant funds to support this employee’s salary. The employee’s employment ended. The University conducted a financial conflict of interest in research review as to the employee’s previously undisclosed significant financial interests for the period 2021 to 2024, and other payments from Duke-NUS Medical School, dating back to 2019 and found no evidence that the design, conduct, or reporting of the employee’s NIH-funded work at the University had been adversely affected. Lastly, the University informed NIH of the matter and offered to repay half of the employee’s salary, fringe benefits, and indirect cost recovery charges that had been charged to NIH grants during the time period from January 2021 through May 2024. The proposed repayment amounts to $299,805.
The amount charged to NIH grants during fiscal year 2024 was $178,084.
Cause:
The employee failed to disclose to the University that he was concurrently employed by Duke-NUS Medical School including on his financial conflict of interest in research forms that he was required to complete and in documents and certifications in connection with various NIH grants that supported his salary.
Effect:
Because the University assumed when calculating the employee’s salary that he was a full-time employee of the University and drew from NIH grants on that basis, but in reality, he was also working at Duke-NUS Medical School, some of the employee’s salary, related fringe benefits and indirect cost charges likely were unallowable under federal grant principles.
Questioned Costs:
The likely questioned costs are $178,084. Known questioned costs are indeterminable.
Recommendation:
The University should continue to communicate to University investigators the importance of accurately completing the financial conflicts of interest in research disclosure forms pursuant to applicable, long-standing University policies.
Views of Responsible Officials:
The University recognizes the seriousness of this matter, involving a former employee who accepted employment and worked at Duke-NUS Medical School in Singapore, without disclosing to the University this concurrent position. Under the University’s Code of Conduct, all members of the University community should conduct themselves ethically, honestly, and with integrity in all dealings and should act with due recognition of their position of trust with respect to the University’s research sponsors. Upon discovering that the employee had a concurrent employment at Duke-NUS, the University acted responsibly in investigating the matter and taking appropriate action, including notifying NIH, offering repayment, and fully cooperating with NIH. No internal controls or protocols were compromised as a result of this matter.