SUMMARY OF UNIVERSITY AUDITS, SETTLEMENTS AND INVESTIGATIONS RELATED TO FEDERAL PROGRAMS For Educational Purposes Only

SEPTEMBER 13, 2016 CHARLENE BLEVENS, [email protected]

Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only

Contents 2016 ...................................................................................................................................................................................... 17 Columbia University .............................................................................................................................................................. 17 Manhattan U.S. Attorney Announces $9.5 Million Settlement with Columbia University For Improperly Seeking Excessive Cost Recoveries In Connection With Federal Research Grants ........................................................................ 17 Starting in fiscal year 2009, in lieu of paying rent for use of one of the NYSPI Buildings, the Department of Neuroscience paid NYSPI a portion of the inflated indirect cost recoveries it received from NIH for research projects performed in that building. ............................................................................................................................................... 18 Columbia University .............................................................................................................................................................. 18 The auditors questioned $1,2 M of costs claimed on 53 NSF awards. ............................................................................. 18 Finding 1 – Exceeded NSF Limits on Senior Salary ............................................................................................................ 18 $774K in salary, fringe benefits and overhead on 34 NSF awards is questioned. Columbia relied on an informal November 2010 Frequently Asked Questions (FAQ) document on Proposal Preparation and Award Administration. .. 18 Finding 2 – Unreasonable Equipment, Materials and Supplies Charges .......................................................................... 19 Finding 3 – Unsupportable and unallocable Transactions $31K on 3 awards. ................................................................. 20 Finding 4 – Unreasonable or Unallowable Transactions .................................................................................................. 20 $25K related to five awards. ............................................................................................................................................. 20 Finding 5 – Transactions after Award Expiration .............................................................................................................. 21 Finding 6– Purchases more than 90 days before Award Effective Date ........................................................................... 21 University of Texas at Austin................................................................................................................................................. 21 The auditors identified minor deficiencies in the Consortium’s management of award funds and NASA’s oversight of the grant’s cost matching verification. Specifically, the Consortium inappropriately awarded $2.5K in scholarships to students who were not U.S. citizens and failed to adequately track required cost matching. ........................................ 21 Univeristy of Washington ..................................................................................................................................................... 22 The auditors questioned $ 2M of costs claimed on NSF awards. Specifically, the auditors noted $1.8M in senior personnel salary charges that exceeded NSF’s two-month limit ..................................................................................... 22 Finding 1 – Exceeded NSF Limits on Senior Salary ............................................................................................................ 22 Finding 2 – Unreasonable Equipment, Materials and Supplies Charged to 19 NSF Awards $123K ................................. 22 University of Miami ............................................................................................................................................................... 24 OIG review of a 3-year, $2.45 million research grant NASA awarded in 2014 for Earth science research ..................... 24 The auditors identified $264K in payments the University made to a vendor that lacked adequate support. .............. 24 2015 ...................................................................................................................................................................................... 25 Stanford University ............................................................................................................................................................... 25 The auditors questioned $337K of costs claimed on 54 NSF awards. Specifically, the auditors noted $124K in senior personnel charges that exceed the NSF two-month salary limit; ..................................................................................... 25 Finding 1 – Exceeded NSF Limits on Senior Salary ............................................................................................................ 25 Finding 2 – Unreasonable and Unallowable Travel Costs $44.5K ..................................................................................... 26 Finding 3 – Unsupported Allocation of Costs.................................................................................................................... 29 Finding 4 – Improperly Charged or Inadequately Documented Costs.............................................................................. 29 Finding 5 – Cost Transfer Due to Overrun ........................................................................................................................ 29 Carnegie Melon University.................................................................................................................................................... 29 The auditors questioned $149.6K of costs claimed on NSF awards. Specifically, the auditors noted senior personnel salary that exceeded NSF’s two-month limit; ................................................................................................................... 29 Finding 1: Salary Costs Exceed NSF’s Allowable Limits $109K .......................................................................................... 29 Finding 2: Unallowable Additional Compensation............................................................................................................ 29 Finding 3: Unallowable Airfare Expenses .......................................................................................................................... 30 Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Finding 4: Unallowable Relocation Expenses.................................................................................................................... 30 Florida State University ......................................................................................................................................................... 31 The auditors questioned $568K of costs claimed on 18 NSF awards. Specifically, the auditors noted $444.9K in senior personnel charges that exceed the NSF two-month salary limit. ..................................................................................... 31 Finding 1 – Exceeded NSF Limits on Senior Salary ............................................................................................................ 31 Finding 2 – Unreasonable Equipment, Materials and Maintenance Charges .................................................................. 31 Finding 3 –Unallocable Computer and Parking Charges ................................................................................................... 32 Finding 4 – Unreasonable Travel and Supply Expenditures - Foreign Conference with an additional trip to a collaborator that was disrupted by a natural disaster...................................................................................................... 32 Finding 5 – Expenditures Near Award Expiration ............................................................................................................. 34 Indiana University ................................................................................................................................................................. 34 The auditors questioned $830K of costs claimed on 53 NSF awards. Specifically, the auditors noted $744K in senior personnel salary that exceeded NSF’s two-month limit; .................................................................................................. 34 Finding 1 – Exceeded NSF Limits on Senior Salary $744K ................................................................................................. 34 Finding 2 - Unreasonable or Unallocable Transactions .................................................................................................... 34 Finding 4 – Unreasonable Travel Expenses ....................................................................................................................... 35 Finding 5 – Unallocable Immigration Fees ........................................................................................................................ 35 Other Matters- two awards with charges occurring more than 90 days prior to the award effective date. ................... 36 Northeastern University ....................................................................................................................................................... 36 Northeastern University to Pay $2.7 Million for Failing to Account for Federal Research Funds - The OIG’s largest civil investigative recovery of NSF award funds. .......................................................................................................................... 36 Wheeling Jesuit University .................................................................................................................................................... 37 Federal grant fraud claims settled with Wheeling Jesuit University $2.3M ..................................................................... 37 The settlement, resolves False Claim Act violations that the United States was prepared to pursue. ............................ 37 The affidavit alleged that the University and McAteer fraudulently diverted federal funds to maintain non-federal aspects of the university and McAteer's law firm. ........................................................................................................... 38 University of California San Diego......................................................................................................................................... 39 Nonpayroll Administrative and Clerical Costs................................................................................................................... 39 Review of nonpayroll costs as part of a series of OIG reviews to determine whether selected colleges and universities claimed administrative and clerical costs in accordance with Federal requirements. ..................................................... 39 (1) Costs for temporary employees of a recharge center that were not adequately supported. .................................... 40 (2) Costs for goods and services that were not allocable to the HHS awards .................................................................. 40 (3) Office supply costs that were improperly charged as direct costs,............................................................................. 40 (4) Excess F&A costs for a capital expenditure ................................................................................................................. 40 University of Wisconsin at Madison ..................................................................................................................................... 41 The auditors questioned $1,2M in senior personnel salary that exceeded NSF’s two-month limit; $192.7K of unreasonably allocated leave accrual payouts; ................................................................................................................ 41 Finding 1: Salary Costs for Senior Personnel That Exceeded NSF’s Two-Month Maximum for Salary Allocation $1.3M 41 Finding 2: Leave Accrual Payouts Unreasonably Allocated to NSF Awards ...................................................................... 41 Finding 3: Methodology Used to Allocate Equipment Expenses Not Proportional to the Benefits Received ................. 42 Finding 4: Expenses Incurred after the Grant’s Period of Performance Had Expired ...................................................... 42 Finding 5: Unreasonable Consulting Expense ................................................................................................................... 42 Finding 6: Unallowable Relocation Expenses.................................................................................................................... 42 Finding 7: Unreasonable Travel Expenses......................................................................................................................... 43 Finding 8: Late Effort Certifications .................................................................................................................................. 43 University of California at Berkley ........................................................................................................................................ 43 The auditors questioned $1.9M of costs claimed on 97 NSF awards. Specifically, the auditors noted $1.6M in senior personnel salary that exceeded NSF’s two-month limit; .................................................................................................. 43 Finding 1 – Exceeded NSF Limits on Senior Salary ............................................................................................................ 44 Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Finding 2 – Unreasonable Equipment Charges ................................................................................................................. 44 Finding 3 – Unreasonable or Unallowable Transactions .................................................................................................. 45 Finding 4: Unallowable or Unreasonable Meal Expenditures .......................................................................................... 45 Finding 5 – Unreasonable Travel....................................................................................................................................... 45 Finding 7 – Purchases Before Award Effective Date ......................................................................................................... 46 University of Florida .............................................................................................................................................................. 46 Finding 1 – Exceeded NSF Limits on Senior Salary ............................................................................................................ 47 UF relied on an informal November 2010 Frequently Asked Questions (FAQ) ................................................................ 47 Finding 2 – Travel and Services Performed After Award Expiration ................................................................................. 48 Finding 3: Unsupportable and Unallocable Transactions ................................................................................................. 49 Finding 4 – Unreasonable Equipment Charges ................................................................................................................. 49 Finding 6 – Unallowable Meal Expenses and Associated Services ................................................................................... 51 Finding 7 – Unreasonable Travel Expenses ....................................................................................................................... 52 Finding 8 – Foreign Currency Conversion Error ................................................................................................................ 52 University of Kentucky .......................................................................................................................................................... 52 In an FBI Press Release issued February 5, 2015 a former mining engineering professor at the University of Kentucky, admitted in federal court that he defrauded the University out of tens of thousands of dollars, in items and services. Tao, 54, pleaded guilty to one count of wire fraud. ......................................................................................................... 52 • From 2008 to 2013, Tao allegedly created fake invoices totaling more than $62,000 for travel, hotels and meals. He allegedly billed the university and consulting clients for the same expenses. ................................................................. 52 • Tao allegedly fabricated or changed invoices related to consulting work totaling more than $31,000. ...................... 52 University of Alaska Fairbanks .............................................................................................................................................. 53 With respect to oversight of contingency expenditures, the auditors found that the University did not have the required documentation to support approval for ten change order requests totaling nearly $4.8 million. ................... 53 2014 ...................................................................................................................................................................................... 54 University of California Irvine ............................................................................................................................................... 54 HHS OIG Issues First Audit Report on Pilot Payroll Certification System .......................................................................... 54 Reconciliation Methodology ......................................................................................................................................... 54 Columbia University .............................................................................................................................................................. 55 The University admitted to Mischarging Federal Grants and agreed to pay more than $9M to resolve false claims lawsuit. .............................................................................................................................................................................. 55 Whistleblower Lawsuit brought by Former Director of Finance for ICAP, Craig Love ...................................................... 56 Lawsuit alleged that for several years the Mailman School of Public Health wrongly charged many grants awarded to the center for work that did not relate to the funded projects. Effort reports for nearly 200 individuals were not created and verified by the individuals. The Finance Department provided information for the reports and the PI’s certified large batches of reports, without inquiring whether the allocation of work among the grants was accurate. ICAP also charged for an individual’s time spent writing grant proposals. ...................................................................... 56 University of Illinois Champaign ........................................................................................................................................... 56 Summer Salary .............................................................................................................................................................. 56 Cost Transfers ............................................................................................................................................................... 57 Travel............................................................................................................................................................................. 57 Also question was no-show room fees. ........................................................................................................................ 58 University of California, Los Angeles ..................................................................................................................................... 58 Performance Audit ............................................................................................................................................................ 58 Overcharged Summary Salaries ........................................................................................................................................ 59 Auditors Finding ................................................................................................................................................................ 59 Unreasonable Salary Expense Charged to an Award – Retroactive Payment .................................................................. 60 Memorial Sloan-Kettering ..................................................................................................................................................... 61 Unallowable Extramural Construction Costs Related to a NIH Recovery Act Grant......................................................... 61 Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Virginia Polytechic Institute & State University .................................................................................................................... 61 Incurred Cost Audit ........................................................................................................................................................... 62 Costs Not Adequately Documented.............................................................................................................................. 62 Foreign Housing and Subsistence ................................................................................................................................. 63 Cost not Treated Consistently –Laptop and Printer Cartridges .................................................................................... 63 University of California, San Diego........................................................................................................................................ 63 Administrative and Clerical Payroll Costs ......................................................................................................................... 63 Costs not Consistently Treated ..................................................................................................................................... 64 Award was not a Major Project & Applicable Credits Not used to Offset Allowable Cost ........................................... 64 After the Fact Effort Report Not Certified .................................................................................................................... 65 A University Department Did not Follow Federal Guidelines and University Policy for Reporting Improper Governmental Activity .................................................................................................................................................. 65 University of California, Santa Barbara ................................................................................................................................. 65 Review of Draft Audit Report 12-1-005 - NSF Management Decision pertaining to 6 audit findings and administratively closed audit report ............................................................................................................................................................ 65 Resolution of NSF Incurred Cost Audit 12-1-005 released 10-28-2012 with 6 findings totaling $6,325,483. .................. 65 Finding 1: Overcharged Summary Salaries over $1.9M, Reduced to 0 in Audit Resolution ............................................. 65 Finding 2: Over $2.8 Million in Unfulfilled Cost Share Requirement, Reduced to 0 in Audit Resolution ......................... 66 Finding 3: Approximately $500,000 of Inappropriate Cost Transfer. Not reviewed, Administratively Closed under Audit Report 12-1-005 ................................................................................................................................................................ 66 Finding 5: $440,000 of Unallowable Costs Charged to NSF Grants, Reduced to 38,320 in Disallowance ........................ 67 Finding 6: UCSB Used $180,000 of Remaining Fellowship Funds for Non-Award Purposes, Reduced to 0 in Audit Resolution ......................................................................................................................................................................... 68 New York University.............................................................................................................................................................. 68 New York University Incurred Cost Audit ......................................................................................................................... 68 $75,494 of costs questioned related to unallowable indirect costs, unreasonable foreign travel and equipment purchases made at the end of a grant’s period of performance and unallowable conference fees. .............................. 68 University of Houston (Profesors)......................................................................................................................................... 69 Houston Professors charged with making false statement and wire transfer fraud. ....................................................... 69 University of South Florida ................................................................................................................................................... 69 Claimed Cost Audit ............................................................................................................................................................ 69 Administration and Clerical Costs ..................................................................................................................................... 70 Twenty-seven questioned transactions were for salary costs for administrative and clerical work such as ordering supplies, performing general information technology work, and supervising data collections. ..................................... 70 Three questioned costs related to payments that the auditors found were in excess of the employees’ supported salary rates. ....................................................................................................................................................................... 70 The auditors also questioned salary for an employee hired for the sole purpose of distributing key chains for a large diabetes related clinical trial. ............................................................................................................................................ 71 Transactions for general-use supplies such as toner, computers, and tablet computers, were questioned. ................. 73 02/12/14 ............................................................................................................................................................................... 74 University of Eastern Michigan University ............................................................................................................................ 74 Develop new procedures of immediately notify NEH or other federal funder of any PI or Institutional Grant Administrator staffing changes to ensure that past-due notices or other automated communications are delivered to valid email addressed. ...................................................................................................................................................... 76 2013 ...................................................................................................................................................................................... 76 11/27/13 ............................................................................................................................................................................... 76 New: Shaw University ........................................................................................................................................................... 76 Shaw University Employee Sentenced for Government Grant Theft Scheme ................................................................. 76 Wayne State University......................................................................................................................................................... 77 Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Wayne State University Claimed Allowable Costs Under National Institutes of Health Grant No. R01NS039860 .......... 77 09/26/13 ............................................................................................................................................................................... 77 Cornell ................................................................................................................................................................................... 77 Audit of Direct Costs, Recovery Act Funds, Pension Costs Associated with the National Astronomy & Ionosphere Center (NAIC) .................................................................................................................................................................... 77 Questioned costs totaled $794,221. The University disputed 60 of the 86 questioned transactions which were primarily associated with the allowability of office supplies and information technology expenses. ............................. 77 Supplies - A large majority of the questioned costs related to computer or computer-related expenses. ................. 78 Recharge Centers - Auditor’s findings related to directly charged transactions for office supplies which should have been treated as F&A costs. ........................................................................................................................................... 79 General- The majority of the questioned costs related to documentation of participant support. ............................ 79 Foreign Travel - Auditors findings included costs that (1) exceeded the maximum allowable per diem rate; (2) were incurred outside the authorized travel dates; (3) were for unallowable expenses (e.g., alcohol and laundry); (4) were not reasonable; and (5) were not adequately documented. ........................................................................................ 80 Clerical and Administrative - Less than 1% of the estimated questioned costs related to clerical and administrative in unlike circumstances. .................................................................................................................................................... 80 John Hopkins Bayview Medical Center ................................................................................................................................. 81 Costs claimed under NIH Contract were Generally Allowable. ........................................................................................ 81 Wayne State University......................................................................................................................................................... 82 Wayne State University Claimed Allowable Costs Under National Institutes of Health Grant No. R01NS064976 .......... 82 Emory University to Pay $1.5 Million to Settle False Claims Act Investigation ................................................................ 83 Allegation: University Overbilled Medicare and Medicaid for Patients Enrolled in Clinical Trial Research at Emory’s Winship Cancer Institute............................................................................................................................................... 83 United States of America and State of Georgia ex rel. Elizabeth Elliott v. Emory University, et al., Civ. No. 1:09-cv-3569AT ...................................................................................................................................................................................... 83 Northwestern University....................................................................................................................................................... 83 Northwestern University to Pay Nearly $3 Million Settlement related to False Claims. Bennett .................................... 83 Allegations: Federal grants billed for family trips, meals, hotels and consulting fees benefitting Dr. Bennett, his friends and family. ........................................................................................................................................................ 83 SUSC Professor Accused of Grant Fraud at Previous Job .................................................................................................. 84 A University of South Carolina research professor, who holds one of USC's endowed chairs, is accused of misusing federal grant money at his previous job. ...................................................................................................................... 84 Morgan State University ....................................................................................................................................................... 84 Morgan professor accused of grant money kickback scheme.Manoj Kumar Jha............................................................. 84 Univeristy of Colorado Denver .............................................................................................................................................. 85 Audit of Selected Costs ..................................................................................................................................................... 85 Hourly Salary Costs – Lack of Sufficient Support .............................................................................................................. 85 Indirect Costs Charged as Direct ....................................................................................................................................... 85 Lack of Documentation – One Transaction....................................................................................................................... 86 Unallocable Costs .............................................................................................................................................................. 86 Thomas Jefferson University ................................................................................................................................................. 86 Audit objective-to determine whether selected costs that Jefferson charged HHS awards were allowable. ................. 86 Salary Costs-Documentation............................................................................................................................................. 86 Office supplies and general use equipment that should have been charged as F&A. ..................................................... 87 Transactions unallowable for the grants they were charged. .......................................................................................... 87 Individual membership in a professional organization..................................................................................................... 87 University of Wisconsin -Madison ........................................................................................................................................ 87 NSF contracted with DCAA to perform an incurred cost audit of $218.8 million of interim incurred direct costs claimed on UW-M’s IceCube project. ............................................................................................................................................. 87 Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Internal Control Findings................................................................................................................................................... 87 Rebudgeting of Sub awards to Service Agreements without NSF Approval..................................................................... 87 Improperly charging an employee’s relocation cost as a direct cost. .............................................................................. 88 CAS 501 violation on treatment of Indirect Cost .............................................................................................................. 88 Lack of Segregation and Accounting for Contingency Funds ............................................................................................ 89 Morgan State University ....................................................................................................................................................... 90 Morgan State University Professor, Manoj Kumar Jha, Indicted in Scheme to Defraud the NSF. ................................... 90 University of California, Santa Barbara ................................................................................................................................. 91 Audit of Incurred Costs ..................................................................................................................................................... 91 Finding 1: Overcharged Summary Salaries over $1.9M .................................................................................................... 91 Finding 2: Over $2.8 Million of Excess Federal Cash Disbursements Resulted From Not Fulfilling Grant Cost Share Requirements .................................................................................................................................................................... 91 Finding 3: Approximately $500,000 of Inappropriate Cost Transfers into NSF Awards ................................................... 92 Cost Transfer made 6 months after award expired ...................................................................................................... 92 Finding 4: Over $473,000 of Indirect Cost Overcharges to NSF Grants ............................................................................ 93 Finding 5: $440,000 of Unallowable Costs Charged to NSF Grants .................................................................................. 93 Finding 6: UCSB Used $180,000 of Remaining Fellowship Funds for Non-Award Purposes ............................................ 95 Awardee Response and OIG Comments ........................................................................................................................... 95 08/28/12 ............................................................................................................................................................................... 95 State University of New York (Suny) Research Foundation .................................................................................................. 95 Audit of clerical, administrative and extra service compensation expenditures. ............................................................ 95 Administration and Clerical Expenses as Direct ................................................................................................................ 95 Extra State Compensation Earned in Same Department as Regular Duties Performed ................................................... 96 The Foundation’s position was that the faculty member's job title did not allow for any release time to conduct research and that his role on the sponsored award was in addition to and outside of his official job responsibilities. The auditors maintained that the expenditure was unallowable because the faculty member earned it while working for the same department for which he performed his regularly appointed duties. ........................................................ 96 Florida State University ......................................................................................................................................................... 96 Audit of select costs charged directly to HHS awards ...................................................................................................... 96 Administrative and Clerical Findings ................................................................................................................................. 96 General Use Supplies-Lab Supplies Charged to Award ................................................................................................. 97 Salary Costs-Researcher who Managed Zebra Fish Facility Direct Cost of Award ............................................................ 97 Salary Costs Lack of Documentation ................................................................................................................................. 98 Insufficient documentation for Student Registration Fees............................................................................................... 98 Graduate Student Compensation paid in Excess of NRSA Stipend Level and First Year Post Doc ................................... 98 Questioned Service Center Costs ...................................................................................................................................... 99 Rate Charged not designed to Recover Cost of Services .............................................................................................. 99 Unallowable Cost for Memberships and Office Supplies ............................................................................................. 99 Use of Space Survey to Determine Activities in Lab ..................................................................................................... 99 Lack of Biennial Review ............................................................................................................................................... 100 Computer Purchases - Transactions not Reasonable ..................................................................................................... 100 On one award the University requested 10 computers in the award budget but purchased 15. According to the University the computers were needed to accommodate additional recruits working on the project and were used solely to collect study data however, the PI told the auditors that the extra computers were purchased as backups in case one broke down during a presentation. ................................................................................................................. 100 Audit of Costs Claimed and Cost Share on 5 Awards ...................................................................................................... 100 Finding 1 – Incurred Costs not Supported by Adequate Documentation and Lack of Approval for Unmet Participant Support Costs--University of Notre Dame (UND) ........................................................................................................... 101 Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Finding 2 – Lack of Documentation to Support Incurred Costs related to Subaward at the University of Chicago (UC) ........................................................................................................................................................................................ 102 Finding 3 – Lack of Documentation and Unallowable Costs for Participant Support and Travel Costs related to Subaward at Michigan State University (MU)....................................................................................................................... 103 San Diego State Research Foundation/El Centro School District........................................................................................ 103 Michael P. Klentschy, pleaded guilty to mail fraud charges in two related cases alleging fraud in elementary school math and science grants. ................................................................................................................................................ 103 University of Pennsylvania .................................................................................................................................................. 104 Former Penn State Professor Charged in $3 Million Federal Research Grant Fraud – Sentenced 41 months .............. 104 John Hopkins University ...................................................................................................................................................... 105 Audit of NSF $32.8 M cooperative agreement ............................................................................................................... 105 Finding 1 - Post-Subaward Fiscal Monitoring of Sub grantees should be improved. ..................................................... 105 Auditors opinion on reliance on external audits for determining risk........................................................................ 106 Finding 2 - Inadequate Supporting Documentation for Costs Charged to the Grant Internal Service Charges ............. 106 Finding 3 - Unsupported Sub grantee Costs (Record Retention) .................................................................................... 106 Finding 4 - Improper Application and Recovery of Indirect Costs by the Sub grantee. .................................................. 107 NEW: Ohio State University ................................................................................................................................................ 108 Audit of Administrative and Clerical Costs...................................................................................................................... 108 State University of New York Research Foundation ........................................................................................................... 108 Audit review of administrative, clerical, and extra service compensation expenditures claimed as direct costs. ........ 108 Expenditures did not solely benefit sponsored agreement............................................................................................ 108 Computer Purchases at the End of the Project........................................................................................................... 108 Purchase of a laptop computer................................................................................................................................... 108 Promotional giveaways ............................................................................................................................................... 108 Expenditures for office supplies.................................................................................................................................. 109 Expenditures required no unusual degree of clerical support. ...................................................................................... 109 Extra service performed on duties not related to sponsored agreement ...................................................................... 109 06/28/11 ............................................................................................................................................................................. 110 North Central Carolina University ....................................................................................................................................... 110 State Auditor ....................................................................................................................................................................... 110 The former executive director of a minority program headquartered at NC Central University diverted $1 million to a checking account for payments to herself and others over a six-year period in a money skimming scheme. .............. 110 Boston University ................................................................................................................................................................ 111 Cooperative Agreement with 13 Partners .......................................................................................................................... 111 Finding 1: Did not have a formal plan for monitoring subawardees. ............................................................................. 111 Finding 2: BU does not have adequate internal controls to ensure that cost share is properly identified, recorded, reported and monitored. Deficiencies: ........................................................................................................................... 112 Finding 3: System of internal controls over the personnel and payroll function not adequate: ................................... 113 Ohio State University .......................................................................................................................................................... 114 Cooperative Agreement -31 Sub awards ........................................................................................................................ 114 Finding 1- In adequate Subawardee Monitoring ............................................................................................................ 114 Lack of policies and procedures over subawardee selection and monitoring................................................................ 114 Finding 2 – Inadequate Controls for Meeting Cost Share Commitments- not adequately monitored .......................... 115 Finding 3 – Inadequate Controls for Meeting Participant Support Cost Commitments – not identified, segregated and monitored. ...................................................................................................................................................................... 116 Finding 4 - Inadequate Effort Reporting System ............................................................................................................. 116 Finding 5 – Inadequate Polices, Procedures and Training – not adequate to ensure compliance................................. 116 North Carolina Central University ....................................................................................................................................... 117 Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Internal Control Review. North Carolina Central University, NCCU, selected for audit based on past internal control weakness and subsequent activities that NSF auditors became aware of. .................................................................... 117 Lack of Adequate Internal Control for Budgeting and Accounting, including Participant Support Costs. ..................... 117 University & Federal Travel Policies Not Followed. ........................................................................................................ 117 Lack of Adequate Control over Equipment Purchases. .................................................................................................. 118 Global Positioning System (GPS) for robots purchased instead of computers outlined in the proposal. .................. 118 Laptops Purchased used in Department ..................................................................................................................... 118 Payroll and Fringe Benefits Procedures Not Followed. .................................................................................................. 118 Inadequate Accounting and Reporting of Indirect Costs. ............................................................................................... 118 Fixed Assets Physical Inventory Deficiencies. ................................................................................................................. 118 Lack of Compliance with NCCU's Own IT General Controls. ........................................................................................... 119 Inadequate Internal Controls over NSF Grant Compliance Requirements for Cost Share and Conflict of Interest. ...... 119 Wilberforce University ........................................................................................................................................................ 119 Theft: Former University Official, Marshal, Sold Computer Items Bought with Federal Grant...................................... 119 Cornell Weill Medical College ............................................................................................................................................. 120 Qui Tam Lawsuit Brought by Post Doc Fellow in NIH Training Grant for a career in research in the neuropsychology of HIV/AIDS.......................................................................................................................................................................... 120 Defendant Argument .................................................................................................................................................. 121 10.01.10 .............................................................................................................................................................................. 121 Cornell Appeal of Fraud ...................................................................................................................................................... 121 Cornell was found to have violated three of five charges under the False Claims Act and ordered to pay $887,714 in total damages. ................................................................................................................................................................ 121 South Carolina State University .......................................................................................................................................... 121 S.C. State University could not account for $25 million in federal earmarks ................................................................. 121 California Institute of Technology ....................................................................................................................................... 122 Follow up to NSF Effort Audit ......................................................................................................................................... 122 University of Delaware........................................................................................................................................................ 122 NSF Effort Audit .............................................................................................................................................................. 122 Audits found that Internal Controls over Effort Reporting System Need Improvement – ............................................. 122 Finding: Salaries and Wages charged to the NSF did not always benefit grants or were incorrectly charged to NSF grants. ............................................................................................................................................................................. 122 Finding: Employees were not sufficiently educated on the salary distribution and effort reporting processes. .......... 123 Finding: System weaknesses were not identified and corrected in a timely manner .................................................... 123 University of Missouri - Columbia ....................................................................................................................................... 123 Audit of internal control over financial reporting and monitoring of subawardees. ..................................................... 123 Finding 1: Subawardee Monitoring Recommendations ................................................................................................. 124 Finding 2: University does not have adequate internal controls and safeguards in place to adequately process all labor cost transfers to ensure that labor effort certifications are properly recertified. ......................................................... 124 University of Buffalo ........................................................................................................................................................... 125 A former University of Buffalo Researcher, William Fals-Stewart, was arrested Feb. 16 on multiple charges of attempted grand larceny, perjury, identity theft, offering a false instrument and falsifying business records. ........... 125 Washington University St. Louis ......................................................................................................................................... 126 NSF Effort Audit .............................................................................................................................................................. 126 The audit did not identify any specific deficiencies concerning labor effort reporting. The audit did identify areas of concern. .......................................................................................................................................................................... 126 The University did not require effort training for all campuses. .................................................................................... 126 Effort system not fully integrated for all personnel to include academic, administrative, and research effort. ........... 126 The need to provide cleaner guidance on how to process significant prospective changes to salary distribution. ...... 126 Lack of Comprehensive Internal Evaluation of Effort Reporting .................................................................................... 127 Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only University of Nevada - Reno ............................................................................................................................................... 127 NSF Effort Audit .............................................................................................................................................................. 127 Salaries Exceed Two-Month Salary Limitation ................................................................................................................ 127 Cost Transfers without Adequate Justification ............................................................................................................... 127 Cost Transfers Processed during Last Month of Grant ................................................................................................... 127 Salary Charges for Employees that did not benefit the Projects .................................................................................... 127 Tuition Remission Costs .................................................................................................................................................. 127 Cost Share Effort Not Reflected on Report ..................................................................................................................... 128 Did not Perform Independent Internal Evaluation ......................................................................................................... 128 Employee Training for Key Officials Not Mandatory ...................................................................................................... 128 Stony Brook University Research Foundation .................................................................................................................... 128 NSF Effort Audit .............................................................................................................................................................. 128 Effort Reports Not Certified by Person with Suitable Means of Verification ................................................................. 128 State funded activities were not ways included on an integrated basis as required by federal regulations ................. 129 Lack of Written Justifications and Explanations on Labor Cost Transfer ........................................................................ 129 Unallowable Costs Incorrectly Charged .......................................................................................................................... 129 Lack of Independent Evaluation...................................................................................................................................... 130 University of Wisconsin....................................................................................................................................................... 130 Improvements Needed in the Payroll Distribution and Effort Reporting System .......................................................... 131 The University did not have a training policy until the implementation of the new ECRT effort reporting system .. 131 Employee Training For Key Officials Was Not Mandatory .......................................................................................... 