Finding 1181652 (2025-001)

Finding 2025-001: Period of Performance and Allowability Federal Agency: Department of Health and Human Services Federal Division: National Institutes of Health Federal Program: Research and Development (R&D) Cluster (ALN 93.866) Federal Award Year: September 15, 2017 – May 31, 2024 Federal Award Number: R01AG057725 Criteria Section 2 Code of Federal Regulations (CFR) 200.309, states that costs charged to a federal award must be incurred during the approved period of performance. Section 2 CFR 200.403, indicates that costs must be allowable under Federal awards. CFR 200.303, states the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition, including proper perspective We sampled 50 University R&D procurement transactions aggregating $5,834,093 and identified one instance where the vendor was paid despite the services not being performed and outside the federal award’s period of performance. Costs in the amount of $286,140 were determined to be unallowable and outside of the period of performance. Total procurement expenditures within the University’s R&D program aggregated $166,760,329. Cause and Effect The control in place over period of performance was not operating at a level of precision to prevent or detect non-compliance. There was insufficient review and monitoring of vendor invoices by the departmental management to ensure that costs were incurred within the approved period of performance which resulted in costs being incurred on the award after the period of performance ended. Questioned Costs There are known questioned costs of $468,555, inclusive of $286,140 direct costs and $182,415 indirect costs. Sampling The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding in the Prior Year No. Recommendation We recommend that the University reinforce its policies and internal controls over grant expenditure review. Specifically, expenditures should be verified for compliance with the grant period of performance and confirmation that services were performed. Periodic training for staff responsible for grant administration is also recommended. Views of Responsible Officials The University accepts this finding and has removed the questioned costs from the award. Management will reinforce and reiterate our internal controls around 2 CFR 200 to the staff. Management will provide targeted 2 CFR 200 training to the impacted department.