POST-AWARD FINANCIAL POST-AWARD FINANCIAL COMPLIANCECOMPLIANCE

Presented by:Presented by:

Jerry Fife,Jerry Fife,Assistant Vice Chancellor for Research Finance, Assistant Vice Chancellor for Research Finance,

Vanderbilt University, Vanderbilt University, jerry.g.fife@vanderbilt.edujerry.g.fife@vanderbilt.edu

Ted Mordhorst, Ted Mordhorst, Assistant Director for Post Award Compliance, Assistant Director for Post Award Compliance, University of Washington, University of Washington, tedm2@u.washington.edutedm2@u.washington.edu

IntroductionIntroduction

COMPLIANCE:COMPLIANCE:

The legal and ethical conduct of The legal and ethical conduct of sponsored projects or programs.sponsored projects or programs.

This includes both the This includes both the administrative and technical administrative and technical conduct of the project or conduct of the project or program.program.

Workshop GoalWorkshop Goal

Participants will: Participants will: gain a greater understanding of the gain a greater understanding of the

post award compliance issues we all post award compliance issues we all face.face.

be provided with a tool for assessing be provided with a tool for assessing and monitoring the various areas of and monitoring the various areas of compliance.compliance.

Compliance – Why?Compliance – Why?

Maintains relationship of TRUST Maintains relationship of TRUST with sponsorswith sponsors

Provides for proper stewardship Provides for proper stewardship to safeguard investments in to safeguard investments in research.research.

It is the right thing to do!It is the right thing to do!

What are the Risk Factors?What are the Risk Factors?

Withholding of future awards.Withholding of future awards.

Audit findings/cost disallowancesAudit findings/cost disallowances

Criminal, civil and administrative Criminal, civil and administrative penalties.penalties.

Loss of administrative flexibility.Loss of administrative flexibility.

What are the Risk Factors?What are the Risk Factors?

Reputation with sponsors, Reputation with sponsors, donors, legislators, staff, faculty donors, legislators, staff, faculty and students.and students.

Public embarrassment.Public embarrassment.

Loss of public confidence.Loss of public confidence.

Financial MismanagementFinancial Mismanagement

Incorrect reporting of time and Incorrect reporting of time and effort.effort.

Not accounting for or reporting Not accounting for or reporting program income.program income.

Improper allocation of costs.Improper allocation of costs.

Financial MismanagementFinancial Mismanagement

Inconsistent/improper Inconsistent/improper accounting of F&A costs.accounting of F&A costs.

Last minute cost transfers.Last minute cost transfers.

Improper payments to Improper payments to subcontractors.subcontractors.

Federal Sentencing GuidelinesFederal Sentencing Guidelines

One One significant aspect of the Guidelines is significant aspect of the Guidelines is that each organization is responsible for that each organization is responsible for the wrongful acts of its employees as long the wrongful acts of its employees as long as the employees were acting in their as the employees were acting in their official capacity.official capacity.

The theory is that the organization shares a The theory is that the organization shares a degree of culpability if an employee acts in an degree of culpability if an employee acts in an unlawful manner, unlawful manner, even if the organization even if the organization did not know of or approve of their actions. did not know of or approve of their actions.

Federal Sentencing GuidelinesFederal Sentencing Guidelines

1.1. the absence of proper internal the absence of proper internal controls, controls,

2.2. knowing participation by high level knowing participation by high level management, management,

3.3. previous violations, previous violations,

4.4. lack of anti-fraud procedures and lack of anti-fraud procedures and

5.5. the absence of ethics training.the absence of ethics training.

Important factors upon which Important factors upon which organizations will be judged by the organizations will be judged by the federal government include:federal government include:

What can we do?What can we do?

Initiate or maintain a proactive Initiate or maintain a proactive compliance program.compliance program.

The NIH Office of Inspector The NIH Office of Inspector General suggested compliance General suggested compliance program guidelines.program guidelines.

NIH - OIGNIH - OIG

Compliance Program Guidance Compliance Program Guidance (CPG)for Recipients of NIH Research (CPG)for Recipients of NIH Research Grants Grants The purpose of this guidance will be to assist The purpose of this guidance will be to assist

organizations in preventing fraud and abuse organizations in preventing fraud and abuse and in better complying with Federal and in better complying with Federal requirements. We anticipate that the guidance requirements. We anticipate that the guidance for recipients of NIH research grants will for recipients of NIH research grants will contain seven elements that we consider contain seven elements that we consider necessary for a comprehensive compliance necessary for a comprehensive compliance program. These seven elements include: program. These seven elements include:

NIH – OIG NIH – OIG (continued)(continued)

Implementing written policies Implementing written policies and procedures that foster an and procedures that foster an institutional commitment to institutional commitment to stewardship and compliance;stewardship and compliance;

Designating a compliance Designating a compliance officer and compliance officer and compliance committee;committee;

Conducting effective training Conducting effective training and education; and education;

NIH – OIG NIH – OIG (continued)(continued)

Developing effective lines of Developing effective lines of communication;communication;

Conducting internal monitoring Conducting internal monitoring and auditing;and auditing;

Enforcing standards through Enforcing standards through well-publicized disciplinary well-publicized disciplinary guidelines: guidelines:

NIH – OIG NIH – OIG (continued)(continued)

Responding promptly to detected Responding promptly to detected problems, undertaking corrective problems, undertaking corrective action, and reporting to the action, and reporting to the appropriate Federal agency.appropriate Federal agency.