131 Suitable Means of Verification Requires Definition .................................................................................................... 131 University of Michigan ........................................................................................................................................................ 132 Audit of large Center awards which continued over an extensive period of time and had significant cost sharing, and substantial subaward, consultant, equipment and participant support costs ............................................................... 132 Lack of Effective Record Retention System for Maintaining Source Documentation. ................................................... 132 Lack of Adequate Centralized Monitoring Control. ........................................................................................................ 133 Lack of Procedures for Monitoring and Enforcing Labor Certification and Effort .......................................................... 133 Lack of Written Job Description for a Key Position Related to an NSF Program ............................................................ 134 Purdue University................................................................................................................................................................ 134 NSF Effort Audit .............................................................................................................................................................. 134 Internal Controls over Purdue University’s Labor Effort Charging Can be strengthened............................................... 134 Additional Concerns for the New On-line System .......................................................................................................... 135 Cornell University ................................................................................................................................................................ 135 NSF Effort Audit .............................................................................................................................................................. 135 Labor Effort Certification System Not in Compliance with OMB Circular A-21 .............................................................. 135 Suitable Means of Verification. ....................................................................................................................................... 135 Group Certifications. ....................................................................................................................................................... 136 Auditors Comment on Management Response to Internal Audit on Effort ............................................................... 136 No Documentation of Discussions with PI to Validate Effort Performed ................................................................... 136 Some of the more significant improvements noted by the auditors: ........................................................................ 136 Other Matters to be reported......................................................................................................................................... 137 Certification Frequency ............................................................................................................................................... 137 Auditor Recommendations ............................................................................................................................................. 137 Georgia Institute of Technology.......................................................................................................................................... 138 NSF Effort Audit .............................................................................................................................................................. 138 Identified as Significant Internal Control Weakness. ...................................................................................................... 138 Prospective Changes ....................................................................................................................................................... 138 Cost Transfers ................................................................................................................................................................. 138 Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Auditors Recommendations ....................................................................................................................................... 139 Southern Illinois University Edwardsville (SIUE) ................................................................................................................. 139 Indictment of Assistant Program Director in “Talent Search” program for wire fraud, misapplication of funds from programs receiving federal funds, and obstructing justice. ........................................................................................... 139 Southern Illinois University Edwardsville (SIUE) ................................................................................................................. 139 Audit of use of TRIO program funds and participant eligibility. ..................................................................................... 139 Did not serve the required minimum number of Talent Search (TS) participants; ........................................................ 139 Failed to provide adequate documentation for TRIO personnel costs; ......................................................................... 140 Unallowable Costs – Field Trips ...................................................................................................................................... 140 Unallowable Costs – Gift Cards or Other Gifts ................................................................................................................ 141 Other Unallowable Costs ................................................................................................................................................ 141 Inadequately Documented Costs .................................................................................................................................... 141 Failed to maintain adequate TRIO participant records................................................................................................... 141 Cornell Weill Medical College ............................................................................................................................................. 141 $2.6 Million to Settle Civil Charges; Whistleblower........................................................................................................ 141 Committed Effort – PI failed to disclose full extent of various research projects .......................................................... 142 UC San Francisco ................................................................................................................................................................. 142 Review of Admn and Clerical Costs - Substantially complied. Minor clerical errors ..................................................... 142 University of Maryland Baltimore ....................................................................................................................................... 142 Theft of $469,000 from University Visa Card.................................................................................................................. 142 University of Florida ............................................................................................................................................................ 142 Federal Investigators Allege Fraudulent Submission of Invoices.................................................................................... 142 UCLA School of Medicine .................................................................................................................................................... 143 Theft - Former Head of Willed Body Program sentenced to jail..................................................................................... 143 University of Central Florida ............................................................................................................................................... 143 Theft using Purchasing Card ........................................................................................................................................... 143 Duke University ................................................................................................................................................................... 143 Review of Administrative Costs – Pilot Audit.................................................................................................................. 143 Salary Costs - University had not adequately documented that the grants, contracts, or other agreements met the definition of “major projects.” ........................................................................................................................................ 143 Examples of other administrative costs from the sample that Auditors considered unallowable. ............................... 144 OIG Comment on Use of Extrapolation .......................................................................................................................... 144 Yale University .................................................................................................................................................................... 145 $7.6 Million Settlement, False Claims & Common Law Allegations in Management of Federally Funded Research Grants (3.8 Actual and 3.8 Punitive) ............................................................................................................................... 145 Cost Transfers not adequately explained and documented ........................................................................................... 145 Time & Effort Summer Salary.......................................................................................................................................... 145 University of Louisville ........................................................................................................................................................ 145 Former U. of Louisville Dean Is Sentenced to More Than 5 Years .................................................................................. 145 10/24/08 ............................................................................................................................................................................. 146 University of Louisville ........................................................................................................................................................ 146 Indictment U of L Education Dean Felner ....................................................................................................................... 146 UofL lost $576,000. ......................................................................................................................................................... 146 Vanderbilt ........................................................................................................................................................................... 147 NSF Effort Audit .............................................................................................................................................................. 147 Significant Internal Control Finding ................................................................................................................................ 147 Effort Certified ............................................................................................................................................................ 147 Approval Time ............................................................................................................................................................. 147 Certification Date ........................................................................................................................................................ 147 Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Tolerance Range.......................................................................................................................................................... 147 Salary Charges to NSF ................................................................................................................................................. 147 Summer Salary, amounts charged did not match effort ................................................................................................ 147 Hold Senior Management Accountable. ......................................................................................................................... 148 St. Louis University .............................................................................................................................................................. 148 St. Louis University Agrees to pay $1 Million to Settle Federal False Claims Act Allegations ........................................ 148 Florida Agricultural and Mechanical University (FAMU) .................................................................................................... 148 10/16/08 ............................................................................................................................................................................. 149 Former FAMU Director McGill pleads guilty to conspiracy and theft from federal programs charges.......................... 148 Former FAMU Director Sentenced to 46 months in federal prison................................................................................ 149 University of California, San Diego (UCSD) ......................................................................................................................... 149 NSF Effort Audit .............................................................................................................................................................. 149 1) Late Effort Reports and Timeliness ............................................................................................................................. 149 2) Lack of Formal Written Timeliness Standards & Accountability by Senior Managers ............................................... 149 3) Independent Internal Evaluations .............................................................................................................................. 149 4) Administrative Time Charged to NSF Awards ............................................................................................................. 149 5) Salary Exceeding NSF Faculty Salary Limitations or UCSD’s Incentive Award Policies ............................................... 149 6) Incentive Award not pro-rated to all funding sources................................................................................................ 150 7) Voluntary Committed Labor Effort ............................................................................................................................. 150 University of Illinois Urbana ................................................................................................................................................ 150 NSF Effort Audit .............................................................................................................................................................. 150 Certification does not include total employee workload. .............................................................................................. 150 Late Effort Reports and Timeliness ................................................................................................................................. 150 Lack of Formal Written Timeliness Standards & Accountability by Senior Managers .................................................... 150 Independent Internal Evaluations................................................................................................................................... 151 Establish a Level of Tolerance ......................................................................................................................................... 151 University of California, San Francisco ................................................................................................................................ 151 Audit of Administrative and clerical expenses as direct costs to National Institutes of Health grants. No Recommendations. ......................................................................................................................................................... 151 North Central Carolina University ....................................................................................................................................... 151 A North Carolina Central University administrator has been reassigned after a state audit revealed he had skimmed about $15,000 from federal research grants to pay his credit card bills. ....................................................................... 151 Georgia Tech ....................................................................................................................................................................... 152 $316,000 Personal Pro-Card Expenditures on Grant ...................................................................................................... 152 University of Utah ............................................................................................................................................................... 152 1) Lack of Formal Written Timeliness Standards & Accountability by Senior Managers ............................................... 152 2) Establish a Level of Tolerance ..................................................................................................................................... 153 3) Suitable Means of Verification.................................................................................................................................... 153 4) Independent Internal Evaluation ................................................................................................................................ 153 5) Policies & Procedures ................................................................................................................................................. 153 University of Maryland Baltimore County .......................................................................................................................... 153 Audit of Cost Claimed on 4 NSF Awards ......................................................................................................................... 153 Lack of Monthly Review of Expenditures........................................................................................................................ 153 Lack of Monitor Subaward Costs .................................................................................................................................... 154 Lack of Monitor Indirect Costs Claimed .......................................................................................................................... 154 09/06/07 ............................................................................................................................................................................. 154 Brandeis University ............................................................................................................................................................. 154 Audit of Administrative & Clerical Expense .................................................................................................................... 154 The University misclassified a total of $31,303 to NIH. .................................................................................................. 154 Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Select Grants – Review of Graduate Student Compensation ............................................................................................. 154 Review conducted at the request of two Members of Congress. No finding................................................................ 154 University of Iowa Hospitals & Clinics................................................................................................................................. 155 Review of Vendor Rebate Paid to Hospitals ................................................................................................................... 155 Thomas Jefferson University ............................................................................................................................................... 155 Audit of Cost Transfers to Federal Grants....................................................................................................................... 155 University generally documented cost transfers to federally funded grants in accordance with Federal requirements ..................................................................................................................................................................................... 155 California Institute of Technology (Caltech) ....................................................................................................................... 155 NSF Effort Audit .............................................................................................................................................................. 155 Voluntary Committed Labor Effort ................................................................................................................................. 156 Late Effort Reports and Timeliness ................................................................................................................................. 156 Committed PI Effort Reported on Grant Proposals not in Current and Pending Support .............................................. 156 Need to establish a formal requirement for Independent Internal Evaluation.............................................................. 157 Cost Transferred to NSF Grant from an Overspent Federal Award ................................................................................ 157 Georgia State University Research Foundation .................................................................................................................. 157 Cooperative Agreement with 8 Partners ........................................................................................................................ 157 Inadequate Subawardee Monitoring-............................................................................................................................. 157 Inadequate Documentation ............................................................................................................................................ 158 Inadequate Documentation Cost Sharing ....................................................................................................................... 158 New Mexico Title IV-E Contracted University Training Costs (A-06-06-0004) .................................................................... 158 Audit of Training Contacts with New Mexico Highland University, Western New Mexico University, and New Mexico State University ............................................................................................................................................................... 158 In compliance with contract language, Highlands University applied its indirect cost to a cost base, which included equipment and stipends (determined incorrect by the OIG). ........................................................................................ 158 Reimbursement to the Universities for Unallowable Costs............................................................................................ 159 Report to Congress ............................................................................................................................................................. 159 An accounting assistant at a grantee institution responsible for processing payments for federal and non-federal awards was debarred from NSF after conviction of embezzling non-federal funds. ..................................................... 159 Boston University ................................................................................................................................................................ 159 Review of Subaward Costs on NIH Grant Awarded to the prime grantee, Harvard University Medical School ............ 159 Cost Transfer Policy not followed. .................................................................................................................................. 159 Late submission of final invoice to prime. ...................................................................................................................... 160 09/26/06 ............................................................................................................................................................................. 160 University of Hawaii ............................................................................................................................................................ 160 Cooperative Agreement with Required Cost Share ........................................................................................................ 160 Unrealistic Percentages for Allocating Labor Costs Related to Cost Sharing Contributions........................................... 160 Inadequate Supporting Documentation for Subcontract Costs ..................................................................................... 160 New Mexico Highlands University ...................................................................................................................................... 161 Review of Cooperative Agreement with Sub awards & Cost Share ............................................................................... 161 Lack of System to Identify, Account for, Monitor and Report Cost Sharing ................................................................... 161 Lack of Adequate Fiscal Monitoring of Subawardee Costs. Questioned of $81,787 due to lack of supporting documentation................................................................................................................................................................ 161 Inaccurate and Unallowable Expenditure Reporting ...................................................................................................... 161 Tennessee State University ................................................................................................................................................. 161 Professor Indicted on Wire Fraud. Dr. Nye ..................................................................................................................... 161 05/01/07 Barbara Nye, Tennessee State PI Enters Guilty Plea........................................................................................... 161 Former Tennessee State Professor enters guilty Plea. ................................................................................................... 161 09/07/06 Audit of Tennessee State Resulted in Indictment .......................................................................................... 162 Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only 15 Universities..................................................................................................................................................................... 162 Select Agent Audit........................................................................................................................................................... 162 University of Chicago .......................................................................................................................................................... 162 Audit of Cost Transfers.................................................................................................................................................... 162 NSF Effort Audit .............................................................................................................................................................. 163 Finding: Suitable Means of Verification .......................................................................................................................... 163 Finding: Timeliness & Accountability by Senior Managers ............................................................................................. 163 Finding: Independent Internal Evaluations ..................................................................................................................... 163 University of Arizona ........................................................................................................................................................... 163 Review of Cooperative agreement of $16.992M with 12 Sub awards ........................................................................... 163 Lack of controls over Subawardee Cost sharing expenditures. ...................................................................................... 163 Lack of controls over Subawardee costs funded by NSF. ............................................................................................... 163 Inadequate review of consulting expenses. ................................................................................................................... 164 Overcharging of Publication Costs -2% administrative fee ............................................................................................. 164 North Shore University ....................................................................................................................................................... 164 Review of Wage data in Medicare cost report. .............................................................................................................. 164 Review of Maryland Medical Center's Organ Acquisition Costs ..................................................................................... 164 Kentucky Cabinet for Health & Family Services/Eastern Kentucky University ................................................................... 164 Review to determine the allow ability of Title IV-E training costs the State agency claimed ........................................ 164 Howard University .............................................................................................................................................................. 165 Review of Adequacy of Internal Controls and costs charged on NSF grants. ................................................................. 165 Lack of comprehensive policies, procedures, techniques, and mechanisms to effectively manage, account for, and monitor NSF grant funds. ............................................................................................................................................ 165 Insufficient documentation in accounting records. ........................................................................................................ 166 Steven Raper, M.D. University of Pennsylvania .................................................................................................................. 166 Raper.Civil Complaint Filed Against University of Pennsylvania regarding gene therapy trial. ..................................... 166 Massachusetts HHS/ University of Massachusetts ............................................................................................................. 166 Review of University of Massachusetts Medical School ................................................................................................. 166 Administrative Cost Claims ............................................................................................................................................. 166 Administrative Costs Unallowable .................................................................................................................................. 166 Columbia University ............................................................................................................................................................ 167 Review of Cost Sharing – No Finding .............................................................................................................................. 167 Roger Williams Hospital Subawardee University of Massachusetts Medical School ......................................................... 167 Audit of Roger Williams Hospital a Subawardee of the University of Massachusetts Medical School .......................... 167 **Recommended that UMMS reimburse NIH for unallowable costs of Subawardee ............................................... 167 Yale University Subawardee University of Massachusetts Medical School........................................................................ 167 Audit of Yale University a Subawardee of the University of Massachusetts Medical School ........................................ 167 Yale University .................................................................................................................................................................... 168 Three federal agencies served subpoenas on Yale University ........................................................................................ 168 Yale University .................................................................................................................................................................... 168 Yale University .................................................................................................................................................................... 168 University of Miami Rosenstiel School................................................................................................................................ 169 Georgetown University Medical Center ............................................................................................................................. 169 Theft: Departmental Administrator embezzled funds which included allocated research grant money. ..................... 169 University of Connecticut.................................................................................................................................................... 169 $2.5 Million Whistleblower; False Claims Investigation Settlement .............................................................................. 169 Finding: Specialized Service Centers ............................................................................................................................... 169 Finding: Excessive Compensation Summer Salary .......................................................................................................... 169 Finding: Cost Sharing/Matching ...................................................................................................................................... 170 Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Audit of McNair Postbaccalaureate Program ................................................................................................................. 170 Finding No. 1 – ISU provided McNair Project Services and Equipment to Ineligible Students....................................... 170 Did not maintain documentation................................................................................................................................ 170 Inappropriately paid McNair funds to individual not enrolled at ISU......................................................................... 170 Allowed non-McNair participants to use project laptops........................................................................................... 170 Finding No. 2 - A McNair Official Received a Double Reimbursement ........................................................................... 170 Review of Cooperative Agreement based on Anonymous Compliant ........................................................................... 171 Recipient did not allocate expenses to the appropriate Federal grant or cooperative agreement. .............................. 171 The University, in its fiduciary role, did not make sure the Center followed established policies and practices. ......... 171 Dartmouth College .............................................................................................................................................................. 171 Review of Cost Claimed................................................................................................................................................... 171 Overstated Salaries (Labor Distribution)......................................................................................................................... 171 Proposal Costs Charged to NIH Grants ........................................................................................................................... 171 Inadequate Monitoring of Sub recipient Costs ............................................................................................................... 171 Invoices did not contain required approval of sponsored programs manager. ............................................................. 172 09/21/05 ............................................................................................................................................................................. 172 University of Rochester ....................................................................................................................................................... 172 Review of Cost Sharing and Cost Transfers at the University of Rochester (No Findings) ............................................. 172 University of Massachusetts Medical School...................................................................................................................... 172 Review of NIH Grant ....................................................................................................................................................... 172 Recharge & Laboratory Supply Center Charges-Record Retention ................................................................................ 172 Cost Transfers made without Detailed Explanation ....................................................................................................... 172 UC Berkley ........................................................................................................................................................................... 173 Audit of Schedule of Award Costs, Compliance and Subcontracts ................................................................................. 173 Inadequate Monitoring of Subcontract Costs................................................................................................................. 173 Cost Sharing Reporting Deficiencies ............................................................................................................................... 173 Inadequate Travel Documentation & Use of Non-Flag Carrier ....................................................................................... 173 Cornell’s Weill Medical College........................................................................................................................................... 173 $4.4 Million Settlement; DOJ (US Attorney in Manhattan) Whistleblower – Physician Allegations .............................. 173 Over billing NIH grant.................................................................................................................................................. 173 Grant money diverted to pay salaries of employees not associated with grant research. ........................................ 173 Chronicle of Higher Education, June 23, 2005 ................................................................................................................ 173 Cornell’s Weill Medical College........................................................................................................................................... 173 Prosecutor Allegations: ............................................................................................................................................... 173 Florida Agricultural & Mechanical University (FAMU) ........................................................................................................ 174 Settlement and Compliance Agreement $1.4 Million Settlement – Cost Share, Financial Administration ................... 174 NSF Newsletter, September 2005 ................................................................................................................................... 174 Mayo Clinic .......................................................................................................................................................................... 174 $6.5 Million DOJ Settlement; .......................................................................................................................................... 174 Whistleblower from Research Accounting ..................................................................................................................... 174 Allegations: Government was charged for research unrelated to the NIH grants it received ................................... 174 Improper Transfers from Overspent Grants – ................................................................................................................ 174 UTMB Galveston ................................................................................................................................................................. 174 University of Alabama-Birmingham .................................................................................................................................... 174 $3.4 Million DOJ Settlement ........................................................................................................................................... 174 Allegations: Research work overstated; Medicare billed for research funded elsewhere ......................................... 174 George Washington University ........................................................................................................................................... 175 Settlement $1,828,000 with University – False Claims................................................................................................... 175 GWU internal investigation............................................................................................................................................. 175 Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Allegation: Theft of Federal Funds; 3 year Prison Sentence for PI ............................................................................. 175 George Washington University ........................................................................................................................................... 175 George Washington University Adjust Professor Pleads Guilty...................................................................................... 175 Bedewi was charged with embezzling $78,602 in DOT and GWU research funds through illegal stipends and unallowable purchases. Investigation found that Bedewi caused the Center to issue authorized and fraudulent graduate assistant stipends to his wife; and made unauthorized charges using a GWU-issued purchase card. Paul Bedewi is the cousin of Nabih Bedewi, former GWU engineering professor and director of the crash center. ........... 176 Oklahoma Department of Human Services (Finding related to Contracts with State Universities only) ........................... 176 Training Contract with State and State Universities ....................................................................................................... 176 The state agency claimed indirect costs that it did not incur as Medicaid administrative costs. .................................. 176 State of Oklahoma Response (Audit portion pertaining to University Indirect Cost) ........................................................ 176 OIG disagree with the State agency’s position ........................................................................................................... 177 University of Vermont – Poehlman..................................................................................................................................... 177 One of the most expansive cases of Scientific Fraud and first PI to service jail time for fabricating data. .................... 177 University of South Dakota ................................................................................................................................................. 177 Audit of Grants Management and Expenditures on Selected NSF Awards .................................................................... 177 Unallowable costs Claimed ............................................................................................................................................. 177 Finding 1: USD needs to improve its Annual Reporting Process and Management of Sub awards and Subcontracts .. 177 Auditors Noted Growth in Grant Workload Outpaced Resources for Grants Administration ................................... 177 Finding 2. Unallowable Costs Claimed ............................................................................................................................ 178 Consultant’s fee to write a grant proposal and related travel expenses incorrectly charged as direct costs. ........... 178 USD augmented the salaries of two faculty members using grant funds without NSF approval............................... 178 Dakota State University ...................................................................................................................................................... 178 Audit of Grants Management and Expenditures ............................................................................................................ 178 Subcontract Management Needs Improvement ............................................................................................................ 178 Inadequate Grants Management.................................................................................................................................... 178 $11.5 Million Settlement on Allegations of mischarged costs and overbilling ............................................................... 178 Cost Transfers incomplete documentation, grants used as a clearing account, cost transfers after grant had closed. 178 Northeastern University ..................................................................................................................................................... 178 Review of Claimed Costs ................................................................................................................................................. 178 Consultant Agreements not Adequately Documented................................................................................................... 178 Internal control weaknesses relating to the monitoring of sub-recipient costs,............................................................ 179 Submission of untimely financial status reports that were not reconciled to financial records. ................................... 179 State of Maine & University of Maine ................................................................................................................................ 179 Training Contracts with University.................................................................................................................................. 179 East Carolina University ...................................................................................................................................................... 179 Audit of Cost Claimed under National Library of Medicine Contract – .......................................................................... 179 $1.7 Million of costs set aside for adjudication due inadequate documentation & $565,000 Cost Adjustment .......... 179 Clerical and Administrative Costs, Time & Effort ............................................................................................................ 179 Time and Effort Reports based on inconsistent methods, ............................................................................................. 179 06/18/04 ............................................................................................................................................................................. 180 Harvard Medical School & Beth Israel ................................................................................................................................ 180 $2.4 Million Settlement .................................................................................................................................................. 180 Allegation: Government was billed for salaries and expenses unrelated to federal grants........................................... 180 June 18, 2004 Wall Street Journal............................................................................................................................... 180 Northeastern University ..................................................................................................................................................... 180 Review of Cost Claimed for Reimbursement on Grant awarded by NIH, National Eye Institute ................................... 180 San Diego State Foundation ................................................................................................................................................ 180 Audit to evaluate Additional Employment Policy allowing overload Compensation ..................................................... 180 Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Finding: Overload compensation charged without required specific agency approval. ................................................ 180 3. CSU had obtained a ruling from their cognizant federal awarding agency, ....................................................... 180 University of Washington ................................................................................................................................................... 181 $35 million settlement for Medicare and Medicaid over billing – allegations by UW billing-compliance officer ......... 181 John Hopkins University ...................................................................................................................................................... 182 $2.6 DOJ Million Settlement ........................................................................................................................................... 182 Allegation: Faculty time and effort devoted to NIH grants was overstated. .................................................................. 182 Chronicle of Higher Education, March 12 2004 .............................................................................................................. 182 University of South Florida ................................................................................................................................................. 182 $4 million to the federal government for inappropriately spending research grants and failing to properly record purchases. ....................................................................................................................................................................... 182 Northeastern University ..................................................................................................................................................... 182 Unsupported direct labor and fringe benefits ................................................................................................................ 182 Use of Incorrect Indirect Cost Rate – .............................................................................................................................. 182 Procard Purchases – Purchases not supported by source documents (receipts). .......................................................... 182 05/21/03 ............................................................................................................................................................................. 182 UC Berkeley ......................................................................................................................................................................... 182 Research Management Services Audit ........................................................................................................................... 182 The audit objective was to determine whether the RMS costs were allowable as direct charges to NSF awards. ....... 182 Northwestern University..................................................................................................................................................... 183 $5.5 million, DOJ Settlement-False Claims Act ............................................................................................................... 183 Whistleblower from Office of Research Sponsored Programs ....................................................................................... 183 Review of 10 large research Universities ............................................................................................................................ 184 Review of Indirect Cost Rates at ten large research universities based in part, on an oral request from Congressman Dingell before subcommittee ......................................................................................................................................... 184 40 Hospitals; Stanford, Emory University, Northwestern Memorial, University of Pennsylvania, Baylor University ........ 184 $42 Million, DOJ Settlement with 31 hospitals; Whistleblower False Claims ................................................................ 184 2000-1993 ........................................................................................................................................................................... 184 Carnegie Institute of Washington ....................................................................................................................................... 184 Program Income, Cost Bases........................................................................................................................................... 184 University of Minnesota...................................................................................................................................................... 184 $32 Million Settlement; Qui Tam Case False Claims....................................................................................................... 184 The University agreed to pay 32 million to settle allegations of selling an unlicensed drug and mishandling of NIH Grant Funds. ................................................................................................................................................................ 184 Program Income Issue................................................................................................................................................. 184 Human Subjects Issue ................................................................................................................................................. 184 *Largest settlement recorded for NIH Grants ............................................................................................................ 185 09/24/98 ............................................................................................................................................................................. 185 Tufts University ................................................................................................................................................................... 185 Washington State Department of Social and Health Services (DSHS) ................................................................................ 185 Audit of Training Contract Costs - primarily concerned the contract with Western Washington University (WWU). .. 185 Use of Funds Donated From Private Sources for Matching ............................................................................................ 185 Use of Market Value of Training Services as Federal Participation Instead of Actual Costs Paid .................................. 185 Claimed Costs Associated with Classroom Space Provided in State-Owned Buildings as State Contribution ............... 186 Administrative Costs Claimed by University Covered under HHS Division of Cost Allocation indirect cost agreement unallowable as direct charge. ......................................................................................................................................... 186 The WWU used the indirect cost rate in billings submitted to DSHS for costs incurred under the training contract. Therefore, the salaries and benefits represented a duplication of amounts already charged. ..................................... 186 New York University Medical Center .................................................................................................................................. 186 Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only $15.5 M Settlement, Qui Tam Largest Settlement Amount Involving Research Overhead ........................................... 186 Audit included contracts primarily with Governors State, Sangamon State and Northern Illinois Universities. ........... 186 Administrative Expense Included in Indirect Cost Billed as Direct Costs ........................................................................ 186 University of Colorado ........................................................................................................................................................ 187 A Review of Recharge Centers ........................................................................................................................................ 187 Washington University- St Louis ........................................................................................................................................ 187 Review of University Recharge Centers .......................................................................................................................... 187 University of Utah ............................................................................................................................................................... 187 A Review of Recharge Centers ........................................................................................................................................ 187 University of Iowa ............................................................................................................................................................... 187 A Review of University Recharge Centers ....................................................................................................................... 187 Selected Universities ........................................................................................................................................................... 188 Audit objective – to determine whether graduate student compensation charged to federally sponsored research was reasonable....................................................................................................................................................................... 188 Finding – Universities were not acting prudently considering their responsibilities to the Government and the public at large. ....................................................................................................................................................................... 188 Review of service centers at 12 Universities ...................................................................................................................... 188 Summary Report of Audits of Recharge Centers at 12 Universities - Findings ............................................................... 188 261 Schools ......................................................................................................................................................................... 188 Internal Indirect Cost Reviews Performed by Colleges & Universities – “Self Scrubs”................................................... 188 Appendix A Audit Table....................................................................................................................................................... 189

