“Surviving an Audit”(or: Everyday things you can do that will both

improve sponsored project management AND reduce audit findings)

Al WillieOffice of Internal Audit

Today’s Objectives: Share what Internal Audit looks at when

planning and conducting a typical sponsored project audit

Review some of the more common audit findings from audits of the past 1½ years

Discuss “best practices” used by University units to manage sponsored projects

How Are Specific Sponsored Projects Selected For Audit?

• Financial Impact award amount $ amount of expenditures in the audit period

• Federal vs. Non-Federal high priority given to federally sponsored projects

• Active Projects vs. Closed almost always select active projects

• “Nature” of Expenses Are Considered salary, equipment, travel, subcontracts, types of

supplies are reviewed

• A typical audit of an academic department will include 2-3 sponsored projects; a college audit 3-5 projects

What Risks & Activities Are Covered In An Audit?

• Eligibility of Project Personnel FIRST/RCR training, chemical/radiation, human

subjects, animals

• Unallowable Expenses Administrative/clerical staff, postage, phone,

photocopies, etc. OMB Circular A-21 provides the general guidelines

• Compliance With Specific Provisions of the Sponsor or the Proposal Cost sharing Matching Program income (properly accounted for & reported,

correct method)

What Risks & Activities Are Covered In An Audit? (cont’d)

• Effort Reporting Ensure that salary is equal to effort certified Timeliness of the certification process Mandatory and voluntary committed cost share

commitments are met Effort decreases >25% are approved by the sponsor PI has certified some effort on the project during the grant

year reviewed Effort commitments are being met Cost sharing is not excessive NIH salary cap compliance

• Human Subjects Proper IRB approvals have been obtained Consent form used is approved Form signed by the participant and the person performing

the consent process

What Risks & Activities Are Covered In An Audit? (cont’d.)• Animals

IACUC approvals obtained Purchases were made per University policy

• Subcontract Payments Contract/agreement on file defining roles and responsibilities Payments properly supported and made per the

contract/agreement Discuss with PI how progress is monitored and payments approved

• Technical Reporting to the Sponsor• Transaction Testing

Sample of transactions charged to the project are selected and tested

PV, TP, IX, IV, JV, PCard are all considered IX charges to sponsored project accounts are thoroughly reviewed Allowable and allocable Proper coding and approvals Timely processing Proper justifications

Common Findings From Recent Audits

14 Reports Since 7/1/06 Contained 49 Sponsored Project Issues

• Effort Reporting Most Common – 12Effort not certified or late (6), effort <

proposed (4), effort not equal to payroll (4), salary > NIH salary cap (3), late HSAs (2)

• Disbursement Policy Compliance – 9Proper justifications (8), not processed timely

(6), unallowable expenses (4), not properly approved (4), inaccurate object codes (4)

Common Findings From Recent Audits (cont’d.)

• Human Subjects – 6Consent form issues (4), subject payment

procedures (3), inventory for items distributed (3), privacy/PHI (2)

• Sponsor Notification & Reporting – 9Project delays, work scope changes,

reduction in effort, change in key personnel, late technical reports

• Other Inappropriate cost transfers, REPA/ROC

issues, subcontracts, allocation of expenses, record retention

Best Practices • Ongoing tracking of PI effort to ensure

effort commitments are being met• Periodic monitoring of match accounts

to ensure the match amounts are being expended throughout the life of the project and are on target to meet the commitment

• Others?

Cornerstones of an Effective Compliance Culture

• Certified Approver program• Effort reporting by those with first-

hand knowledge of the effort to be certified

• Rigorous standards for cost transfers

Conclusions:• “Surviving an audit” shouldn’t be the goal;

appropriate management of sponsored project funding should be

• Being aware of the major risks facing sponsored project management, and developing processes and controls into your daily routines to address those risks, will make the audit process much easier and at the same time help minimize risks to the University

Questions?

Internal Audit Website: http://www1.umn.edu/audit/Index.html