NIH is also considering an eighth NIH is also considering an eighth element, ``Defining roles and element, ``Defining roles and responsibilities and assigning responsibilities and assigning oversight responsibility, '' that would oversight responsibility, '' that would include a discussion of the importance include a discussion of the importance of effectively delegating oversight of effectively delegating oversight authority. authority.

Where to Begin?Where to Begin?

Identify areas that most Identify areas that most commonly result in non-commonly result in non-compliancecompliance

Review recent audit results.Review recent audit results.

Review agency audit plansReview agency audit plans

DHHS PILOT AUDITSDHHS PILOT AUDITS

1.1. Direct Charging of Clerical and Direct Charging of Clerical and Administrative SalariesAdministrative Salaries

2.2. Cost TransfersCost Transfers

3.3. Cost Sharing/MatchingCost Sharing/Matching

4.4. Sub recipient MonitoringSub recipient Monitoring

5.5. EffortEffort

The DHHS OIG’s office plans to The DHHS OIG’s office plans to conduct pilot audits at universities conduct pilot audits at universities in five areas.in five areas.

Risk Management PlanRisk Management Plan

Key component of institutional Key component of institutional defense - “due diligence”.defense - “due diligence”.

Used to mitigate institutional Used to mitigate institutional risk to an acceptable level.risk to an acceptable level.

Risk AssessmentRisk Assessment

RISK – An uncertainty that could RISK – An uncertainty that could impact the institution’s ability to impact the institution’s ability to achieve it’s goals and objectives.achieve it’s goals and objectives.

Identify areas of Risk.Identify areas of Risk. Develop a MatrixDevelop a Matrix

Borrowed from the University of Texas at San Antonio web site Borrowed from the University of Texas at San Antonio web site with permission from Donna Holmeswith permission from Donna Holmes

The Risk MatrixThe Risk Matrix

In the left hand column, Identify In the left hand column, Identify activities with the greatest risk.activities with the greatest risk. Examples: Allowable costsExamples: Allowable costs

?? ?? ??

In the rows identify the risk factors.In the rows identify the risk factors. Example for allowable costs: Costs Example for allowable costs: Costs

charged to a grant are not allocable to the charged to a grant are not allocable to the grant.grant.

Areas used to Evaluate Risk levelAreas used to Evaluate Risk level

Balance size of population in Balance size of population in dollars, (materiality).dollars, (materiality).

Size of area. Overall budgetary Size of area. Overall budgetary responsibility.responsibility.

Responsibility for federal funds.Responsibility for federal funds.

Areas used to Evaluate Risk levelAreas used to Evaluate Risk level

Employee turnover.Employee turnover.

Level of automation.Level of automation.

Extent of decentralization.Extent of decentralization.

Areas used to Evaluate Risk levelAreas used to Evaluate Risk level

Segregation of duties.Segregation of duties.

Applicability of external laws, Applicability of external laws, regulations and terms & regulations and terms & conditionsconditions

Areas used to Evaluate Risk levelAreas used to Evaluate Risk level

Frequency of audit.Frequency of audit.

Audit finding historyAudit finding history

Interest shown by outside Interest shown by outside constituents.constituents.

Basis for Determining ComplianceBasis for Determining Compliance

Federal regulations: OMB Federal regulations: OMB Circulars, FAR, etc.Circulars, FAR, etc.

Award Terms & ConditionsAward Terms & Conditions Non-federal Terms & ConditionsNon-federal Terms & Conditions Institutional Policies and Institutional Policies and

Procedures, CASProcedures, CAS Ethical ConductEthical Conduct

Monitoring PlanMonitoring Plan

Area to be assessedArea to be assessed Specific risksSpecific risks Risk RatingRisk Rating Regulatory BasisRegulatory Basis Institutional PolicyInstitutional Policy Person ResponsiblePerson Responsible

Monitoring MatrixMonitoring Matrix

Operating controlOperating control Evidence of controlEvidence of control Supervisory ControlSupervisory Control Evidence of controlEvidence of control Oversight ControlOversight Control Evidence of controlEvidence of control

Training MatrixTraining Matrix

Who to trainWho to train Level of knowledge requiredLevel of knowledge required Frequency Frequency TrainerTrainer Testing methodTesting method

Reporting MatrixReporting Matrix

Activity to be reportedActivity to be reported Type of information to be Type of information to be

reportedreported Frequency of ReportingFrequency of Reporting Recipient of reportRecipient of report

Key ComponentsKey Components

Written Policies & Written Policies & ProceduresProcedures

AssessmentAssessment

TrainingTraining

Anonymous reportingAnonymous reporting

Wrap-UpWrap-Up

Questions?Questions?

ResourcesResources

University Compliance web pagesUniversity Compliance web pages

Agency OIG web pagesAgency OIG web pages

NCURA and (SRA)NCURA and (SRA)