Issue Date

University/ Gov’t

Funding Agency

Audit Agency (source)

Audit Finding

HHS-OIG US U.S. Attorney New York Settlement Agreement Settlement Agreement

Manhattan U.S. Attorney Announces $9.5 Million Settlement with Columbia University For Improperly Seeking Excessive Cost Recoveries In Connection With Federal Research Grants In connection with the filing of the lawsuit and settlement, the Government joined a private whistleblower lawsuit that had previously been filed under seal pursuant to the False Claims Act.

2016 09/14/16

Columbia University

COLUMBIA admitted that it applied the on-campus indirect cost rate to the 423 NIH grants even though the research was primarily performed in space not owned or operated by Columbia, and that it submitted to NIH certified reports that used the on-campus indirect cost rate to calculate the indirect cost amounts claimed by the university. COLUMBIA had a collaborative relationship with the New York State Psychiatric Institute (“NYSPI”), a clinical Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) research facility administered by the New York State Office of Mental Health. The COLUMBIA faculty performed research in two off-campus buildings owned by the State of New York and operated by NYSPI (the “NYSPI Buildings”). COLUMBIA faculty also performed research in another off-campus building owned and operated by the City of New York (the “City Building”). For most of the relevant period, COLUMBIA did not pay the State of New York for use of the NYSPI Buildings, and therefore did not incur indirect “facilities-related” costs with respect to the medical research performed in these buildings. Similarly, COLUMBIA did not pay the City of New York for use of the City Building. Starting in fiscal year 2009, in lieu of paying rent for use of one of the NYSPI Buildings, the Department of Neuroscience paid NYSPI a portion of the inflated indirect cost recoveries it received from NIH for research projects performed in that building. 07/08/16

Columbia University

NSF

NSF OIG #07-08-16 WithumSm ith+Brown (WSB)

The auditors questioned $1,2 M of costs claimed on 53 NSF awards. Specifically, the auditors noted: $775K in senior personnel salary charges that exceeded NSF’s two-month limit; $344K in unreasonable equipment, materials, and supplies expenses; $31K in unsupportable and unallocable expenses; $26K in unreasonable and unallowable transactions; $22K in transactions after award expiration; and $3K8 in purchases before the award effective date. These questioned costs resulted in six areas identified where Columbia’s controls could be improved to ensure compliance with laws and regulations. Finding 1 – Exceeded NSF Limits on Senior Salary $774K in salary, fringe benefits and overhead on 34 NSF awards is questioned. Columbia relied on an informal November 2010 Frequently Asked Questions (FAQ) document on Proposal Preparation and Award Administration. Columbia argued that its researchers at the Lamont Observatory are appointed as Officers of Research by the University; they are not “faculty,” who are appointed as Officers of Instruction. Officers of Research at Lamont do not receive a regular institutional salary from the University in the same manner as University faculty. Furthermore, salaries of Officers of Research are largely supported by sponsored

Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) research funds, rather than by the general university funds that support salaries for Officers of Instruction. As a result, it is common practice for Lamont researchers to charge a substantial portion of their salaries to grants, including NSF grants. The auditors stated that the FAQ document was nonauthoritative and contradicted the NSF requirement per the AAG which was in effect during the audit period. Columbia did not agree and argued that salary in excess of the two month limitation was budgeted, justified and approved by NSF via incorporation of the budget in the applicable award notification, in accordance with NSF policy as published in its 2009 Proposal and Award Policies and Procedures Guide (PAPPG). A significant portion of the remaining questioned costs result from re-budgeting of senior personnel salaries. Columbia relied on the guidance provided by NSF regarding the ability of institutions to rebudget senior salaries after the award is made. Columbia noted that NSF appears to have supported positions similar to Columbia's by other major research with regard to the application of the NSF policy for senior salary charges. Finding 2 – Unreasonable Equipment, Materials and Supplies Charges The auditors found that equipment, materials, and supply expenses totaling $343,794 charged to 13 NSF awards were not necessary or reasonable in accordance with 2 CFR 220 (OMB Circular A-21). Equipment and Materials Purchases at End of Award The auditors questioned: -$223K on eight awards for equipment purchased near the award expiration. Questioned costs included equipment, purchased in June 2011 on a nine-year award that expired August, 2011. -44K for equipment purchased that was not in the original or revised budget, The purchase represented 13 percent of the total NSF award budget for unplanned equipment with less than 6 months remaining on the award. -$35K of questioned cost related to equipment purchased as a spare in case of unit failure on a 4 year award 4 months before the award expired that was never used for the NSF award. -$20K for purchase of parts that were shipped after the award had expired. Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) -$18K for the purchase of a laser that was received 5 months after the award expired. -$14K, 28% of the cost of the equipment with no explanation for the allocation methodology. The equipment was delivered 6 days before the grant expired. Columbia agreed and reversed the charge. -$13.5K for additional disk storage and a work station that was available in the last 89 days of a 4 year award. Equipment Allocations $70K for equipment purchase by one PI and charged to three awards with equipment budgets of 0. The PI stated that the equipment was not used exclusively by the NSF award to which the purchased was charged. Columbia concurred and reversed the charge. Finding 3 – Unsupportable and unallocable Transactions $31K on 3 awards. Columbia concurred with $22.5K of the unsupported costs but did not concur with $8.8K in housing costs related to rental of 20 rooms for various days. The housing costs were initially charged to another NSF award in May 2011 for administrative convenience. Once the information was available to appropriately allocate the charges, they were allocated between the grants as shown in the supporting documents. Finding 4 – Unreasonable or Unallowable Transactions $25K related to five awards. -$12.6K for the cost of rental accomodations for a PI who gave up his apartment during a sabbatical leave. Columbia concurred and reversed the charge. -$8K for an honorarium where the conference agenda did not contain the individual’s name as a speaker. No formal consulting arrangement or deliverables were provided to the auditors. Columbia concurred and reversed the charge. -$1.3K for excess costs of hosting a dinner for 40 guests, when only 25 were present. Columbia concurred and removed the excess charges. -$1.2K in travel expense for a PI to attend a conference. The PI traveled with his wife and they stayed on after the conference. The PI was missing the rental car receipt and provided his bank statement to show the charge. However, without the rental receipt the auditors were unable to determine if the car was rented for use during the conference only. Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) -$201 for the cost of meals charged for an additional person other than the PI. The PI made notes on the receipts that the meals were business dinners/lunches. The auditors stated that they could not determine if the additional person had submitted the cost of her meal to her University for reimbursement and could not identify if the PI was actually paying for a UC-Riverside employee or his wife. -$755 for the Portland portion of a multi-leg trip for a research presentation at a conference not directly related to the award. -$167 for same-day flight change fees -$17 for the purchase of alcohol. Columbia indicated that it has performed corrective actions to remove $25,069 in costs from the awards in question leaving $922 remaining unresolved. Finding 5 – Transactions after Award Expiration -$22K charged to three awards for travel and equipment after the awards expired. Columbia concurred and reversed the charges. Finding 6– Purchases more than 90 days before Award Effective Date -Questioned $3,198 charged to one NSF award for purchase of a MacBook Pro purchased in March on an award that did not begin until July without NSF approval. Columbia disagreed and argued that the PI's computer ceased working requiring him to immediately purchase another. 02/18/16

University of Texas at Austin

NASA

NASA IG-16013

The auditors identified minor deficiencies in the Consortium’s management of award funds and NASA’s oversight of the grant’s cost matching verification. Specifically, the Consortium inappropriately awarded $2.5K in scholarships to students who were not U.S. citizens and failed to adequately track required cost matching. Management of Consortium’s Matching Funds is Inadequate For example, the Consortium recorded $461,215 as budgeted/proposed for salaries instead of calculating the actual value, which we determined was $442,176. We also found the University did not consistently comply with Consortium bylaws regarding matching funds by failing to contribute $40,000 of the required

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) $50,000 cash match. Finally, the Consortium could not consistently provide adequate support that it had actually matched the required amount. For example, it had no records for 1 year of a member’s required $10,000 annual cash match and lacked support for this same member’s in-kind match for 2 of 5 years. 02/11/16

Univeristy of Washington

NSF

NSF OIG # 161-004

WithumSm ith+Brown (WSB)

The auditors questioned $ 2M of costs claimed on NSF awards. Specifically, the auditors noted $1.8M in senior personnel salary charges that exceeded NSF’s two-month limit; $123K in unreasonable equipment, materials, and supplies expenses; $36K in unsupportable and unallocable expenses; $8.8Kin unreasonable and unallowable expenses; $6,6K in purchases before the award effective date; $2.7K in unallowable meal expenditures; and $1.7K in travel after the award expiration. UW, in its response dated November 25, 2015, reviewed and agreed with the facts for $71,071 in questioned costs. Finding 1 – Exceeded NSF Limits on Senior Salary -$1.8M UW relied on an informal November 2010 Frequently Asked Questions (FAQ) document on Proposal Preparation and Award Administration. UW did not concur with the questioned costs of based on the guidance from the NSF Policy Office, the University determined that the senior personnel salary costs identified in the report were appropriately allocated to NSF awards under institutional post-award rebudgeting authority. Additionally, UW stated the NSF Cost Analysis and Audit Resolution Branch of the Division of Institution and Award Support has sustained the position of institutions of higher education on similar audit findings in several other recent audits. UW believes that it has complied with the express guidance provided by NSF and NSF policies with respect to senior personnel salaries and that questioning these costs is not consistent with NSF policy, previous NSF audit resolutions, and related agency guidance in effect during the time of these expenditures. Finding 2 – Unreasonable Equipment, Materials and Supplies Charged to 19 NSF Awards $123K -$16K for the purchase of a laser system. UW received a laser system on July 30, 2012. Per the PI, the laser system was built for the purpose stated in another

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) Award which expired August 2012, but no cost was allocated to this award. Based on the PI explanation and the date of purchase, the laser system did not benefit Award 0904004 and was not reasonable since it was only available for 3 percent of the NSF grant life (32 out of 1,095 days); $9K for a conductivity, temperature and depth instrument purchased on September 13, 2010 on a four-year award that expired on September 30, 2010. UW explained that the purchase was to replace an instrument that was lost at sea and was needed to continue research after the NSF grant expiration. UW agreed to transfer costs from the award $7K for the purchase of a digitizer received on June 7, 2010 on a five-year award that expired on June 30, 2010. UW stated that the digitizer enabled the building of a firm foundation for a lifetime of contributions to research and education. UW has agreed to transfer the costs from the award; $6.7K for the purchase of a high-speed video camera. UW received the video camera costing $26,888 on July 1, 2010 and charged 25 percent of the total cost to a four-year award that expired on August 31, 2010. The PI stated there was an opportunity to share costs with another lab for purchasing the high-speed camera that was superior to an existing one; however, the equipment was only available for 4 percent of the NSF award grant life. UW agreed to transfer the costs from the award; $5.8K for the purchase of an ultrasound detector. The detector was purchased on August 17, 2012 on a fiveyear award that expired on August 31, 2012. UW argued that the end of a project does not mean that work stops; $4.7K for the purchase of a temperature control system on July 5, 2011 for an award that expired on August 31, 2011. UW stated that the purchase was made to replace a defective unit; • $4.7K for the purchase of an oscillator on July 27, 2012 on a three-year award that expired on August 31, 2012. UW stated the oscillator was needed to develop teaching modules • $3.8K for the purchase of a centrifuge ordered on March 15, 2011 on an award that expired on March 31, 2011. UW stated that the purchase was made to replace a defective centrifuge and • $2.9K for an oscilloscope purchased on June 22, 2011 on an award that expired Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) on August 31, 2011. UW stated that the equipment was on backorder and they had to use a loaner for 6 months until the final product arrived; Computer Purchases - questioned $21.6K charged to seven awards for general-purpose computers purchased near the award expiration that did not appear to benefit the award or that did not appear necessary considering the limited time remaining on the awards. Materials and Supplies We questioned $12K for materials and supplies purchased near the award expiration that did not appear to benefit the award or that did not appear necessary considering the limited time remaining the awards. NASA OIG 01/21/16 University of NASA OIG review of a 3-year, $2.45 million research grant #IG-16-011 NASA awarded in 2014 for Earth science research. The Miami overall audit objective was to determine whether the University used NASA funds for their intended purpose and whether associated costs were allowable, reasonable, and in accordance with applicable laws, regulations, guidelines, and the award’s terms and conditions. The auditors identified $264K in payments the University made to a vendor that lacked adequate support. University of Miami concurred with the finding. During the audit, OIG tested $461K in personnel and non-personnel expenditures to include indirect costs which amounted to 90 percent of the total costs incurred for the research grant at the time of the audit. Out of the $447K in these judgmentally-selected transactions, the auditors identified four transactions to one vendor totaling $264K (59 percent) that were paid by the University based on limited supporting documentation. Specifically, although the accounting packages for these transactions included the associated invoices and documentation showing that the invoices had been entered into the University’s accounting system and reviewed, approved, and paid, the invoices did not adequately identify or support the expenditures. For example, an invoice dated May 11, 2015, referenced two sets of red lenses but did not include a packing slip or any other documentation to support the invoiced amount. Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) The Principal Investigator told us that the invoices reflected payments for completion of 4 of the 16 milestones agreed to between the University and the vendor rather than for specific deliverables. The auditors reviewed proposed work in the contract associated with each milestone; however, the documentation the University provided lacked sufficient detail to support the invoices. Specifically, the milestones were not listed in the contract and the document provided describing the milestones did not contain evidence of review and concurrence by both the University and the vendor. Both OMB and NASA require documentation be maintained to support the allowability of costs charged under a Federal award. Given the limited information contained on the invoices and contract, the University should have obtained additional documentation to support that the expenditures the vendor made to complete the milestones were appropriate. The University obtained additional information from the vendor to support the four questioned transactions, including the number of hours the vendor paid for personnel, material and components, and travel. The auditors found the information sufficient to support the transactions. The auditors stated that going forward, the University should ensure it obtains adequate documentation to support all vendor payments. 2015 09/30/15

NSF

NSF OIG # 151-020

The auditors questioned $337K of costs claimed on 54 NSF awards. Specifically, the auditors noted $124K in WithumSm senior personnel charges that exceed the NSF twoith+Brown month salary limit; $44.5K in travel expenses; $84K in (WSB) allocated not adequately supported $72K for improperly charged or inadequately documented costs; and $12K for a cost transfer related to a potential cost overrun on another NSF award. Finding 1 – Exceeded NSF Limits on Senior Salary SU disagreed with the salary overcharges because they believe that NSF policy that limits salary compensation for senior project personnel is specifically related to pre-award budgeting purposes and re-budgeting is allowed during the post-award portion of the award. Furthermore, they believe NSF policies and subsequent guidance from NSF are clear concerning the charging of Reprinted by permission of Charlene Blevens, [email protected] Page 25 Updated 09/13/2016 Stanford University

Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) senior salary. SU acknowledged they will work with NSF during the audit resolution period to determine if they need to modify administrative and management controls. Finding 2 – Unreasonable and Unallowable Travel Costs $44.5K -$2,826 for the PI to travel to Europe for a conference two months prior to expiration on a three year award, with no foreign travel approved in the budget. The travel to Europe included a vacation in (not charged to the award) prior to the conference. Due to an emergency the PI returned home and missed the conference. Therefore, these costs did not benefit the award, and the necessity of the unbudgeted travel is questionable. SU explained that the PI was scheduled to be a speaker for the conference, which would have benefited the award, and that the cost of the airline ticket should be an allowable expense to this award. SU further explained that Federal Travel Regulations allow for emergency travel, and that qualifies as emergency travel. However, we continue to believe that this travel was not necessary for the award, and had the PI not already used the ticket for vacation purposes, the PI could have canceled the trip and received a credit from the airline due and the Government would not have been charged. -$7,799 of the approximately $29,000 charged to this award for travel, for a PI to travel to be a keynote speaker for a conference which did not appear necessary for this award. This award had its proposed travel budget reduced from $6,000 to only $2,200 per NSF’s request. SU used its rebudgeting authority to charge additional travel and conference costs totaling approximately $29,000. While being selected as a keynote speaker was certainly a nice accolade for the PI and SU, that does not make it reasonable or necessary for the award. Additionally, an SU internal audit identified $2,477 of the $7,799 related to this trip that should not have been charged to this award and an adjustment was made in March 2015. These charges included business class airfare above the economy airfare rate and charges for certain other stop-over days $2,514 for attendance at an annual meeting of an international research society. The traveler was a member of a leadership committee for the society, Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) and therefore these costs appear to be allocable to Departmental funds, not the NSF award. We did not find any evidence attendance at this meeting was necessary for the award. • $736 for visas for travel to and for presentations and meetings with colleagues. There was no international travel budgeted for this award. The PI stated there was extra money left over in student support; therefore the surplus was used for this travel. We did not find evidence that this travel was necessary for the award; therefore, we questioned these visa costs. -$2,471 for travel reimbursement to a graduate student to attend training in which the training did not appear to be specific to the award or within the scope of the award. Although SU indicated that training would result in cost savings in the long run, we noted that the grad student was at a university where the training was held. - $3,208 for unbudgeted travel costs for a graduate student to attend a conference in In its proposal to NSF, SU stated that it would find ways to fund travel and supplies from other sources; however these costs were charged to NSF anyway. Additionally, the travel appeared to cover the period June 1st to June 19th (based on the airline tickets), but the conference ended June 10th. We were not provided any evidence to support the purpose of the remaining portion of the trip, which would also be an indicator that the trip was not necessary for the award. This was the same traveler identified in the first item of this finding. - $815 for travel to for dissertation research for a graduate student that was not identified in the proposal. The travel occurred over the holidays from December 23rd to January 17th. At the time of our audit, SU was unable to provide support for the research conducted by the traveler. Well after our fieldwork, SU obtained and provided additional support from the traveler. We noted a discrepancy in some of the support provided, specifically that the boarding pass indicated a return date of January 11, 2011, while a shipping label and drugstore receipt appeared to indicate the traveler was still in on January 17, 2011. The additional support was therefore not convincing and we are questioning these costs. • $875 for travel occurring on the last three days of a five-year award for the Principle Investigator (PI) to travel to for a conference. These costs were originally charged to Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) other funds and later moved to an NSF award after review of expenses showed that unspent funds remained. The award only had domestic travel in the approved NSF budget. Additionally, we questioned $9,742 of travel costs which SU agreed were erroneously charged or otherwise not supported, and, SU stated they made corrections for, including: • $1,129 for travel costs for a student who SU indicated worked on several NSF awards with a similar scope, but did not work on the NSF award these travel costs were charged to. Therefore, SU agreed to remove the costs from this NSF award. • $2,081 for travel costs for a student who SU indicated worked on several NSF awards with a similar scope, but did not work on the NSF award these travel costs were charged to. Therefore, SU agreed to remove the costs from this NSF award. • $2,497 for travel costs that SU agreed were double charged to an NSF award. SU stated they have taken corrective action to remove the charges. • $281 for travel costs related to the family members of speakers, SU agreed the costs should be removed from the NSF award and stated they have taken corrective action. • $878 in unallowable recruitment/relocation travel expenses charged to one NSF award. This employee split time between this NSF award and another NSF award, and the costs should have been split between the two awards. SU agreed that these costs should be removed from the award, and stated they have taken corrective action to transfer 50 percent ($878) of these costs to an unrestricted account, since the second award had since been closed. • $1,916 of foreign travel costs related to one award for a PI’s expense reimbursement. The travel reimbursement incorrectly calculated the allowable meals and incidentals per diem rate. These improper calculations occurred on three separate per diem line items on the same travel reimbursement for multiple dates and locations, and occurred despite the travel reimbursement being approved by three separate individuals at SU. SU agreed that these were miscalculated in error and stated they have taken corrective action to credit the NSF award for the overcharge. • $960 for a workshop registration and course fee for a graduate student incurred in February 2011. In August 2012, the PI initiated a journal entry to transfer the travel costs associated with this workshop Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) to an unrestricted account, but we were not able to determine if this registration fee was 7 also transferred. SU subsequently agreed the costs should be removed from the award and indicated they have taken corrective action Finding 3 – Unsupported Allocation of Costs We questioned $84,197 for equipment, travel, instrument usage, and lab supplies, representing costs that were allocated to NSF awards using unsupported allocation methodologies. In many instances, the allocation percentage was only the PI’s estimate of expected future use, which appeared to be arbitrary and based on convenience. Finding 4 – Improperly Charged or Inadequately Documented Costs We found inadequately supported or erroneous charges to nine NSF awards totaling $72,375. Stanford agreed that $41,853 of the $72,375 are questioned costs and indicated it has taken corrective actions to remove these charges. Finding 5 – Cost Transfer Due to Overrun

09/28/15

Carnegie Melon University

NSF

NSF OIG #15-1-022 Cotton & Company LLP

The auditors questioned $149.6K of costs claimed on NSF awards. Specifically, the auditors noted senior personnel salary that exceeded NSF’s two-month limit; unallowable additional compensation; unallowable airfare; and unallowable relocation expenses. Finding 1: Salary Costs Exceed NSF’s Allowable Limits $109K On three NSF awards, CMU employees that were identified as senior personnel allocated more than two months (or the maximum number of approved months) of their salaries to the awards within a single year. CMU disagreed with the senior personnel salary overcharges because they believe that NSF policy allows for re-budgeting of funds, including the re-budgeting for additional senior personnel effort. Finding 2: Unallowable Additional Compensation The PI provided a postdoctoral fellow an additional $10,000 above their monthly salary for extra tasks performed within a single month; however, because this fellow was a full-time salaried employee on a federally sponsored project, CMU was not permitted to provide compensation in excess of the base salary divided by the period to which it relates. Therefore, the

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) auditors questioning the additional $10K that this employee received above their monthly salary appointment, as well as all associated fringe benefits and indirect expenses. CMU personnel stated that the university provided the $10,000 of additional compensation to directly reflect additional tasks that the fellow assumed during the month. Specifically, the PI stated that additional work was necessary to perform closeout procedures on various projects related to this NSF award. The auditors stated that In no event may charges to sponsored agreements, irrespective of the basis of computation, exceed the proportionate share of the base salary for that period. Finding 3: Unallowable Airfare Expenses -A foreign-national postdoctoral scholar traveled to present and discuss topics related to research performed under an NSF Award The foreign national’s H1B visa had expired and as he knew that he would not be allowed to re-enter the United States without renewing the visa, he booked an additional flight so that he could renew his visa after attending the conference. The scholar submitted one expense report for reimbursement of all airfare expenses incurred. CMU determined that the additional airfare was reasonable, as the employee could not return to the U.S. without the additional leg of the trip and therefore did not segregate the additional expenses incurred for the trip instead allocating 100% of the total flight expense to the NSF Award. The auditors stated that the additional trip was personal in nature and did not benefit the NSF award, and CMU should therefore not have charged this expense to NSF. -A visiting professor submitted an expense report that included business-class airfare expenses of $5.4K that should not have been charged to the NSF award. -an airline issued a travel credit to the travel agency used by a Professor to book a grant related flight. The auditors found that as the credit was issued to the travel agency rather than to CMU, none of it was applied to either of the NSF awards to which the airfare expense had initially been charged. Finding 4: Unallowable Relocation Expenses The auditors found that relocation fees charged to NSF grants were not related to named individuals identified in the grant proposal and CMU did not obtain specific permission from NSF to allocate relocation expenses for Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) these employees, so they determined that it was not reasonable to charge the fees to these NSF awards. NSF OIG # 15- The auditors questioned $568K of costs claimed on 18 09/28/15 Florida State NSF 1-021 NSF awards. Specifically, the auditors noted $444.9K in University WithumSm senior personnel charges that exceed the NSF twoith+Brown month salary limit. (WSB) Finding 1 – Exceeded NSF Limits on Senior Salary -FSU defines senior personnel in accordance with the NSF definition and has designed its effort reporting system to identify individuals exceeding the two-month limit. In instances where the limit was improperly exceeded, the responsible department is required to transfer the excess costs to a non-sponsored project. For the 12 instances noted, FSU agreed with the auditor’s calculation of the overage. The University did not concur with the auditor’s findings regarding senior personnel costs. Based on the guidance from the NSF Policy Office, the University determined that the senior personnel salary costs were appropriately allocated to NSF awards under the rebudgeting authority. Finding 2 – Unreasonable Equipment, Materials and Maintenance Charges -equipment and maintenance charges related to two awards where the NSF Program Office required budget reductions. Equipment and maintenance was either reduced or eliminated from the budget due to the required funding reductions. The auditors questioned whether it was reasonable or prudent for the awardee to claim equipment charges 82% over the approved equipment budget in the last 46 days before and 67 days after the award expiration. Per FSU, the $49,502 for equipment charges benefited a continuous stream of NSF awards from 2004 to 2017, which comprised funding for the same or very similar scopes of work related to the study of ions. The auditors found that the purchase should have charged to the awards for which they benefited. - The auditors questioned $23,907 charged to three awards for computers purchased near the award expiration that did not appear to benefit the award or that did not appear necessary considering the limited time remaining on the awards. FSU concurred -$7K for the purchase of a freeze dryer, drying chamber, and vacuum pump near the award expiration that did not appear to benefit the award or that did not appear Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) necessary considering the limited time remaining on the award. Finding 3 –Unallocable Computer and Parking Charges -Per FSU, the computers were not used exclusively on the NSF award, but were charged entirely to the award. The usage of the computers was split between research, dissertation, coursework, and professional activities in varying percentages. FSU argued the graduate students employed on the grant used the computers exclusively for work on the project during their compensated hours. Any incidental use of the computers outside of their work schedules should not negate the fact the computers were used primarily for the research project. The auditors noted that FSU cannot support their assertion that the computers were primarily used for research. The allocation percentages provided were estimates and the reasonableness and accuracy of the methodology could not be determined. -Additionally, questioned was $233 for interdepartmental parking expenses that were charged to the NSF award in error. FSU discovered the error when providing the audit documentation and indicated that it has taken corrective action to remove the charges. However, the University disagreed that the $233 for interdepartmental parking expenses should have been included in the audit findings. While the University did agree this was an unallocable transaction; it was sampled from an ongoing award and the charge would have been moved to a non-sponsored source of funds during the University's closeout of the award. As a general practice, Sponsored Research Administration, the University's central department responsible for award management, reviews expenditures over $1,000 for compliance prior to charging contracts and grants. Expenditures below this threshold are reviewed during the close-out process and any expenses deemed unallowable are moved to a non-sponsored source of funds. Finding 4 – Unreasonable Travel and Supply Expenditures - Foreign Conference with an additional trip to a collaborator that was disrupted by a natural disaster. The auditors questioned $6K for travel expenses related to a foreign conference. The PI traveled to a conference Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) with a graduate student and another individual (for which most charges were removed by FSU prior to the audit). After the conference, the travelers intended to visit the laboratory of a collaborator. The return travel was disrupted and air traffic was shut down due to a natural disaster. The PI decided not to travel to visit the laboratory and not to wait until the original flight could be rescheduled; instead the PI decided they would return home by any means possible. The PI’s decision to return by any means possible resulted in the following unreasonable travel expenses: -$4,597 for two airline tickets purchased for the PI and graduate student to return to Tallahassee. In addition to these tickets, the original non-refundable round-trip airfare was also charged to the award; -$823 taxi fare to the airport. The PI did not realize until after he booked a flight, that the flight left from a different airport than he thought. The PI stated that there was no scheduled bus or train service to the other airport and therefore they had to take a taxi; -$309 for train tickets that the travelers did not use due to the flight cancellation; -$203 for increased lodging costs due to the second individual staying in the PI’s room. FSU agreed that these costs should be removed from the award. -$175 for a lodging reservation made that the travelers did not use. These audits stated that the unreasonable travel expenditures were due to a series of imprudent and impulsive decisions made by the PI due to a natural disaster that caused air travel to be temporarily interrupted. The University responded that it did not concur with the total of $6K in disallowed costs. The PI's travel was interrupted by an unforeseen natural disaster causing major travel challenges. Given the facts provided, the PI's responsibility for the safety of his research team, and the need to ensure a means of returning home in a time of uncertainty regarding the suspension of air traffic, it was reasonable and prudent that the PI made the decision to return to Tallahassee in the most expedient means available. The PI was faced with the possibility that all air travel in his locale could be grounded at any time. If the PI had chosen to stay or was forced to stay for an additional time period until Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) the natural disaster was contained, additional travel costs still would have been incurred. It is difficult to now compare the increased travel costs that would have been incurred to stay in relation to the costs that were incurred to leave immediately, years after the travel occurred.

09/17/15

Indiana University

NSF

NSF OIG # 15-1-019 WithumSm ith+Brown (WSB)

Finding 5 – Expenditures Near Award Expiration One award had travel that was obligated and paid for prior to award expiration, but the travel occurred after the award expiration; and, the other award had supplies purchased after the award expiration. The University concurs with the finding for airfare costs. The auditors questioned $830K of costs claimed on 53 NSF awards. Specifically, the auditors noted $744K in senior personnel salary that exceeded NSF’s twomonth limit; Finding 1 – Exceeded NSF Limits on Senior Salary $744K The auditors stated that overcharges were due to a lack of effective monitoring caused by an over-reliance on rebudgeting authority. Indiana University disagreed with the salary overcharges because they believe that NSF policy that limits salary compensation for senior project personnel is specifically related to proposal preparation and submission and not post-award administration. In addition, the post-award rebudget authority IU is permitted. Furthermore, they believe NSF policies and subsequent guidance from NSF are clear concerning the charging of senior salary. Finding 2 - Unreasonable or Unallocable Transactions $47K in transactions occurring at the end of the award periods that were not purchased solely to advance the work for the sponsored agreement under which they were acquired or were not reasonable given the time remaining on the awards. Ie. -$21.7K for the purchase of lab supplies on the day of award expiration. The auditors stated that the supplies appear to be general materials, purchased with excess funds at the end of the award -Purchase of software with a license term that did not begin until after the award expiration. IU has removed the identified expenditures and

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) returned $47,116 to NSF. Finding 3 – Unreasonable Equipment Charges $22K, $10K for equipment that was general purpose or did not appear to benefit the award. $5K for the purchase of equipment that was shipped almost a month after the grant was over. The auditors concluded that these purchases near the awards ending dates do not represent specialized equipment ordered well in advance of the award expiration dates. Also, for the $699 iPad, newly released in April 2010, no evidence was provided as to how it was used in the field to collect data. Therefore, the finding remains as previously stated. Finding 4 – Unreasonable Travel Expenses The original NSF award budget included only PostDoctoral Scholar salaries and fringe benefits. The NSF Program Officer required a budget reduction and the revised budget included only salaries and wages. During the audit period, 10 percent of the award budget was spent on travel. IU stated that, “this travel was not included in the NSF proposal budget because in order to meet the target budget total for this grant, travel could not be included.” Additionally, IU stated that the travel was justified for this award because the grant required that the Investigator communicate findings of the research performed. The auditors commented that they were not questioning the rebudgeting authority of the University. They questioned whether it was reasonable or prudent for the awardee to claim charges for items specifically requested and subsequently removed from the budget per NSF’s budget reduction request. “Removing or reducing a line item from the budget during pre-award is an acknowledgement that the change in scope eliminated the amount of travel necessary to successfully complete the project as proposed, and therefore; spending $877 on travel was not prudent. The report findings remain as previously stated.” Finding 5 – Unallocable Immigration Fees The employee was offered a one-year extension on his postdoctoral position and the department agreed to sponsor the individual’s H-1B visa status during this period of appointment. Per the payroll database, the individual only worked 2 months during the one-year post-doctoral extension. There was no benefit to the Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) award for 83 percent ($417) of the visa immigration fees paid for this employee. IU removed the identified expenditure and returned $417 to NSF Other Matters- two awards with charges occurring more than 90 days prior to the award effective date. The University established a guarantee account. Purchases were not to have been charged until after September 1, however due to the use of electronic ordering, the charges were billed and payment processed before Sept 1, prior to the start of the 90 day pre-award period. 08/18/15

Northeastern University

NSF

DOJ US Attorney District of Massachus etts Press Release; Northesast ern Settlement Agreement

Northeastern University to Pay $2.7 Million for Failing to Account for Federal Research Funds - The OIG’s largest civil investigative recovery of NSF award funds. In addition to the Settlement Amount, Northeastern agreed that within 90 days of the effective date of the agreement to identify and repay any Unallowable Costs included in payments previously sought with applicable interest and penalties. The US alleged that, from 2001 to 2010, Northeastern repeatedly violated requirements to exercise control and oversight over the NSF award funds they receive by approving and disbursing numerous advances and other payments of NSF award funds to accounts that Professor Reucroft controlled at CERN without proper justification or requisite verification. Northeastern also failed, for more than two years, to notify NSF when it discovered significant problems with the accounting for award funds paid and knew that at least some of the funds were used to pay Professor Reucroft’s personal expenses. The regulations limit cash advances to the recipient’s immediate cash needs. Additionally, the regulations require universities to notify NSF of any significant problems relating to financial management of the awards. NSF granted Awards to Northeastern to support highenergy particle physics research largely at the European Organization for Nuclear Research ("CERN") in Geneva, Switzerland. The United States contended that the certifications on the Financial Cash Transaction Reports and Federal Financial Reports to NSF were false because

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) Northeastern failed to comply with the conditions of the Awards when Northeastern: (1) Approved and disbursed NSF funds without required documentation supporting the expenditures and permitted the commingling of funds from different Awards, making it impossible to ensure that expenditures were reasonable and used solely for authorized purposes; (2) Approved and disbursed at least 26 advances, totaling approximately $8.4 million in NSF funds, to CERN team accounts without required verification of need and sufficient oversight (3) Did not remit to the federal government interest accrued on advanced funds; ( 4) Approved and disbursed salaries without the required documentation; (5) Disbursed funds for travel expenses and sundry expenses without the required documentation, or based on fraudulent documentation submitted by Professor Reucroft; (6) Continued to engage in these practices when it knew or should have known that Professor Reucroft had violated NSF requirements when he submitted fraudulent claims for personal expenses. 08/03/15 Wheeling NASA DOJ Federal grant fraud claims settled with Wheeling Jesuit Northern University $2.3M Jesuit District of In a signed settlement agreement, the University University West agreed to pay $2.3M to settle claims that it misused Virginia grant funding awarded by the NASA, the US, the Press Department of Labor, and the NSF. Release, The settlement, resolves False Claim Act violations 08.03.15; that the United States was prepared to pursue. The Settlement agreement did not preclude criminal charges against Agreement individuals involved in the grant fraud. ; Redacted The allegations arose as the result of an 2009 audit Affidavit Case 3 :12- conducted by the NASA which led to the execution of a federal search warrant at University offices and mj-0004elsewhere in February of 2012. Allegations are JES Document contained in federal court documents filed by a special agency of the NASA OIG. The affidavit was used to 13-1 obtain search warrants in a criminal investigation of a former federal official, mine safety expert J. Davitt McAteer and his alma mater and employer, Wheeling Jesuit University. Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) The affidavit alleged that the University and McAteer fraudulently diverted federal funds to maintain nonfederal aspects of the university and McAteer's law firm. In 1989, Congress designated WJU as the site for the Robert C. Byrd National Technology Transfer Center (NTTC), and NASA established the Erma Ora Byrd Center for Educational Technologies (CET) at WJU. NTTC and CET managed five NASA agreements which had a combined value of $15.6 million. In 1988, Byrd stepped down from the post of Senate majority leader to take a position as chairman of the Senate Appropriations Committee. It was in that capacity a short time later that Byrd made a casual request to NASA to consider a technology program for West Virginia, which had no NASA facilities. Thus was born the National Technology Transfer Center. (reported by the Philadelphia Inquirer June 8, 1995.) Since the early 1990s, NASA awarded multiple grants and cooperative agreements to WJU. Most of these have been Congressional earmarks. NASA initiated construction of the NTTC in 1993 and helped build the CET. From fiscal years (FY) 2000 to 2009, NASA obligated over $116 million to WJU, with over $65 million being awarded since FY 2005, when McAteer, took control over the SPO. McAteer held various positions at WJU to include Interim President , VP Sponsored Programs, CEO of Robert C. Byrd National Technology Transfer Center , NTTC and Erma Ora Byrd Center for Educational Technologies, CET, and Chief Legal Counsel . WJU received awards from other Federal entities such as the DOL and the Department of Defense (DOD). A 2009 NASA Audit reported that in developing its indirect cost rate, WJU did not include its administrative costs (F&A costs) for management of these agreements. WJU instead charged these F&A costs as direct cost to the NASA agreements. WJU allocated administrative expenses as direct costs through cost centers, such as the Finance Service Center and the Combined Management Service Center. As a result, more than $4 million was misclassified as direct costs. In May 2011, at the request of NASA, the DHHS Office of Inspector General (OIG) conducted audit reviews of Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) costs. DHHS OIG stated the SPO claimed reimbursement for management and administrative costs relating to SPO service centers, as direct expenses, contrary to the requirements of OMB A-21. DHHS OIG stated the management and administrative costs billed as direct expenses were not specific to the NASA awards, but were billed to the NASA awards anyway. The DHHS OIG concluded that a total of $5M out of $14M claimed by WJU on three Federal awards was questionable. In a sworn affidavit file 03/30/12, A NASA OIG special agent alleged probable cause to believe that two individuals have unlawfully diverted Federal Funds to fund non-federal purposes. The affidavit further stated that there was probable cause to believe the evidence of the crimes was located in the private law office. Allegedly McAteer and the school fraudulently billed expenses to federal grant programs or cooperative agreements. The sworn affidavit said those expenses range from McAteer’s salary — which surged from $130,300 in 2006 to $230,659 by 2008 — to cellphones, computers, technical support and salaries for other staff, including a secretary in McAteer’s Shepherdstown private law office. In examining five NASA grants, the agent found the duties and salaries of individuals “did not, in any way, benefit the substantive work being done on the federal award projects.” “The motive for (McAteer’s) actions is evidenced by the substantial sum of money (Wheeling Jesuit) improperly received,” the agent concluded.

04/30/15

University of California San Diego

HHS

HHS OIG

It was alleged that McAteer utilized his position as head of the SPO at WJU to defraud the government by allocating salaries and personal expenses from his private law office, in Shepherdstown, WV, as a direct expense to the Federal awards. Nonpayroll Administrative and Clerical Costs Review of nonpayroll costs as part of a series of OIG reviews to determine whether selected colleges and universities claimed administrative and clerical costs in accordance with Federal requirements. The OIG issued report A-09-12-01001 on 06/26/14 for the University’s payroll costs charged directly to HHS

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) awards. Of the 142 sample transactions, 125 were allowable and 17 transactions, totaling $56,375, were not allowable. Findings: (1) Costs for temporary employees of a recharge center that were not adequately supported. The auditors found that the timesheets did not support the TES billing hours used to calculate the recharge costs and provided the following examples: • Timesheets did not record the hours worked on each project. The University allocated the recharge costs to different projects using a predetermined allocation percentage based on budget which was preprinted on the timesheet and a timesheet was not signed by a responsible official having firsthand knowledge of the actual hours worked on the project. The University did not concur but stated that it recognized improvements could be made to the process for documenting temporary employees’ time charged to Federal awards. Based on review of supplemental documentation the auditors allowed one sampled transaction, but stated that additional information for the remaining unallowable transactions did not constitute sufficient documentation to conclude that the questioned costs were allowable. (Some of the documentation included retroactive certifications signed more than 3 years after the pay period). (2) Costs for goods and services that were not allocable to the HHS awards Costs disallowed included publication costs for research conducted and supported by another Federal agency, cost of a personal computer on a training grant near the end of the project where the employee did not continue working on the training grant after the end of the budget period, parking costs for guests who attended a workshop and a transaction deterred to be fraudulent by the University. The University concurred with the finding. (3) Office supply costs that were improperly charged as direct costs, These supplies included copy paper, toner, and printer cartridges. The University concurred with the finding. (4) Excess F&A costs for a capital expenditure Cost related to factory and site acceptance testing of special purpose equipment used for the preparation of the equipment for use that was recorded as Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) maintenance and repair instead of as a capitalized expenditure. The University concurred.

03/31/15

University of Wisconsin at Madison

NSF

NSF OIG #15-1-014 (Cotton & Company’s (C&C) report

The auditors questioned $1,2M in senior personnel salary that exceeded NSF’s two-month limit; $192.7K of unreasonably allocated leave accrual payouts; $70K of inappropriately allocated equipment expenses; $56.9K of expenses incurred after the award period had expired; $35.6K of unreasonable consulting expenses; $30.K of unallowable relocation expenses; and $7K of unreasonable travel expenses. Finding 1: Salary Costs for Senior Personnel That Exceeded NSF’s Two-Month Maximum for Salary Allocation $1.3M The university responded that , ”UW-Madison understands that NSF generally limits the allocation of salaries for senior project personnel to no more than two months of their regular salary in any one year; however, it believes that the NSF Grant Proposal Guide (GPG) allows grantees to allocate more than two months of a senior personnel member’s salary when the allocation is justified and disclosed in the budget and in the “Current and Pending Support” documents provided to NSF as part of the grant proposal. The university also believes that these GPG instructions only apply in the event that a need for extra salary allocation is recognized at the time of the proposal; it noted that some of the questioned salary costs identified relate to situations in which a need for increased effort was recognized after award and therefore would not have required prior approval based on its interpretation of the GPG.” Finding 2: Leave Accrual Payouts Unreasonably Allocated to NSF Awards UW-Madison unreasonably allocated $192,707 of accumulated leave to NSF awards. The university’s cost accounting policies state that these accumulated balances are expensed as incurred, as a direct cost to the source of the employee’s funding. As a result, when an employee who has a positive leave balance leaves the university, the lump-sum payment of all leave accumulated by the employee is charged to the funding source for the employee’s final month of effort, regardless of when the leave was actually

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) earned. Due to this methodology, the university is charging an unreasonable proportion of accumulated leave to NSF awards. UW-Madison claims that these lump-sum payments are calculated and allocated appropriately in accordance with its cost accounting policies, which have been approved by its cognizant federal agency, and therefore no exceptions should be noted. Finding 3: Methodology Used to Allocate Equipment Expenses Not Proportional to the Benefits Received Equipment purchased by UW-Madison was used to achieve more than one cost objective; however, UWMadison personnel did not maintain adequate documentation to justify the methodology used to allocate the expenses to NSF-funded awards. It was unreasonable for UW-Madison to allocate 68 percent of the costs incurred to purchase an AUV to an NSF grant that was expiring 16 days after the purchase was initiated. In addition, the methodology used to allocate the expenses among funding sources was flawed. UW-Madison Page personnel stated that the AUV was used not only to support multiple NSF awards, but also to support a NOAA-funded grant. As none of the AUV expenses were allocated to NOAA, it is clear that the expenses incurred were not equitably distributed based on the benefits receive Finding 4: Expenses Incurred after the Grant’s Period of Performance Had Expired Purchase orders for equipment and other supplies allocated to NSF grants were submitted after the grant’s POP had expired. Finding 5: Unreasonable Consulting Expense In two cases, consultants performed work for UWMadison during the effective period of a grant, but UWMadison did not enter into an agreement to pay these consultants until near or after the grant’s expiration date. As the consultant fees were provided to an individual who had not previously been paid as a consultant, after the grant period had expired, for work completed almost 6 months prior to the invoice date, the principal investigator (PI)’s decision to retroactively request payment for as a consultant was unreasonable. Finding 6: Unallowable Relocation Expenses The university reimbursed more than $20,000 in relocation expenses, including costs to move an employee’s personal possessions, as well as all Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) insurance, storage, and delivery expenses associated with the move. As this employee was hired to fulfill a position related to NSF Award the university allocated all of the reimbursed relocation expenses to this grant. The NSF Proposal and Award Policies and Procedures Guide, Chapter V, Section C.4 states that relocation costs may be charged to an NSF award in accordance with the applicable governing cost principles, provided that the proposal for NSF support indicates that the grantee intends to hire a specific, named individual to perform full-time work on the project, and that such recruitment action is not disapproved by the grant terms. While this position was identified in the grant budget, the budget did not specifically indicate that the university intended to hire this individual for work on the project. These expenses were therefore not appropriate per NSF’s Award and Administration Guide. UW-Madison agreed that this individual had not been identified in the NSF award budget, but claimed that, as the individual was not considered key personnel, the university was not required to notify NSF of the individual’s recruitment and relocation Finding 7: Unreasonable Travel Expenses As the travel expenses charged to this NSF award were incurred by an individual who did not allocate any effort to this NSF grant, to present a paper that was not mentioned in the annual report for this award, it appears that this travel was not allocable to this funding source and therefore should not have been charged to this award. Finding 8: Late Effort Certifications While each salary transaction that we tested was supported by a signed effort certification, a significant number of these reports were not signed before the due date UW-Madison acknowledged that some of its effort certifications were not completed in a timely manner; however, it believes that it has adequate procedures in place to address the completion of effort certifications in a compliant manner. Based on its comprehensive guidance regarding effort certifications, UW-Madison requested that these audit findings be removed. 03/31/15

NSF NSF OIG The auditors questioned $1.9M of costs claimed on 97 University of #15-14-012 NSF awards. Specifically, the auditors noted $1.6M in California at Reprinted by permission of Charlene Blevens, [email protected] Page 43 Updated 09/13/2016

Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) Berkley (WithumS senior personnel salary that exceeded NSF’s twomith+Brow month limit; unreasonable equipment charges; n (WSB)) unallowable transactions; $15K in unallowable meal expenditures; $9.9K in travel; $7Kin unsupportable and unallocable immigration fees; and $3.9K in purchases before the award effective date. UC Berkeley, in its response dated March 2, 2015, agreed with some of the findings and questioned costs. However, UC Berkeley disagreed with the salary overcharges that were due to a lack of effective monitoring caused by an over-reliance on rebudgeting authority, and, does not believe NSF policies and subsequent guidance from NSF are clear concerning the charging of senior salary UC Berkeley, in its response dated March 2, 2015, agreed with some of the findings and questioned costs. However, UC Berkeley disagreed with the salary overcharges that were due to a lack of effective monitoring caused by an over-reliance on rebudgeting authority, and, does not believe NSF policies and subsequent guidance from NSF are clear concerning the charging of senior salary. Finding 1 – Exceeded NSF Limits on Senior Salary UC Berkeley agreed that these individuals’ salaries exceeded the NSF approved salary limit, but that excess was allowable per NSF policy. UC Berkeley relied on an informal November 2010 Frequently Asked Questions (FAQ) document on Proposal Preparation and Award Administration which states, “NSF has not changed the terms and conditions or any of our post-award prior approval requirements. Therefore, under the normal rebudgeting authority, an awardee can internally approve an increase of salary after an award is made.” However, the FAQ document is non-authoritative and contradicts the NSF requirement per the AAG which was in effect during the audit period. Therefore, we question the $1.6M in overcharges that NSF did not approve. Finding 2 – Unreasonable Equipment Charges -questioned the purchase of a laser system which was not included in the original grant application. Specifically, because the purchase represents a significant reduction in the funds necessary to complete the proposed research tasks, the auditor’s questioned Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) whether a prudent person would have spent more than 33 percent of the total funding approved for the project on additional equipment. - questioned purchases of services or equipment, purchased near the award expiration. In many cases, the purchases appeared to be an attempt to use the remaining award funds prior to expiration. In some cases, the purchase appears to be general purpose computers not primarily or exclusively used in the actual conduct of the proposed research. UC Berkeley believes that a majority of the questioned equipment costs were reasonable and necessary for the effective performance of the applicable NSF awards. Each purchase must be evaluated based on the particular facts and circumstances in order to confirm that the expenditures are necessary and reasonable for the administration and performance of the award. Finding 3 – Unreasonable or Unallowable Transactions -UC Berkeley contributed $44,000 for the sponsorship of three international conferences and charged NSF F&A costs; the auditors argued that similar to participant support costs, UC Berkeley did not incur significant expense to administer the payment and it is not reasonable to charge F&A costs. - toner cartridges. UC Berkeley agreed that these costs should be removed from the award; -gift cards, in which the “recognition payments” were not supported in the proposal or budget justification. Finding 4: Unallowable or Unreasonable Meal Expenditures -$10,418 charged to two awards for various unallowable alcohol related charges. UC Berkeley agreed that these costs should be removed from the awards; - $741 charged to one award for meals that were not an integral or necessary part of a conference. UC Berkeley agreed that these costs should be removed from the awards; • -$2,204 charged to one award for four catered meals that were not included in the budget; and • -$2,088 charged to one award to host a holiday dinner. UC Berkeley agreed that these costs should be removed from the award. Finding 5 – Unreasonable Travel The original NSF award budgets for two awards included travel; however, the NSF Program Office Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) required budget reductions and the travel was eliminated. -The PI was aware that the telescopes were located in northern California, but travel had been excluded from the budget by UC Berkeley to address the change in scope as a result of the NSF budget reduction. Therefore, it is unreasonable to charge the travel costs after the fact. -11 travel transactions that had been excluded from the budget per the budget impact statement, the PI stated that, “UC Berkeley would seek outside funds to defray project associated travel expenses.” UC Berkeley contended that reducing a budget from that originally proposed to respond to NSF funding levels does not constitute an agreement between UC Berkeley and NSF that certain costs removed from the original budget will not be incurred during the course of the project. Finding 6 – Unsupportable and Unallocable Immigration Fees -$4K charged to three awards for immigration fees for visiting scholars at UC Berkeley that did not receive a salary or stipend. The University could not provide documentation that the visiting scholars’ worked 100 percent on the NSF awards and that these costs should have been charged 100 percent to these awards accordingly; and • $3K charged to three awards for immigration fees that were not appropriately allocated based on employee effort reporting. Finding 7 – Purchases Before Award Effective Date During our audit we noted $3,891 in helium recharges for May and April 2010 on an award that did not begin until October 2010. NSF approval had not been received; and therefore, the costs are questioned. UC Berkeley responded that this was an isolated administrative error due to confusion over the start of the performance period and UC Berkeley had submitted a request to NSF for pre-award spending authorization to allow the charges that were incurred before the 90day pre-award spending period to the award.

03/31/15

University of Florida

NSF

NSF OIG #15-1-004 (WithumS

mith+Brow

The auditors revised its incurred cost audit report of the University of Florida, previously issued (NSF OIG Audit Report 15-1-004, dated March 19, 2015). The revision was necessary to make minor technical corrections

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) n (WSB)) within the report. The findings, conclusions, and recommendations remain unchanged. reporting of jobs created under ARRA and grant the auditors questioned $867K in senior personnel salary that exceeded NSF’s two-month limit. Finding 1 – Exceeded NSF Limits on Senior Salary UF relied on an informal November 2010 Frequently Asked Questions (FAQ) document on Proposal Preparation and Award Administration which states “NSF did not change the terms and conditions or any of our post-award prior approval requirements. Therefore, under the normal rebudgeting authority, an awardee could internally approve an increase of salary after an award is made.” However, the FAQ document is non-authoritative and contradicts the NSF requirement per the AAG which was in effect during the audit period. Therefore, we question the $867,188 in overcharges that NSF did not approve. UF does not concur with this finding, totaling $867,188. Per UF, the NSF Senior Project Personnel rule for certain classes of faculty is unclear that this rule is applicable to most of the personnel costs in question. In particular, NSF policy states “NSF regards research as one of the normal functions of faculty members at institutions of higher education. Compensation for time normally spent on research within the term of appointment is deemed to be included within the faculty member’s regular organizational salary….” The majority of the questioned costs relate to employees who do not have, any component of their organizational salary allocated as compensation for time spent on research. These faculties do not have university appointments in which compensation for research is part of their regular organizational salary, as referenced in the NSF Policy, and as such should not be constrained by the two-month salary rule. Additionally, UF believes that, NSF has published consistent policy guidance related to Senior Personnel, including, “... under the normal rebudgeting authority, an awardee can internally approve an increase in person months devoted to the project after an award is made, even if doing so results in salary support for senior personnel exceeding the two-month salary rule. No prior approval from NSF is necessary.” UF states that the remaining question costs are a result of the UF’s budgeting under Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) this authority. UF believes that the charges in question are consistent with the express guidance provided by NSF Policy Office, and the audit finding is inconsistent with this guidance. Auditor Comments: Per the GPG Exhibit II-7, senior personnel are defined by NSF as PIs, Co-PIs, or faculty, are jointly responsible for the direction of the project. These individuals, identified by UF on the award budget, are the senior personnel responsible for the project and subject to the twomonth salary limit. Although UF agreed that these individuals’ salaries exceeded the NSF approved salary limit, their reliance on rebudgeting authority resulted in questioned costs based on the official NSF policy applicable during the audit period. UF interpreted the November 2010 Frequently Asked Questions (FAQ) on Proposal Preparation and Award Administration which states, NSF has not “changed the terms and conditions or any of our post-award prior approval requirements. Therefore, under the normal rebudgeting authority, an awardee can internally approve an increase of salary after an award is made,” to mean the two-month salary limit on senior personnel could be disregarded post award. However, the FAQ made no mention of the ability to disregard or violate the NSF Award & Administrative Guide (AAG) and rebudget authority does not apply to questioned costs. Furthermore, informal communication in a FAQ does not supersede the official policy per the AAG. Finding 2 – Travel and Services Performed After Award Expiration We questioned $42,958 in unreasonable expenditures, related to three NSF awards including travel expenses that occurred after award expiration ($17,958) and services performed after award expiration ($25,000). $13,818 for an apartment rental in Barcelona from June 8, 2012 through August 14, 2012 on an award that expired on July 31, 2012. UF agreed that the expenses for the entire period should be removed from the award; • $2,500 for airfare from Gainesville, FL to Brazil departing August 29, 2011 on an award that expired August 31, 2011. UF agreed that the expenses should be removed from the award; • $1,640 for airfare from Gainesville, FL to Florence, Italy departing October 13, 2012 on an award that expired September 30, 2012. UF agreed that the expenses should be removed from the Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) award; and • $25,000 for DNA Barcode Analysis of plant samples on an award that expired on August 31, 2011, the same date as the invoice. Per the PI, the complete results of the genetic analysis were not available until several months after the grant expired. However, the genetic analysis could not benefit this NSF award as the results of the DNA analysis were not received until months after the award expiration and after the final report was submitted to NSF; and therefore, the costs will be questioned. The University concurred with the finding. Finding 3: Unsupportable and Unallocable Transactions We found $32,822 in unsupportable or Unallocable transactions related to eleven awards The UF agreed that they could not support the following charges totaling $23,278 and agreed that they were questioned costs. • $274 for lodging and mileage; UF has taken corrective action to remove the charges; • $5,261 for a journal entry to transfer funds between a non-NSF award to an NSF award; • $598 for truck repairs. The receipt for the repair was misplaced; • $3,333 for the purchase of 91 gift cards. Twenty-one of the gift cards were not disbursed and are being held by the department and the University could not locate support for seventy of the gift cards disbursed; • $2,066 for travel expenses charged to one NSF award and transferred to another NSF award. UF could not provide support for the expenses; • $6,820 in unsupported materials purchases being transferred from one NSF award to another; and • $4,926 in unsupported materials purchases being transferred from one NSF award to another. The UF concurs with this finding. Finding 4 – Unreasonable Equipment Charges We questioned $7,075 for purchases of equipment that did not appear to benefit the award or that did not appear necessary for the administration of the award. In some cases, the purchase appears to be general purpose computers not primarily or exclusively used in the actual conduct of the proposed research. • $2,940 for a MacBook Pro; UF agreed that these costs should be removed from the award and has taken corrective action to remove the charges; • $1,208 for an iPad; UF agreed that these costs should be removed from the award; • $1,609 for a Lenovo ThinkPad Laptop that Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) appears to be a general purpose computer, not exclusively used on the award. Additionally, the budget justification details the computer access already available at UF for administration of the award; and • $1,318 for an iPad, iPad cover and iPad doc connector. The Principal Investigator (PI) stated that he used the iPad over 90 percent for document storage and retrieval related to the research activities of the NSF award. However, our review of the payroll database found that from the date the iPad was purchased, September 1, 2010, through 2012 the PI’s time was charged 100 percent to non-NSF awards. Therefore, we question the allocation of the cost of the laptop to the 8 NSF award when the PI was working 100% on non-NSF awards. UF agreed that these costs should be removed and has taken corrective action. We questioned $4,033 for the purchase of a Digital Camera Body and Lens purchased on February 14, 2011 on a multi-year award that expired February, 28 2011. The camera was only available for use for 1 percent of the grant life (14 out of 1,376 days). We questioned $16,223 charged in major car repairs to one NSF award. The vehicle was purchased for $55,000 on a previous NSF award, and was being used in Kenya. A post-doc tried to cross a river during heavy rains resulting in the need for major bodywork, as well as a complete engine overhaul and rebuild. There was insurance on the vehicle, but a mechanic had already substantially started the repairs before the insurance company could assess the damages, leading to a breach of the insurance contract. The UF settled with the insurance company for $3,994, which UF states has been returned to the grant. We are questioning the total cost of repairs of $16,223 due to the imprudent actions of the post-doc when operating the NSF-purchased vehicle and the breach of the insurance contract. Finding 5: Unallowable Student Advances We found $7,880 in student stipends related to two awards that were not appropriately distributed to students $3,556 of stipends recorded in the general ledger was not disbursed to students. UF identified the error when providing documentation for audit; and • $4,324 of stipends recorded in the general ledger was not disbursed to students. This resulted from an overestimate of financial aid transferred from the grant Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) to a financial aid account which disbursed the scholarships to students. UF identified the error when providing documentation for audit and has taken corrective action to appropriately disburse the $4,324 to students. The University concurred with the finding. Finding 6 – Unallowable Meal Expenses and Associated Services We found that meals and associated services totaling $7,160 charged to five awards were not necessary or reasonable in accordance with 2 CFR 220. $157 in unallowable meal related charges. UF agreed that these costs should be removed from the award; • $821 charged to one award for various meals and associated services. UF agreed that these costs should be removed from the award; • $207 charged for a meal at a restaurant for students was not necessary for the administration and performance of the award; • $1,400 charged to NSF for meals related to lunch receptions and field trips. The project proposal specifically stated that the center would absorb the cost of food; and therefore, it is unreasonable that amounts for food were charged to NSF. UF agreed that $29 of the $1,400 should be removed from the award; and • $4,575 in meals expenditures to host a two-day conference at a Miami hotel with sixteen attendees. Specifically, $3,829 ($239/attendee) was spent to provide breakfast, lunch and breaks during the two day conference. Additionally, we found that $746 ($47/person) was spent on dinner for the attendees when the conference agenda specifically states that per diem would be provided for dinner. UF per diem policy states that the State of Florida reimbursement rate for dinner on UF domestic travel is $19/person. These charges are excessive and unreasonable, and therefore are questioned. The UF does not concur with finding of $4,575 in meal expenditures for a two day conference, $3,829 for 2 breakfasts, 2 lunches, and 3 conference breaks for each of the 16 attendees. The $746 dinner cost for 16 attendees, is in line with UF's re-budgeting authority. Re-budget authority would allow the flexibility to decide to offer dinner at this conference instead of providing each attendee a per diem as stated in the conference agenda. UF concurs with the other items of this finding. Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) Finding 7 – Unreasonable Travel Expenses We found $5,495 in unreasonable travel expenses related to two NSF awards, including a rental home in to host a one-week conference ($5,420) and no show/cancellation fees ($75). UF agreed that these costs should be removed from the awards. The UF concurs with this finding. Finding 8 – Foreign Currency Conversion Error UF claimed excess costs of $1,628 to one NSF award. The overcharge occurred because UF failed to convert Namibian dollars to US Dollars before the costs were charged to the award. UF identified the error when providing documentation for audit. The University concurred with the finding. 02/05/15

University of Kentucky

Various

FBI Press Release

In an FBI Press Release issued February 5, 2015 a former mining engineering professor at the University of Kentucky, admitted in federal court that he defrauded the University out of tens of thousands of dollars, in items and services. Tao, 54, pleaded guilty to one count of wire fraud. In August of 2014 the Lexington Herald-Leader reported that the university completed two investigations of Tao that made several allegations: • From 2008 to 2013, Tao allegedly created fake invoices totaling more than $62,000 for travel, hotels and meals. He allegedly billed the university and consulting clients for the same expenses. • Tao allegedly fabricated or changed invoices related to consulting work totaling more than $31,000. • Tao allegedly routinely required visiting scholars and graduate students to work on his private consulting activities. In violation of university policy, students received no compensation for those activities. • Tao allegedly paid research assistants more than $312,000 from university grants and contracts for work that was done for Tao's private consulting clients. • Tao allegedly used grant research funds to buy about $9,000 worth of equipment that was then transported to an unnamed consulting client. He also allegedly billed the client for the equipment. Tao also admitted that he fabricated and altered invoices, to show fictitious costs, and submitted those invoices to the University and Georgia-Pacific for payment. Tao then received payment for these

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) fraudulent expenses. According to his plea agreement, between 2010 and 2013, Tao fraudulently obtained $59,411.86 from the University and $2,280.00 from Georgia-Pacific.

01/09/15

University of Alaska Fairbanks

NSF

NSF OIG 15-1-002

In January the National Science Foundation, NSF, released an audit report of one of the audits listed on its 2015 audit work plan, the R/V Sikuliaq Construction Project. In 2007, the NSF entered into an agreement for construction and operation of a ship expected to provide a larger platform for complex multidisciplinary research. The project consisted of four phases with a total awarded cost of $199.5 million. The $148 million construction phase predominantly consisted of a firm fixed-price contract to construct the ship which included $31.7 million in contingency funds. The auditors were only able to review expenditures from other phases of the project for allowability, allocability and reasonableness. A database of transactions relating to the remaining $22.1 million that was not included in the firm fixed price contract was requested for all transactions through September 30, 2012. The audit report stated that, “In light of previous audit findings of unallowable contingency at other NSF awardees and a lack of visibility over contingency expenditures, our audit also included reviewing oversight of change order requests for contingency funds as well as other project funds to determine if such requests were executed properly and were supported by required documentation.” The examination of the financial transactions found nothing material to indicate costs claimed on the project were unallowable. The report did contain one finding and one recommendation related to the University’s record retention policies. With respect to oversight of contingency expenditures, the auditors found that the University did not have the required documentation to support approval for ten change order requests totaling nearly $4.8 million. NSF approval was required for change orders valued at $50,000 or higher. Circular A-110 requires awardees to retain “records pertinent to an award…for three years.” NSF’s internal policy also requires awardees to maintain

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) certain documentation including “change requests and approvals.” The University’s Project Officer stated that the approval documentation had been deleted when the University moved its email system to a different provider and that he could not retrieve the documents from the backup system. The NSF Program Officer overseeing the project was able to provide the documentation for all but one change order request. 2014 12/11/14

University of California Irvine

HHS A-0413-01027

HHS OIG Issues First Audit Report on Pilot Payroll Certification System The Office of Management and Budget, OMB, requested that NSF and HHS OIG perform audits to assess the payroll certification system pilot (pilot PCS) developed by the Federal Demonstration Partnership (FDP). Four Universities participated in the pilot program, the University of California—Irvine and the University of California—Riverside, Michigan Technical University and George Mason University. The first audit report was issued in December 2014. In their report, the HHS OIG stated that the auditors could not express an opinion due to the University’s inability to reconcile its accounting records to its FFR’s. According to the auditors the reconciliation showed a total variance of approximately $3.8 million for 666 Federal awards, totaling $491 million. The auditors concluded that they could not determine if the University had a valid list of labor transactions to select a statistical sample for review. In the University’s view the inability to express an opinion was not the result of faulty processes and systems associated with the payroll certification process. Instead, it reflected the failure to meet an agreed-upon deadline and a misunderstanding that led the audit team to inaccurately imply that their reconciliation showed a variance of $3 .8 million. The University did not concur with the recommendations in the report.

Reconciliation Methodology HHS and NSF OIGs met with the University and other pilot schools on January 29, 2013, to discuss the audit Reprinted by permission of Charlene Blevens, [email protected] Page 54 Updated 09/13/2016

Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) approach, including data and supporting information needed for the audit. On June 6, 2013, the OIG sent the University an engagement letter requesting a list of information to submit by June 14, 2013. The list included a request that the University provide a reconciliation of its accounting records to its FFRs for the audit period. The University reconciled their FFRs to the general ledger (accounting records) quarterly using an “inception-to-date” methodology which the University stated was consistent with generally accepted accounting practice and required by the HHS Payment Management System (PMS) for certification of FFRs. The University was informed that NSF wanted to use the FFR-to-general ledger reconciliation process as a means of validating the completeness of general ledger data submitted to NSF. After a discussion of various alternative approaches to completing the reconciliation, the audit team decided that all of the reconciliations be re-created using a quarter-by-quarter methodology. On October 24, 2013, OIG presented the University with another deadline of November 1, 2013. The University expressed concern about the heavy manual workload associated with this approach, but agreed to provide the requested data by the deadline date. In its response the University acknowledged that it had failed to meet the deadline stating that they had underestimated the complexity of the quarter-byquarter and did not commit enough resources to meet the deadline. The University submitted its reconciliation on November 8, 2013.

10/28/14

Auditor and University Response HHS OIG expressed that because the University could not provide what should have been readily available information by the November 1, deadline, they discontinued fieldwork on the audit. They stated that this is the same reconciliation information that the University would have used to prepare its FFRs and the University should have anticipated that both NSF and HHS OIGs would request a quarterly reconciliation because the University reports its Federal grant expenditures to PMS on a quarterly basis. The University admitted to Mischarging Federal Grants

HHS DOJ Press Columbia Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) University Release and agreed to pay more than $9M to resolve false claims lawsuit.

09/25/14

University of Illinois Champaign

NSF

NSF OIG 14-1-006 (Cotton & Cotton LLP)

Whistleblower Lawsuit brought by Former Director of Finance for ICAP, Craig Love Lawsuit alleged that for several years the Mailman School of Public Health wrongly charged many grants awarded to the center for work that did not relate to the funded projects. Effort reports for nearly 200 individuals were not created and verified by the individuals. The Finance Department provided information for the reports and the PI’s certified large batches of reports, without inquiring whether the allocation of work among the grants was accurate. ICAP also charged for an individual’s time spent writing grant proposals. The university admitted that it faked cost reports for a federal grant that was supposed to fund work at ICAP, International Center for AIDS Care and Treatment Programs. Simultaneous with the filing of the lawsuit, the US settled claims against Columbia pursuant to a settlement stipulation in which Columbia admitted failure to use a suitable means of verification on whether salary charged were based on actual effort. Other Sources: By Bob Grant The Scientist The audit questioned $173,290 of the $435M of costs reviewed. Summer Salary. Salary cost for senior personnel who exceeded two months of their academic-year salaries was questioned because it was not disclosed in the proposal budgets, justified in the budget support, nor specifically approved by NSF. The University did not agree citing the FAQ’s on Proposal Preparation and Award Administration available on NSF’s website which indicated that grantees are not required to obtain NSF’s approval to exceed the two-month salary limitation. The auditor’s responded that the FAQ responses do not represent authoritative guidance and therefore do not overrule NSF’s Award and Administration Guidelines. Questioned costs incurred at the end of the award included a camera purchased in the last 30 days of a 4 year award, charged at the full amount with a justification that it would be used on other projects and a stipend received by five students in the final month of the award in which the summer period on the payment

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) request was outside of the performance period and when questioned the response was that the payments were actually for work during the academic year. However, the award stated that students would work without pay during the academic year. The auditors view was that they may have been attempting to spend the remaining unobligated funds at the end of the award. Cost Transfers Findings related to cost transfers included a cost transfer on a 6 year grant made 21 days after the award ended. The transfer was for expenses incurred to install a rack system which was not completed until approximately 11 days before the award period expired. Other instances included a charge for an internal billing in which the University could not provide support for how the billing rate was determined because the rate was not approved yet and a one-time $500 annual user fee transferred to the Award that lacked documentation to support the fee. Travel The auditors had several questioned costs on travel related expenses. One included a “Tip” expense incurred for a daily per diem for a field assistant which lacked support for what days the assistance was provided, the location in which it was provided, when or if the payments were made, or to whom the tip expenses were provided. Other questioned travel costs included an expense report reimbursement where the PI requested lodging, meals and incidentals at two different per diem rates without documentation to support the higher rate, airfare for a participant which included an invoice total with no itinerary or details related to the flight such as who took the flight, the arrival and departure destinations and whether it was economy; travel related expenses for additional nights beyond the conference without a reasonable business purpose for the expenses and a room upgrade fee to accommodate a participant who had their son with them which the auditors stated should not have been allocated to the award and hotel no show fees that were charged to the award. Additionally questioned due to lack of documentation was a cost differential for an airfare in which the PI included a portion of the trip as personal. The personal portion added another flight onto the trip but the PI maintained that the three Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) flights were less expensive than the direct flight without the additional personal leg. Documentation for the cost comparison of the trips was not maintained. Extra days stay beyond the conference was questioned on several awards. In one instance a participant flew in before the conference, with family members, and charged the hotel stay to the NSF grant without a business purpose for the additional night. This employee also claimed parking expenses each night of the hotel stay, but did not request reimbursement for the car rental; indicating that the parking fees were not incurred for a business purposes. Also considered unreasonable were expenses claimed for additional days before and after an international conference. The justification provided was to prepare for the conference, the traveler had to take an earlier flight and the flight home after the conference was delayed so the traveler had to stay an extra night to wait for the delayed flight time. The auditor’s position was that since the PI was not presenting at the conference, needing two days to prepare for it was not reasonable. The auditors also pointed out that the PI reserved his flight several months in advance with the same return date indicating it was planned in advance and not related to flight delays. The auditor’s disallowed the cost on the basis that the expenses appeared to have been incurred for personal travel. Also question was no-show room fees. Late registration and a late hotel reservation which caused the hotel rate to be above the conference rate were questioned. The department stated that this because the PI was trying to make sure that someone could cover his teaching responsibilities. The auditors noted that since the PI had reserved his flight in advance he had sufficient time to reserve a room at the discounted rate and that an e-mail confirmed that the PI’s classes would be covered by a TA it appeared unreasonable that the PI was unable to register for the conference early. The NSF award should not have been charged the additional cost because the PI failed to sign up for the conference in a timely manner. 08/14/14 University of NSF NSF OIG Performance Audit 14-1-004 Objectives of the audit were to identify and report on California, Los (Cotton instances of unallowable, unallocable, and Angeles and unreasonable costs, as well as instances of Company) noncompliance with regulations, Federal financial Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) assistance requirements, and provisions of the NSF award agreements as they relate to the transactions tested. UCLA exceeded $1 billion in competitively awarded research grants and contracts in a single year; The auditors reviewed $225,830,782 in costs that UCLA claimed on Federal Financial Reports (FFRs) Finding Summary Specifically, the auditors determined that claimed costs totaling $2,358,380 were questioned for reasons relating to summer salaries ($2,111,653), per diem costs ($131,139), visa application fees ($73,135), equipment ($15,700), general salaries ($15, 186), travel ($6, 104 ), indirect costs ($3,200), and technology infrastructure fees ($2,263). UCLA incorrectly charged unallocable, unreasonable, and unallowable costs to NSF awards. UCLA did not agree with all of the recommendations; however, they did agree that some of the questioned costs were unallowable. Overcharged Summary Salaries Auditors Finding Issue: UCLA’s methodology for reimbursing employees and charging awards for work performed during its summer quarters. UCLA overcharged NSF awards by more than $2 million for summer salaries and related benefits and indirect costs. UCLA’s methodology for reimbursing employees and charging awards for work performed during its summer quarters resulted in the university charging costs that exceeded the proportionate share of an employee’s salary and/or their base monthly salary amount. This methodology is also inconsistent with how employees’ salaries are reimbursed and charged to awards during the academic year. Based on UCLA's methodology, employees that plan on working exactly one month of the summer properly allocate one month of their summer salary to a sponsored project, regardless of the number of days in that month. However, for those individuals whose service period length is indeterminate or is greater than one month, the amount of compensation earned as additional summer salary is Reprinted by permission of Charlene Blevens, [email protected] Page 59 Updated 09/13/2016

Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) overstated. The calculation of the summer salary payment for these individuals is based on a-summer month, rather than on the actual number of working days during the month. Unreasonable Salary Expense Charged to an Award – Retroactive Payment IUCLA unreasonably charged salary expense to NSF Award No. 0713903 for a retroactive payment for the August 2010 pay period. In June 2011, 2 months before the expiration date of the award, the PI of this award requested, and received, an additional summer salary payment related to work performed in August 2010. According to 2 CFR 220 Appendix A, SectionC.4.b, costs cannot be shifted to other grants to meet deficiencies caused by overruns or for other reasons of convenience. Additionally, 2 CFR 220 Appendix A, Section J.10 states that activity reports must reflect the distribution of activity expended by employees covered by the system, and that these reports must reasonably reflect the activities for which employees are compensated by the institution. The payroll sub-ledger indicates that this employee did not receive any salary payments during the month of August 2010. However, in June 2011, months before the grant period expired, the PI received a salary payment of for the pay period ending August 31, 2010. This payment was allocated to NSF Award No. 0713903. When we requested a justification for the timing of this effort allocation, UCLA representatives originally stated that the PI wanted to ensure that sufficient funds were available to cover other research expenses prior to receiving compensation. However, UCLA representatives later stated that they believed there was a translation issue involved with the PI’s original justification for the timing of this expense. They stated that the PI had not originally charged this time to the grant because he was not sure he was going to finish the project he had been working on before the grant expired. The PI stated, “If the additional task were not completed before the end of the project, it would not make sense to claim this effort through this project.” It is clear that the retroactively request payment either was based on the fact that funds were available at the Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) end of the grant period, or was related to an unidentified “additional task” that would not have been compensated by the university if NSF funding had not been available. We questioned the unreasonable salary costs and the related indirect costs as shown. 07/25/14 Memorial NIH ARRA DHHS Audit Unallowable Extramural Construction Costs Related to A-02-12a NIH Recovery Act Grant Sloan02013 Kettering Memorial Sloan-Kettering Cancer Center (SloanKettering) claimed unallowable extramural construction costs related to a National Institutes of Health (NIH) Recovery Act grant totaling $126,000. Specifically, Sloan-Kettering claimed costs for the construction of a tunnel/service corridor ($121,000) and moving services ($5,500) that did not benefit the grant. Sloan-Kettering met all Recovery Act and NIH reporting requirements and milestone dates for project completion. We recommended that NIH require Sloan-Kettering to refund $126,000 to the Federal Government. 07/01/14 Virginia NSF NSF OIG The report claimed $1.6 million of questioned costs 1 1 1-0 1 claimed on 109 awards; $1.45 million of the questioned Polytechic 1 cost was for senior personnel salary that exceeded Institute & WithumSm NSF’s two month limit; other questioned costs were for State ith+Brown, $8,485 in unallowable moving expenses; $2,913 in University PC unallowable immigration fees, $2,101 in unreasonable travel expense and $118,329 in unreasonable equipment and materials charges. The University’s stated that the applicability of the NSF Senior Project Personnel rule for summer salary for certain classes of faculty were unclear. The class of faculty questioned where those fully dependent on available research funding or calendar year employees who are expected to generate a significant portion of their funding from sponsored programs. The University’s position was that a PI in a positon fully or partly based on the availability of external funding beyond 2 months per year is exempt from the rule. The auditors responded that, The NSF definition of Senior Personnel does not contain a distinction between “regular” or “restricted” faculty. Individuals other than PI are considered to be faculty members, and who will participate in the project are Senior Personnel. The rule does not provide for compensation in excess of 2 months. NSF requires it be disclosed in the proposal budget, justified in the budget justification, and approved by NSF in the award notice. They also noted that in one of the awards in the Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) sample, NSF objected to a PI exceeded the two month rules and the award was amended before being awarded. Per the program officer, the PI requested more than two months but NSF only allows 2.0 months per year for all NSF awards, A revised budget was submitted which limited the salary to 2 months in the first year. Despite the revision, the costs exceeded $12K in the first year and $10K for another award or a combined 3 months. 06/27/14 University of DHHS Audit Incurred Cost Audit North Carolina A-04-13Chapel Hill 01024 UNC was selected for audit based on their high level of HHS funding. The audit covered $112.2 M in transactions on 1,447 grants, contracts and cooperative agreements. Questioned costs related to 8 of the 163 transactions in the sample which represented $335,874 of the over $8M in costs reviewed. PIs and OSR staff did not comply with University policies and procedures for adequately documenting cost transfers, adequately reviewing costs charged to awards, and assuring that costs are treated consistently. Of the $335,874 in costs we identified as unallowable, the University claimed: 89% • $298,275 in costs that were not adequately documented, 10% • $34,557 in costs that were not reasonable, and 1% • $3,042 in costs that were not treated consistently. In addition, the University claimed unallowable F&A costs totaling $16,969 that were associated with the unallowable costs. Costs Not Adequately Documented The University claimed the costs of research-related equipment, supplies, and services totaling $284,865 that it had transferred from University accounts (or other accounts) to HHS award accounts without documenting the basis for the amounts transferred, the reason the transfers were necessary, or why transfers occurred several months after the University initially recorded the charges. The majority of the questioned cost was for $265,000 for scientific equipment which was initially charged to a Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) University account but transferred 10 months later to an HHS grant. The documentation was limited to a note that stated that, after review, the University determined that a portion of the equipment should be charged to the grant. The University did not document the allocation basis for the amount transferred and did not document why it took so long to transfer the costs. Foreign Housing and Subsistence The University claimed $13,410 under a foreign award for the costs of a housing rental and an expatriate allowance with documentation that did not support that costs incurred. The University employee requesting reimbursement for the rental owned the property. The documentation for the housing rental was a letter requesting rent payment for a 6-month period and a memo approving payment for an expatriate allowance. The University stated the letter reflected a housing valuation used to determine a reimbursement rate for renting. In addition, the University stated that the expatriate allowance was to cover the employee’s utilities and incidentals; however, the documentation did not support the year in which the allowance applied (the approval shown was for a prior year). Costs not Reasonable- Duplicate Costs The University claimed $34,557 in various costs charged to a foreign award that were duplicate costs and were therefore not reasonable and allowable. Cost not Treated Consistently –Laptop and Printer Cartridges The University claimed $3,042 for the costs of a laptop computer and printer cartridges that had not been treated consistently as F&A costs. According to University policies and procedures, the University generally treated computer hardware as an F&A cost unless an awarding agency approved in advance the direct charging of the cost. Likewise, the University classified general administrative supplies, such as printer cartridges, as F&A costs. 06/26/14

University of California, San Diego

HHS

DHHS Audit Administrative and Clerical Payroll Costs A-09-12Of the 200 sampled monthly payroll payment records, 01001 195 were allowable, and 5 were unallowable. The five unallowable sample items totaled $3,765, consisting of

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) $2,510 of unallowable direct administrative and clerical payroll costs and $1,255 of related F&A costs. Costs not Consistently Treated For one sample item, the University claimed $920 of unallowable administrative payroll costs for an assistant department business officer of a research unit’s business office. Bid and proposal activities are normally treated as F&A costs. The grant progress report stated that the research unit’s business office was instrumental in preparing large-scale grants, multiple applications for Recovery Act grants, and cancer center support grants. Because the employee worked on business aspects of these bid and proposal activities, the employee’s payroll costs were not allowable direct charges to the HHS award. The positon in question was an assistant department business officer responsible for managing a Cancer Center Support Grant. The University acknowledged that the individual worked on a number of grant proposals during the reporting period, but stated that the individual's effort was split-funded between the sampled federal award (at 67 percent) and nonsponsored funding (at 33 percent) and the time spent preparing financial information for proposals was not charged to the grant. The position’s primary functions were to allocate the CCSG award, monitor and report expenses to the various programs and shared resource directors, and manage the recharge accounts of the eight shared resources receiving CCSG support. The University did not concur and stated that OIG cannot conclude on the basis of the progress report alone but acknowledged that the documentation provided may not have adequately supported the sample item. Award was not a Major Project & Applicable Credits Not used to Offset Allowable Cost For one sample item, the University claimed $782 of unallowable clerical payroll costs for a fund manager. The project did not conform to the examples of a major project in Exhibit C of 2 CFR part 220, such as grants and contracts that entail assembling and managing teams of investigators from a number of institutions and projects that require extensive data accumulation, analysis, and entry. In addition, the project did not explicitly budget Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) for administrative and clerical services. After the Fact Effort Report Not Certified For one sample item, the University claimed $367 of unallowable clerical service costs charged directly to a major project for one employee. The employee’s afterthe-fact activity report for the major project was not certified by the employee, PI, or responsible official. The costs were claimed because of a lack of departmental oversight. A University Department Did not Follow Federal Guidelines and University Policy for Reporting Improper Governmental Activity Pursuant to: The NIH Grants Policy Statement …”any individual who becomes aware of the existence (or apparent existence) of fraud, waste, or abuse related to NIH grants or grant funds should consider contacting the institution’s responsible officials”. In 2010, a University department failed to report to the University’s local designated official alleged improper governmental activity by one part-time employee. 06/13/14

University of California, Santa Barbara

NSF

NSF Division of Institution & Award Support

Review of Draft Audit Report 12-1-005 - NSF Management Decision pertaining to 6 audit findings and administratively closed audit report Resolution of NSF Incurred Cost Audit 12-1-005 released 10-28-2012 with 6 findings totaling $6,325,483. A California University challenged the questioned costs in NSF audit report 12-1-005 released in September 2011. The NSF Division of institutional & Award Support reviewed the audit findings and released its review on 06/13/14. NSF reviewed 5 of the 6 findings noting that finding 3 on Cost Transfers was addressed in the original audit report. NSF upheld $43,551 of the original disallowed cost of $5,829,017 for the 5 findings reviewed. Finding 1: Overcharged Summary Salaries over $1.9M, Reduced to 0 in Audit Resolution In the original audit report the auditors found the methodology the University used in calculating summer salary was inconsistent with federal policy and NSF

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) guidelines. Per University policy if the length of the service period for the summer was indeterminate or irregular, a daily rate based on a 19 day month (instead of actual number of days) was applied to summer salary calculations. The auditor’s position was that the methodology resulted in salary charges to NSF exceeding 1/9 of the annual rates. The University position was that salaries were based on an academic year which included 171 days of service over a nine month period which equated to a 19 days of service per month. Upon review the methodology was upheld in audit resolution and the entire $1.9M was allowed. Finding 2: Over $2.8 Million in Unfulfilled Cost Share Requirement, Reduced to 0 in Audit Resolution The auditors found that the University lacked an adequate system to identify, account for, monitor and track the cost share it contributed to its NSF awards. Cost share contributions were not tracked on a project by project basis in its accounting system. Instead, the departments maintained their own independent, offline systems to track cost share contributions. Also, the University did not require certified labor effort reports for employees whose salaries are not at least partially paid by federal funds. In audit resolution NSF stated that OMB guidance does not require that cost share be tracked in the accounting system and that there was verifiable evidence to support the cost share. Audit resolution did agree that failure to maintain effort reports was a compliance issue. The University cost share policy was revised to require effort reports. Finding 3: Approximately $500,000 of Inappropriate Cost Transfer. Not reviewed, Administratively Closed under Audit Report 12-1-005 The auditors found salary and wages cost transfers between NSF awards for labor costs incurred after the awards to which these costs were posted had expired; unrelated equipment cost transfers into an NSF grant; transfers made into an NSF grant at grant close out to spend out those grant funds; transfers from one NSF grant that went over budget into an NSF grant with available funds; and transfers for overhead, Department recharges, and materials and supplies that were unrelated to the NSF award to which they were charged. In the University’s response to the original Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) audit they stated that they were in the process of reviewing all of the questioned transactions to determine the reason for the cost transfer. Finding 4: Over $473,000 of Indirect Cost Overcharges to NSF Grants, Reduced to $5,231 in Disallowance The auditors questioned $396,418 as overcharged indirect cost; NSF reviewed and allowed $391,187. The $5,231 of indirect cost applied to rental facilities remained disallowed. The audit report also questioned $77,047 of expense related to direct charging of cost typically treated as indirect. NSF reviewed the purpose and goals of the awards in question and determined that the projects reviewed qualified as major projects and the University was compliant with federal requirements and its own policies and procedures for direct charging of costs such as telephone, photocopying, etc. to NSF awards. Of the $77,047 originally disallowed, $65,605 was allowed. The remaining $11,441 of disallowed related to furniture costs that were removed from the award in 2009 and did not require resolution. Finding 5: $440,000 of Unallowable Costs Charged to NSF Grants, Reduced to 38,320 in Disallowance For $177,573 questioned as equipment purchased at or near the end of the grant period, there were two questioned transactions with transaction dates after the award period. NSF disallowed the transaction for $3,581 and allowed the second transaction of $8,124 based on the purpose and intent of the project and evidence that the purchase order was placed before the award expired. The remaining equipment items totaling $165,868 were questioned because they were near the end of the award period and in some cases were general use equipment. NSF reviewed and allowed $134,295 and disallowed $31,573. For $204,996 questioned because amounts were not in the award budget and in some cases were for general use equipment, NSF allowed the entire amount and determined that equipment does not have to be budgeted to be reasonable, allowable and allocable under an NSF award. NSF did disallow $3,166 in unapproved pre-award costs related to fabricated equipment with a transaction date five months before the effective date of the award and purchased with a Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) personal credit card. Finding 6: UCSB Used $180,000 of Remaining Fellowship Funds for Non-Award Purposes, Reduced to 0 in Audit Resolution The audit questioned awards under NSF’s Graduate Research Fellowship program. The audit cited $180,255 in questioned fellowship costs because the costs were claimed costs on the final FFR despite no actual cost having been incurred. NSF determined that the questioned costs were COE allowance costs that the University was allowed to recover. These costs were awarded as an “allowance” based on the number of Fellows and not reimbursement. Per program requirements the actual use of the allowance is at the discretion of the institution. NSF allowed all of the questioned cost. 06//12/1 4

New York University

NSF

NSF OIG 14-01-001

New York University Incurred Cost Audit $75,494 of costs questioned related to unallowable indirect costs, unreasonable foreign travel and equipment purchases made at the end of a grant’s period of performance and unallowable conference fees. The University did not agree with all of the recommendations but did agree that some of the questioned costs were unallowable. Questioned costs related to unallowable indirect costs, unreasonable foreign travel, equipment purchases made at the end of a grant’s period of performance and unallowable conference fees. Travel & Conference Costs The questioned foreign travel related to numerous trips to foreign countries charged entirely to an NSF award. The foreign travel was not budgeted and the purpose of the trips indicated that they were related in whole or in part to other projects. Unallowable conference costs related to the cost of dinners for the PI and others who participated in planning a meeting for the conference. The auditors stated that dinner and other meals are not a necessary part of a planning meeting and holding a meeting outside of normal business hours was not sufficient justification for NSF to pay for meals at meetings. The auditors questioned alcohol charged during a dinner held at a restaurant for conference participants.

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) Cost Incurred at the End of the Award Also questioned where equipment purchases less than 90 days prior to the end date of the award. The auditors stated that the purchases were not available for use during most of the award period and therefore were not necessary to accomplish the award objectives and did not benefit the program. 04/28/14

04/25/14

University of Houston (Profesors)

University of South Florida

NASA

Departmen t of Justice Indictment

Houston Professors charged with making false statement and wire transfer fraud.

The two Physics professors where accused of falsely obtaining approximately $1.3 million from the Small Business Innovation Research program, SBIR. They allegedly started a small business known as Integrated Micro Sensors Inc. (IMS) which applied for and received SBIR grants or contracts from NASA, National Science Foundation, Department of Energy and the United States Air Force. On behalf IMS they both allegedly used false and fraudulent letters of support and made false representations with regards to facilities, equipment and materials. Additionally, the indictment alleges the defendants stated in proposals that IMS would pay a required subcontract fee to the University, which it failed to pay on four of five contracts. From 2008 through 2013, the defendants and IMS allegedly received at least five SBIR contracts for approximately $1.3 million. The defendants allegedly attempted to hide their scheme from detection from the government and university officials. The University stated that it was cooperating with authorities on the investigation and described itself as a victim of the fraud case. DHHS Audit Claimed Cost Audit A-04-12The University was chosen for audit based on their high 01016 level of HHS funding and because prior audits conducted by HHS OIG and the Florida Auditor General contained significant findings. The OIG auditors sampled a total of 222 transactions of which 74 were considered unallowable. On the basis of the sample results, the auditors estimated that, of approximately $24.8 million in transactions, the University charged at least $6.4 million in unallowable transactions and related facilities and administrative costs to HHS awards during fiscal years 2010 and 2011. The University disagreed with the overall findings. The

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) majority of sampled costs related to NIH awards. Administration and Clerical Costs Twenty-seven questioned transactions were for salary costs for administrative and clerical work such as ordering supplies, performing general information technology work, and supervising data collections. The auditors’ position was that these costs should not have been charged directly to the award because they involved salaries of administrative and clerical staff, and neither the nature of the work performed on the projects nor any other circumstances justified any unusual degree of administrative support or showed that the employees were necessary for the performance of the awards. The basis for their findings was Circular A-21, § F.6.b. (2). University officials disagreed with most of questioned costs on the basis that the administration and clerical costs were associated with specialized technical/programmatic employees who were also working on major projects which were an “unlike circumstance”. Many of the questioned costs were associated with a very large, multi-site, international diabetes-focused clinical trial. In the budget justification the University expressly stated that the project’s size, scope, and complexity reflected the “unlike circumstance” of a major project in which clerical and administrative expense could be charged. In another large, multi-site international clinical trial, the University specifically budgeted for a dedicated system administrator to help manage massive amounts of data. The OIG responded that the documentation provided showed that the employees’ administrative activities were not related solely to the project to which their salary was charged. Rather, the employees’ administrative duties benefited multiple activities and they could not determine the percentage of effort the employees spent on administrative activities because the University’s effort reports did not reflect time spent on administrative tasks. Other Salary Related Questioned Costs Three questioned costs related to payments that the Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) auditors found were in excess of the employees’ supported salary rates. The findings related to documentation standards in 45 CFR § 74.21 (b) (7)). They included a retroactive salary increase, extra compensation in which the University had sponsor approval which was paid at time and a half and a $24 charge related to overtime. The University concurred with the extra compensation to the extent the approved extra compensation was paid at time and a half and did not seek recover for the $24 in overtime. The University’s position on the retroactive compensation was that they had provided ample documentation. The auditors did not concur. Two questioned costs related to graduate school compensation that was in excess of NIH guidelines. One of the questioned costs related to an employee who was a student at the time of the proposal and later rehired as an Other Professional Services. The OIG questioned the cost on the basis that the documentation did not show that the employee was not a student at the time of the transaction. The second questioned cost was for a graduate student’s compensation that was within the allowable limit but exceeded the rate of awardable compensation. The University’s stated they had used rebudgeting authority, within NIH guidelines, to re-budget the funds to pay a higher compensation level. The auditors responded that the University did not provide any additional evidence to show that the work performed justified the pay in excess of a first-year postdoctoral stipend therefore, the amount paid was not reasonable. They referenced NIH guidance which allows institutions to re-budget funds to charge more than the awarded amount, provided that they observe the cost principles requiring reasonable compensation and that graduate student compensation will not be considered reasonable if it is in excess of the amount paid to a first-year postdoctoral scientist at the same institution performing comparable work. The auditors also questioned salary for an employee hired for the sole purpose of distributing key chains for a large diabetes related clinical trial. University officials said that the University’s contract required it to engage in public relations efforts, including the use of Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) incentive items such as key chains to encourage individuals to participate in a clinical trial. The OIG took the position that items such as key chains are equivalent to promotional items and unallowable and that University officials did not address the reasonableness of having an employee whose sole duty was to distribute these key chains. Since promotional items are unallowable, the compensation paid to any individual to distribute such items would also be unallowable (Circular, § J.1.f. (3)). The last questioned cost was a terminal leave payout at 100 percent to the grant for an employee that had worked exclusively on the project for the period of time required to accrue the amount of leave in which the University paid her. The auditors stated that the University did not provide documentation to support its assertion that the employee’s leave was accrued working exclusively on the award. Non-Salary Questioned Costs Sixteen of the questioned costs related to the purchase of laboratory supplies from a vendor in which the University also had two other agreements one of which was a sub-contact for bio-sample repository services. The laboratory supplies were purchased under an agreement established so that clinical trial sites could order and directly receive necessary laboratory supplies. The auditors questioned the treatment of purchases as vendor costs rather than subcontract costs. The auditors questioned the company’s treatment as a vendor when the substance of the work performed by the company was central to the work of the award and the company had responsibility for dealing directly with other subcontractors, giving them a decision-making role and responsibility for program compliance. By treating the sub contact costs as vendor purchases, the University claimed F&A on costs in which it should not have received F&A. Eleven transactions were questioned in which the University charged shipping fees without documenting that the costs were allocable to the grant. The documentation did not track the destination or contents of the shipment therefore; the shipment could Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) not be tied to the award. According to 45 CFR § 74.21(b)(7), recipient financial management systems shall provide for accounting records, including cost accounting records that are supported by source documentation. Four Specialized Service Center transactions were questioned because the University did not provide a schedule of rates or a cost basis for its telecommunications center and did not always document the allocation of animal center costs on the basis of usage. University officials agreed that one telecom service center transaction was unallowable. However, officials believed their methodology for allocating research animal per diems was sufficient to support the costs claimed. The officials said that the investigators’ allocation methodologies were reasonably designed to charge projects in accordance with the proportional benefit each project received. Documentation that the University provided showed that the awards’ investigators split an invoice from the service center between multiple awards on the basis of percentage allocations. However, the investigators did not describe the method that they used to arrive at those percentages. The investigators listed several factors that they said were considered in making the allocations, but they did not describe their allocation methodology. Transactions for general-use supplies such as toner, computers, and tablet computers, were questioned. The auditors stated that these costs should have been treated as F&A costs and not charged directly to the award. University officials argued that the Circular (§ F.6.b.3) allows it to direct charge certain non-salary costs that are normally treated as F&A, citing section D.2. which contains provisions that would allow it to directly charge certain costs normally treated as F&A. For the computer purchases, the University stated that the sponsor accepted the budget, which included the purchase of the computers and the computers were used solely on the award and were therefore allowable. The auditors did not agree stating that in making its argument, University officials did not consider whether the costs were necessary for performance of the award (the Circular § C.3.(a)). Notwithstanding the sponsor’s Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) approval of the budget, University officials did not provide documentation to show that the University used the computers solely on the award and, therefore, did not adequately address why the 17 computers should be directly charged to the award. Other costs questioned included a charge for media consulting that the University paid without an agreement that specified either the service to be provided or the rate of compensation in violation of the regulations (Circular § J.37.b.(8)) and a donation to a non-profit and promotional items used for outreach efforts which are both unallowable (the Circular §§ J.15.a. and J.1.f.(3)). In its response the University stated that it had located the agreement which included a detailed scope of work and information on the costs charged. The cost was also addressed in a progress report. The auditor’s responded that the additional documentation did not include a signed contract with deliverables and that donations and promotional efforts were unallowable. Another questioned cost centered on a contract the University had with a lab ware supplier that included a handling fee in the cost of the items; however, it routinely paid extra handling fees to receive partial shipments rather than ordering a full shipment. The University did not provide a justification for partial shipments. The auditors noted that one consideration for reasonableness is whether the type of cost is generally recognized as necessary for the conduct of the organization or the award performance (Circular § C.3.(a)). The University did not comment on this finding. Finally the auditor’s questioned the purchase of fiberoptic cable without justification showing that it was used for the performance of the award. (Circular § J.31.c.).The university agreed that a portion of the transaction was unallowable to the extent the space cables were a contingency cost. 02/12/14 University of Eastern Michigan University

National Endowmen t for the Humanities

NEH OIG OIG-14-01 (EA)

Objectives were to determine whether grant expenditures were made in accordance with applicable provisions of the Documentation Endangered languages Program guidance, NEH General Terms and Conditions and the terms of the grant award. The underlying

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) reasons that led to the delinquent filing of the final financial and performance reports and the reduction in project scope, and whether proper controls over federal funds were in place. Grant expenditure texting identified unallowable costs totaling $3,093.60 and questioned costs of approximately $700; The University missed filing deadlines associated with the final grant reports (both performance and financial). The submission of the reports did not take place until the OIG became involved. Several events prevented the grantee from completing the proposed project deliverables resulting in the deobligation of almost $62,000 in grant funds. Overall University controls appear to be working. Questioned Grant Costs - Duplicate Billing related to the double billing of plane tickets due to a lack of communication between two primary researchers who worked at two separate institutions. The accounts payable review process failed to identify the duplicate billing. Improper Per-Diem Rate A trip to Northern Argentina last 47 days. The University used the higher GSA daily periderm rate for Buenos Aires instead of the lower rate applicable to Northern Argentina. Delinquent Final Reports and Grantee Report Monitoring Procedures NEH-OIG became aware of the missed deadlines associated with final reporting upon issuance of the third Delinquent Notice by the Office of Grant Management. The automated notice was emailed to the project director and the institutional grant administrator on record. Older forms were used to report within 15 days of the grant expiration date. Management was unaware that the older forms were superseded and the University failed to notify the NEH Office of Grant Management of the change in the Institutional Grant Administrator. Therefore the delinquent notices were routed to an inactive e-mail. Once the Grants Officer was made Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) aware, the University promptly prepared and submitted the correct report within a matter of days. OIG recommended the University consider 1) Expanding Sponsored Research Administration responsibilities to include oversight of both the financial and performance reports to include coordinating with the PI to ensure the University submits performance reports in a timely fashion. Develop new procedures of immediately notify NEH or other federal funder of any PI or Institutional Grant Administrator staffing changes to ensure that past-due notices or other automated communications are delivered to valid email addressed. 2013 11/27/13 New: Shaw University

EPA

U.S. Attorney Eastern District of North Carolina, FBI Press Release

Shaw University Employee Sentenced for Government Grant Theft Scheme According to the criminal information, ADEMOLA L. EJIRE was employed at Shaw University as the principal investigator for the Environmental Protection Agency (EPA) Research Apprenticeship Program (RAP) grant, and was responsible for managing the program. A criminal information was filed on July 23, 2013, charging mail fraud. On August 20, 2013, EJIRE pled guilty to the charge and was sentenced to 33 months’ imprisonment followed by two years’ supervised release. The court also imposed restitution in the amount of $470,192. The EPA RAP grant provides funding for a program for specific high school students who have an interest in science and math. From 2001 to July 2012, EJIRE fraudulently represented that his wife was an employee of Shaw University working as the EPA program coordinator for the EPA RAP grant and that his children were participants in the EPA RAP grant by submitting falsified timesheets. The scheme enabled EJIRE to fraudulently obtain approximately $444,350.74. The investigation of this case was conducted by United States Environmental Protection-Office of Inspector General, the Federal Bureau of Investigation, and the United States Postal Inspection Service.

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) 09/30/13 Wayne State NIH HHS OIG A- Wayne State University Claimed Allowable Costs 05-13Under National Institutes of Health Grant No. University 00041 R01NS039860 The auditors commented that the review was performed because (prior) Audits of National Institutes of Health (NIH) and other HHS grantees have found internal control deficiencies, problems with financial stability, inadequate organizational structures, inadequate procurement and property management policies, and inadequate personnel policies and procedures. The objective was to determine whether costs claimed by Wayne State University were allowable under the terms of the grant and applicable Federal regulations.

09/26/13 Cornell

NSF

HHS OIG on behalf of NSF 131-004 (HHS A-0212-02004)

$66,671 of the direct costs and $291,713 of the indirect costs that were claimed by the grantee for the period of May 1, 2007, through April 30, 2010 were reviewed. Evaluation was limited to the grantee’s accounting system to (1) obtaining an understanding of internal control as it relates to the specific objective and scope of the audit, and (2) reviewing the grantee’s financial audits performed by an independent auditor. The costs covered by the review were allowable under the terms of the grant and applicable Federal regulations. Accordingly, the report contained no recommendations. 2) Audit of Direct Costs, Recovery Act Funds, Pension Costs Associated with the National Astronomy & Ionosphere Center (NAIC) Questioned costs totaled $794,221. The University disputed 60 of the 86 questioned transactions which were primarily associated with the allowability of office supplies and information technology expenses. The report supersedes the initial report issued in May 2013 based on the NSF request that the OIG perform additional audit work. The University comments are dated April 29, 2013. Expenditures selected for review for the Direct Cost Audit were those that the auditors consider to be generally at a high risk for error, including supplies, recharge center activities, general expenditures, foreign travel, clerical and administrative salaries, cost transfers and other salaries. The audit sampled 714 transactions

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) which resulted in 86 questioned transactions, The University disputed 60 of the questioned transactions which were primarily associated with the allowability of office supplies and information technology expenses, the sufficiency of the documentation needed to substantiate a charge to a sponsored project and charging administrative and clerical salaries directly to NSF awards. The population of costs transfers sampled included all positive cost transfers during the audit period greater than $200. Supplies - A large majority of the questioned costs related to computer or computer-related expenses. Questioned costs included laptops for a multi-summer teacher training program that were originally proposed to the NSF, solely used by the teachers during the summer and taken back to their school during the subsequent year. They were not used for University projects or responsibilities. Other questioned costs were for computer costs specifically identified and incorporated into the annual budgeting and award process for the related cooperative agreements and computer supplies used in a laboratory. The University argued that F.6.b.(1) and (3) guidance provides that computer and computer related expenses are allowable direct charges so long as they can be identified “to a particular cost objective” and that the sections do not contain any reference to major project. The reference to major project is limited to F.6.b (3) which is explicitly limited to salary charges and when considering the allowability of non-salary administrative-type costs, the related project need not be a major project. In a footnote in the University response, they noted that the auditors disagreed with the institutions characterization of major projects and that the University believes that the auditors have taken too narrow an interpretation of the standards of A-21. In addition, a questioned cost related to what the auditors considered a “conference meal” which did not have NSF approval. The meal was for a team of high school students in lieu of a budgeted participant Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) stipend.

Recharge Centers - Auditor’s findings related to directly charged transactions for office supplies which should have been treated as F&A costs. The two items the University disputed related to flash drives and DVD’s used in a laboratory for storing project data. General- The majority of the questioned costs related to documentation of participant support. Of the 100 transactions sampled 32 were questioned and the University disputed 29 of those costs. Lack of documentation cited included lack of signed attendance sheets, insufficient documentation to support the amount of a stipend paid to a high school teacher/team member, a stipend paid to a program attendee which was greater than that paid to the other attendees, and subsistence allowances pursuant to a written agreement. Many of the questioned costs related to a residential summer program for teachers in which in which a stipend was paid upon the participants completion of the program. In findings related to lack of documentation (signed attendance sheets) for participant support the University asserted that another reasonable and adequate form of documentation would be an attestation from workshop staff in attendance which was consistent with guidance in A-21 that either the employee or someone else with a suitable means of verification can document compensation costs. Other questioned costs included a magazine subscription that did not benefit the sponsored agreement, visa expenses incurred outside the period covered by the sponsored agreement, late fees associated with publishing a thesis and directly charged office supply costs. The report provided guidance that charges to sponsored agreements are unallowable if incurred outside of the funding period authorized by the awarding agency (2 CFR pt. 215 § 215.28). A cost is allocable to a sponsored agreement if the goods or Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) services involved are charged to the sponsored agreement in accordance with the relative benefits received (2 CFR pt. 220, App. A § C.4). Costs charged to sponsored agreements must be reasonable (2 CFR pt. 220, App. A §§ C.2 and C.3). Foreign Travel - Auditors findings included costs that (1) exceeded the maximum allowable per diem rate; (2) were incurred outside the authorized travel dates; (3) were for unallowable expenses (e.g., alcohol and laundry); (4) were not reasonable; and (5) were not adequately documented. The University disagreed with findings related to a portion of a registration fee paid in Brazil which was greater than the US based rate. A hotel room in which the traveler stated the room was occupied by the PI and the hotel confirmed that the room was used and was registered in the name of the PI’s graduate student and a subsistence payment which was noted in one portion of the reimbursement documentation as an honorarium and software and hardware needed for a project which took place off campus where access to normal IT support was unavailable. After reviewing comments by Cornell on draft report, the auditors maintained their findings were valid and that detail justifications did not support the questioned costs however, they did revise recommended recovery based on additional documentation supporting travel charges. The auditors cited guidance on maximum per diem rates allowed for foreign areas, as established by the U.S. Department of State, cover travel beginning on the day the traveler departs an authorized point and ending on the day the traveler returns to the authorized point (41 CFR § 301-11.9). Laundry expenses incurred in foreign areas and costs of alcoholic beverages are unallowable (41 CFR § 301-11.31 and 2 CFR pt. 220, App. A § J.3). Clerical and Administrative - Less than 1% of the estimated questioned costs related to clerical and administrative in unlike circumstances. Of the 100 transactions sampled, 6 transactions were questioned. The costs questioned included salaries for employees that performed tasks such as coordinating Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) meetings and events, maintaining travel forms, and acting as a general liaison for students. Specific examples were salary for an executive staff assistance associated with a major center, an administrative assistance dedicated 100% to an award which was administratively intensive, a coordinator for an Engineering undergraduate program and an administrative assistant to a large complex plant genomics award which requested numerous travel arrangements all of which were proposed and awarded. The Universities policy outlines a procedure of internal review for unlike circumstances and requires that the costs be identified in the proposal budget and not be specifically disapproved by the sponsor.

09/13/13

John Hopkins Bayview Medical Center

NIH

HHS OIG A03-1203300

Costs claimed under NIH Contract were Generally Allowable. The National Institutes of Health (NIH), National Institutes on Aging, Gerontology Research Center, had concerns about the cost of utilities and steam heat under a utilities contract between NIH and Johns Hopkins Bayview Medical Center (Bayview). Accordingly, NIH requested that HHS OIG conduct an audit of the contract, number HHSN292200900002C (contract). Extensive review of billing allocation methodologies and line items billed took place over a fifteen month time period. No inconsistencies or problems with the billing practices were discovered during this process. One finding relating to the depreciation charged to the contract was issued in the draft audit report. The monthly depreciation charge was never revised for changes to the asset base in the CUP, despite several, additional equipment purchases during the contract period to maintain the CUP's functionality and performance. The OIG recommended that JHBMC pay back the full $404, 193 amount charged in depreciation to the contract over the audited period due to lack of underlying support for the asset values. In written comments on the draft report, Bayview objected to the request for documentation identifying the original valuation of the central utilities plant. Bayview stated that in 1994, the Department of Health and Human Services' Division of Cost Allocation's performed an

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) audit on the costs charged to this contract and did not find issue related to the depreciation schedule for NIA. Hence, the Government was aware of and approved the depreciation schedule previously. “To disallow the depreciation schedule now because of the lack of documentation of asset valuation some 20 plus years later would be unconscionable. “ Bayview was able to provide the auditors with bond information relating to the funding of the central utilities plant's construction costs and refunded $66,132 in unallowable depreciation costs and unallowable indirect costs relating to the depreciation costs it had identified. Based on the information provided, the auditors modified the report and had no recommendation. In 1992, JHBMC developed and built a Central Utility Plant (CUP) to provide the necessary utility services for the Gerontology Research Center (GRC), which is a federal-owned facility located on the campus of the JHBMC. The GRC was built without its own power plant and therefore it relies on the JHBMC facility to provide steam, electricity and water. The Gerontology Research Facility pays JHBMC for the cost of these utility services via contract. The contract is a mix of cost-reimbursable and firm-fixed price. The procedure for charging out the cost of providing the utilities to the various users is based on an accumulation of the costs of producing utilities (steam, chilled water and water) divided by the total units produced for each utility yielding a cost per unit. This cost per unit is then charged to each user based upon meter readings. The exception to this process is depreciation which is charged at a flat, straight-line amount directly to the contract and overhead costs which is based on a negotiated overhead rate. Wayne State University

NIH

HHS OIG A05-13-0040

Wayne State University Claimed Allowable Costs Under National Institutes of Health Grant No. R01NS064976 Review was performed because Audits of National Institutes of Health (NIH) and other HHS grantees have found internal control deficiencies, problems with financial stability, inadequate organizational structures,

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) inadequate procurement and property management policies, and inadequate personnel policies and procedures. Audit objective was to determine whether costs claimed by Wayne State University were allowable under the terms of the grant and applicable Federal regulations.

08/28/13

Emory University

Medicaid and Medicare

US Attorney, FBI Press Release

07/30/13

Northwestern University

NIH

HHS OIG, FBI, NIH, U.S. Attorney’s Office

The costs covered by the review were allowable under the terms of the grant and applicable Federal regulations. Accordingly, the report contains no recommendations. Emory University to Pay $1.5 Million to Settle False Claims Act Investigation Allegation: University Overbilled Medicare and Medicaid for Patients Enrolled in Clinical Trial Research at Emory’s Winship Cancer Institute The United States and the state of Georgia alleged that Emory University billed Medicare and Medicaid for services the clinical trial sponsor agreed to pay (and, in some cases, actually did pay, thereby resulting in Emory’s being paid twice for the same service). In 2009 a former Clinical Research Manager at Emory filed a qui Tam action. The former employee also received compensation for wrongful termination. According to the Settlement Agreement, the claims began on or between January 1, 2001 through December 31, 2010. The settlement was not an admission of liability by Emory. United States of America and State of Georgia ex rel. Elizabeth Elliott v. Emory University, et al., Civ. No. 1:09-cv-3569-AT Northwestern University to Pay Nearly $3 Million Settlement related to False Claims. Bennett Allegations: Federal grants billed for family trips, meals, hotels and consulting fees benefitting Dr. Bennett, his friends and family. The settlement covers improper claims that Dr. Charles L. Bennett submitted for reimbursement from the federal grants for professional and consulting services, subcontracts, food, hotels, travel and other expenses that benefited Dr. Bennett, his friends, and family from Jan. 1, 2003, through Aug. 31, 2010. Dr. Bennett allegedly billed federal grants for family

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) trips, meals and hotels for himself and friends, and “consulting fees” for unqualified friends and family members, including his brother and cousin. At Dr. Bennett’s request, Northwestern also allegedly improperly subcontracted with various universities for services that were paid for by the NIH grants. Allegations were made in a civil lawsuit filed by a former employee of the Lurie Cancer Center. The allegations were investigated by the U.S. Department of Health and Human Services Office of Inspector General, the Federal Bureau of Investigation, the National Institutes of Health, and the U.S. Attorney’s Office. Northwestern, which fully cooperated during the investigation, did not admit liability as part of the settlement. Press Release FBI for the U.S. Attorney’s Office Northern District of Illinois SUSC Professor Accused of Grant Fraud at Previous Job A University of South Carolina research professor, who holds one of USC's endowed chairs, is accused of misusing federal grant money at his previous job. Dr. Charles Bennett is now the chair of the Center for Medication Safety at the University of South Carolina College of Pharmacy. He came here from Northwestern University, and the U.S. Attorney for Northern Illinois says it was there that Bennett misused federal grant money.

06/09/13

Morgan State University

NSF

The Baltimore Sun

Posted: Aug 02, 2013 By Randy Key, WJBF Web Content Producer Robert Kittle, WJBF South Carolina Capitol reporter Morgan professor accused of grant money kickback scheme.Manoj Kumar Jha Federal prosecutors allege in a court filing. Manoj Kumar Jha, director of the university's Center for Advanced Transportation and Infrastructure Engineering Research, handed stipend checks to students at the university but demanded they pay part of the money back to him. One student approached Jha and told him that they needed money to pay tuition, prosecutors wrote. Jha gave the student checks for $4,500 and $2,000. But he then asked the student to write him a personal check for $4,500, prosecutors said, in an effort to cover up his alleged misuse of the grant money.

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) By Ian Duncan 06/07/13 Univeristy of HHS (NIH) HHS OIG-A- Audit of Selected Costs 07-11Colorado Hourly Salary Costs – Lack of Sufficient Support 06013 Denver Finding related to the method used for confirmation of effort for hourly employees. The hourly employee’s timesheets documenting the salary costs did not identify the projects or activities on which the employees worked. The University stated that hourly employees generally did not know which projects their work benefited or, the proportion of time devoted to each project if they worked on multiple projects in the same laboratory. The University added that to obtain the firsthand knowledge needed for appropriate allocation of employee time and distribution of salaries, its batch approval process included a review and approval of the timecard input batch by one of the principal investigator’s management or administrative staff. The University concluded that these salary transactions met the documentation standards of 2 CFR part 220 and the University’s DS-2. However the auditors disagreed that the documentation was sufficient support. They stated that the documentation of the batch approval process consisted of a spreadsheet and emails that were created after the fieldwork and that they did not adequately support the costs in question. Therefore, the University was not able to provide suitable after-the-fact support for the verification of distribution of salaries. The auditors finding cited language in the Universities DS-2 and § J.10.b (2) (b). Pursuant to the University DS2, the University requires hourly employees who are not covered by the University’s Personal Effort Reporting System process to attest to the appropriateness of wages charged to a sponsored project reflecting the actual effort expended. The attestation is done on a prescribed timesheet (that is, the personnel activity report) on which the employee certifies that (1) the project(s) identified on the timesheet are appropriate to pay the hours and (2) the percentage of time attributed to each project reflects the actual effort expended on that project. Indirect Costs Charged as Direct Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) University charged as direct costs general-use supplies that should have been treated as F&A costs. These administrative expenses charged directly to HHS-funded grants, contracts, and other agreements included monthly local telephone line charges, memberships, a computer monitor, and general office supplies. Lack of Documentation – One Transaction University charged lab supplies to an award but could not provide a receipt or any other documentation supporting the charge. Unallocable Costs University charged an award for janitorial services including restroom cleanup and trash pickup. These services were billed as direct costs rather than as indirect (F&A) costs. Moreover, these billed services were actually for overtime work that was performed on another project and therefore did not meet the criteria for allocability. Costs Charged to Two Awards After Relinquishment Dates During FY 2010, two principal investigators transferred from the University to another institution. With these transfers, the University agreed to relinquish all rights and interests for two awards, whose activities had been conducted by these principal investigators, to the gaining institution. After the relinquishment of these awards, the University received reimbursement of direct and F&A costs Auditors commented, that if the University incurred allowable costs for these awards after the relinquishment dates, the University should have received reimbursement from the other institution under a subcontract arrangement. Once the principal investigators had transferred and the awards had been relinquished, the University should not have claimed Federal reimbursement for any subsequent expenses. 06/04/13

Thomas Jefferson University

HHS (NIH)

HHS OIG A03-1103300

Audit objective-to determine whether selected costs that Jefferson charged HHS awards were allowable. Salary Costs-Documentation

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) One transaction lacked documentation to corroborate the amount of effort charged to the award. Office supplies and general use equipment that should have been charged as F&A.  General use laptop and accessories.  Binder clips, superglue, post it notes and pens Transactions unallowable for the grants they were charged. On-campus housing in lieu of a consulting fee, no evidence of the consultation was provided and the individual was never hired as a consultant on the project. Individual membership in a professional organization. Only costs for institution’s memberships are allowable. Individual membership should not have been charged to the award. 03/22/13

University of Wisconsin Madison

NSF

DCAA

NSF contracted with DCAA to perform an incurred cost audit of $218.8 million of interim incurred direct costs claimed on UW-M’s IceCube project. The project included a Construction cooperative with $44M (20%) contingency costs. Internal control weakness and significant issues were identified. UW-M agreed with the internal control findings, but disagreed with DCAA’s audit findings relating to all other areas. DCAA considered UW-M’s response in its final audit report, but did not change its audit position. Internal Control Findings The internal control deficiency addressed NSF approval of Change Requests. DCAA recommended that UW-M revise its Change Control Process to clearly define those changes to total project costs that are considered Class1/Level1 changes requiring NSF approval. Rebudgeting of Sub awards to Service Agreements without NSF Approval The auditors questioned UW-M’s classification change from sub awards to service agreements. The changes increased F&A costs by $2.1 million. The auditors maintained that the primary reason for the change was that one of the vendors objected to the sub award arrangement and that this objection did not adequately

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) justify the change. DCA did not concur that the documents provided adequately supported the change. DCAA recommended that UW-M establish a procedure to document the determination of a sub award (the portion of the program the sub recipient is responsible for, and what management roles they will be perform) and that a change is made only if documentation is available to show that the scope of work has changed significantly and no longer includes responsibility for a part of the program or management functions. In addition, DCAA recommended obtaining prior written approval from the contracting officer for any proposed classification change, including a budget impact showing any increased F&A costs. Improperly charging an employee’s relocation cost as a direct cost. UW-M’s practice is to normally charge relocation costs as indirect F&A expenses. The auditor’s position was that UW-M did not identify the employee in its proposal and, therefore, did not meet the NSF requirement for direct-charging his relocation expenses. The auditor’s citied CAS 502 noncompliance. The auditors found that UW-M did not provide the justification required by its CAS disclosure statement (DS-2) for charging the questioned relocation as direct costs. CAS 501 violation on treatment of Indirect Cost The University granted an exception to the project that allowed it to retain 100% of the recovered F&A. The usual process was for the accounting system to pool the recovery of F&A Costs into a single, central F&A pool account which was allocated to campus departments as part of the annual budget reallocation process. The accounting system was not capable of directing F&A recovery from one project to a distinct department. To directly retain the recover the University had to manually calculate the F&A. UW-M stated that it generated monthly journal transactions that charged the IceCube projects the appropriate F&A expense and the journals were clearly designated, but DCAA disagreed stating that “identifying the F&A transactions was not consistent or clear,” and that “some transfers included both direct Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) costs and F&A costs combined in the total transfer amount. This would require UW-M to manually review each journal entry to identify the F&A costs included in the total transfer amount.” The auditors found that the decision was based on internal management decisions rather than requirements of the agreement and that CAS 501 had no provision for such exceptions. The auditors stated that it took a significant amount of manual sorting to identify the F&A transactions and verify the correct application of the F&A rate. The condition prevents UM-M from summarizing the F&A costs from its books and records to compare to proposed F&A costs and prevents the sponsoring agency from efficient verifying the correct application of the fixed F&A rates,. The auditors recommended that UW-M use its usual method of recording F&A costs to a specified account to permit visibility into the F&A costs claimed on reimbursable projects and to prevent errors in determining the incurred F&A base costs for other purposes, such as the determination of university-wide indirect cost rates. Lack of Segregation and Accounting for Contingency Funds The auditors found an inconsistency in the treatment of the proposed and actual contingency costs. On the proposal form contingency costs were put in the category “Other Costs” which were not subject to F&A When contingency funds were expended, UW-M commingled these expenditures among its several direct cost elements and did not identify or maintain visibility of contingency costs, or differentiate the associated indirect F&A costs that resulted from expenditures of contingency funds. The auditors cited CAS 501 and A-110 C.21.b.4 violations. The University’s position was that the Contingency designation in this project represented a place-holder for estimated unanticipated expenses at the time of the proposal preparation. Given the size and scope of the project it was assumed that there would need to be modifications to the project during its design and construction and it was not possible to designate what those changes would be or in which categories Reprinted by permission of Charlene Blevens, [email protected] Page 89 Updated 09/13/2016

Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) expenses would be incurred. As modifications arose the University recorded the actual cost codes in the University’s account structure. The auditors agreed that the accumulated costs included more detail than the estimated costs. However, the University had not met the basic requirement of 48 CFR 9905.501-50(c) that for any significant amount of estimated cost, the contractor must be able to accumulate and report actual cost at a level which permits sufficient and meaningful comparison with its estimates." The DCAA auditors recommended that UW-M segregate contingency costs in its accounting records and OIG recommended that proposed contingency costs be clearly identified as to direct and indirect costs on the pricing proposal summary form submitted to NSF. OIG also recommended that UW-M revise its CAS Disclosure Statement to accurately and completely describe its accounting practices related to contingency costs. 2012 11/14/12

Morgan State University

NSF

NSF OIG, DOJ Press Release

Morgan State University Professor, Manoj Kumar Jha, Indicted in Scheme to Defraud the NSF.

According to the indictment, Jha fraudulently obtained $200,000 in grant funds from the (NSF) Small Business Technology Transfer (STTR) program to fund a highway project, and attempted to obtain another $500,000 though the same program. The indictment alleges that Jha converted the funds to his personal use, including: to make payments on his mortgage and personal credit card; authorizing approximately $11,000 in salary payments to his wife, who did not perform NSF-related work; and writing a $6,000 check to himself. Jha falsely represented that: he would secure “release time” or negotiate other leave options with Morgan State University in order to spend time at ATRC working on the highway project; that ATRC had eight employees; and that another Morgan State professor would be working for ATRC as a Senior Scientific Advisor. In fact, Jha remained employed full time as a professor at Morgan State and the indictment alleges Reprinted by permission of Charlene Blevens, [email protected] Page 90 Updated 09/13/2016

Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) that none of the statements were true. Jha also allegedly misrepresented the involvement of the University of Maryland in conducting research on the project and further misrepresented that he had obtained a $100,000 investment from a third party in order to qualify for matching funds from NSF. 09/28/12

University of California, Santa Barbara

NSF

NSF OIG No. 12-1005

Audit of Incurred Costs UCSB was selected for audit due to findings in its A-133 for FY 2008 & 2209 related to untimely cost transfers in which NSF was specifically referenced and because UCSB is one of the largest recipients of NSF award dollars. Finding 1: Overcharged Summary Salaries over $1.9M Auditors found that UCSB’s allocation of faculty summer salaries to NSF awards was not based on actual work performed. The auditors stated the UCSB’s policies and procedures were inconsistent with the federal policy and NSF guidelines. Per UCSB policy if the length of the service period for the summer was indeterminate or irregular, a daily rate based on a 19 day month (instead of actual number of days) was applied to summer salary calculations. The auditor’s position was that using 19 working days as the base for faculty summer salaries resulted in salary charges to NSF exceeding 1/9 of the annual rates. The University position was that salaries were based on an academic year which included 171 days of service over a nine month period which equated to a 19 days of service per month. UCSB did not agree with the auditor’s assumption of a 22 day month during the academic year. The auditors also stated they were told by employees that the PAR’s did not support the labor cost allocation but rather the mathematic operation of distributing 3/9ths of an employee’s annual salary over the summer period and allocating 2/9ths to NSF awards. Finding 2: Over $2.8 Million of Excess Federal Cash Disbursements Resulted From Not Fulfilling Grant Cost Share Requirements The auditors found that UCSB lacked an adequate system to identify, account for, monitor and track the cost share it contributed to its NSF awards. UCSB does not track cost share contributions on a project by

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) project basis in its accounting system. Instead, UCSB relies on the respective departments that administer awards with cost share requirements to maintain their own independent, off-line systems to track cost share contributions. Furthermore, UCSB personnel stated that the University does not require certified labor effort reports for employees whose salaries are not at least partially paid by federal funds. UCSB had no other documentation to support the claimed labor cost share for these employees. The documentation provided consisted of a typed list of expenses rather than labor effort reports, receipts for equipment purchases or invoices. The auditors reported that supporting documentation provided was not sufficient for the auditor to verify that costs were actually incurred, that they benefitted the award and that they were not claimed as cost share on any other federal awards. Finding 3: Approximately $500,000 of Inappropriate Cost Transfers into NSF Awards The auditors found salary and wages cost transfers between NSF awards for labor costs incurred after the awards to which these costs were posted had expired; unrelated equipment cost transfers into an NSF grant; transfers made into an NSF grant at grant close out to spend out those grant funds; transfers from one NSF grant that went over budget into an NSF grant with available funds; and transfers for overhead, Department recharges, and materials and supplies that were unrelated to the NSF award to which they were charged. Cost Transfer made 6 months after award expired Auditors noted that a cost transfer was made from an institutional account and another NSF award to an NSF award six months after that award had expired for salary and wages, laptop purchases, and indirect costs. The auditors were advised that the original costs were charged to the wrong accounts. Explanations for transfers included employee error and research had forgotten their NSF awards had expired. The auditors stated that it was unreasonable to spend 56% of available grant funds on general purpose lab supplies when ODCs were only budgeted for 10% and when the project did not incur the requisite salaries to execute the grant objectives. The auditors questioned the costs Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) ODCs claimed in excess of the approved grant budget for ODCs. The auditors reviewed the annual project report which stated that 12 people worked on the grant, however the numbers were not supported by salaries paid and charged to the grant. The remaining cost transfers were for budget overruns on one NSF award into another NSF award made 4 months after the initial NSF award expired and the costs were transferred into a grant which had available funds at the time of the cost transfer. The auditors noted the explanations did not comply with UCSB policy which stated “employee error” was not an acceptable explanation and that 50% of the questioned cost transfers were attributable to one PI. The auditors noted that cost transfers were processed into grant accounts that were closed and inactivated in the accounting system. As a result the auditors found that the UCSB claimed costs on several NSF grants that were unrelated to the grant in order to spend down the funds. The Universities position was that the issues identified by NSF/OIG were not per se prohibited and a full understanding of the facts and circumstances is necessary to evaluate the appropriateness of these transfers. Finding 4: Over $473,000 of Indirect Cost Overcharges to NSF Grants The auditors found indirect costs that were charged on costs explicitly excluded from indirect cost in the areas of tuition remission, rental costs of off-site facilities, participant support, and sub awards in excess of $25,000. The Universities stated that it was acting in accordance with the terms of its specific grant awards which required UCSB to charge indirect costs at a specific rate rather than the negotiate indirect cost rate agreement. NSF/OIG clarified its basis for questioning these indirect costs is that the NSF Grants officers do not have authority to issue awards requiring a special indirect cost reimbursement rate when the institution has a negotiated indirect cost rate agreement. Finding 5: $440,000 of Unallowable Costs Charged to NSF Grants The auditors analyzed Purchase (flex card) transactions posted into UCSB’s general ledger and found several Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) transactions for purchases made for computer products. They noted that some of these transactions were conducted near the end of the NSF award periods. They selected 18 transactions, obtained supporting documentation for these transactions and inquired of UCSB key personnel as to why certain computer products were purchased at the end of the grant period for three NSF grants. UCSB personnel advised us that the purchases were made because the computers were needed for new post-doctoral researchers, for visitors’ offices, and for the server room. UCSB personnel could not explain how the purchases benefitted the NSF awards. We found that all 18 transactions were for the purchase of general purpose supplies and according to NSF’s Award and Administration Guide, Chapter 5, Section B.2, such purchases are unallowable charges. Transaction Charged to NSF Award No. 0832090 Prior to Grant Start Date In conducting data analytics on UCSB’s general ledger, we found that UCSB accounting records contained a transaction with a date of April 14, 2008, which was nearly 5 months before the effective date of September 1, 2008 for NSF Award No. 0832090. UCSB personnel explained that the principal investigator (PI) on this award wanted equipment to be available at the start of the award and knew there was a long lead time involved for fabrication. The equipment was purchased with a personal credit card. However, our review of NSF’s e Jacket system award documents indicated that UCSB did not request, and thus, NSF did not provide, approval for these preaward costs. Unreasonable and Unallocable Equipment Purchases Charged to NSF Award For equipment purchased at the end of the grant period, they auditors found that 70% of the equipment costs charged to an NSF Award were incurred during the last 10 months of a No-Cost Extension made to the four year award. The approved grant budget only included $17,000 for equipment, and UCSB could not explain how these late equipment purchases benefitted the NSF grant to which they were charged. Another award that did not have a budget for equipment had equipment charges with less than two months remaining. In reviewing the supporting documentation for the purchase, the auditors found that the Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) equipment was to be used on a subsequent grant from the Department of Homeland Security. In response to our asking why equipment was purchased when the budget did not include equipment cost, or purchased at the end of an award, UCSB personnel advised us they believed they could make such purchases because they were part of the Federal Demonstration Project (FDP). However, while FDP intends to streamline the administration of federally sponsored research, its ultimate goal is to improve “the productivity of research without compromising stewardship. Thus, FDP organizations must still adhere to the requirements of the awards and the federal regulations regarding costs claimed on their federal awards. Thus, participation in the FDP does not relieve UCSB of the requirement to only charge reasonable, allocable, and allowable costs on its NSF awards. Finding 6: UCSB Used $180,000 of Remaining Fellowship Funds for Non-Award Purposes UCSB had claimed costs on an award’s final FFR despite not having incurring actual expenses under the award. The funds were transferred to the Institutional Fund and expended from 2007 through 2010, after the expiration of the NSF award. We also noted that the costs for which the funds were used were not in compliance with the award terms and conditions. Awardee Response and OIG Comments UCSB did not agree with the findings in the report. Some of the concerns UCSB stated was that it did not have adequate time to respond, the findings should have been resolved during the audit stage and auditors did not consider additional information. The NSF OIG disagreed with the statements. The NSF OIG commented that they had sent their audit manager back for additional field work (which they stated was beyond the normal practice) to consider additional documentation provided by the University but it did not charge their position regarding findings for the report. Audit of clerical, administrative and extra service compensation expenditures. Administration and Clerical Expenses as Direct The Foundation improperly claimed $1,631 as direct administrative expenditures (e.g., laptop, flash drives,

HHS OIG-A08/28/12 State 02-11University of 02008 New York (Suny) Research Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) Foundation batteries, laser printer, printer cartridge, paper, and binder clips). The Foundation stated that the administrative expenditures questioned in the report were for exclusive use on the funded project and that the University's standard procurement procedure includes an attestation from the Principal Investigator that "items are for project specific use if they are to be directly charged. The audits stated that the Foundation was unable to demonstrate that the administrative expenditures related to the finding were not consistent with similar type expenditures incurred in unlike circumstances or related to a "major project." Extra State Compensation Earned in Same Department as Regular Duties Performed The Foundation improperly claimed $10,659 for extra service compensation paid to one faculty member because the individual earned such compensation in the same department that he performed his regular duties. The Foundation’s position was that the faculty member's job title did not allow for any release time to conduct research and that his role on the sponsored award was in addition to and outside of his official job responsibilities. The auditors maintained that the expenditure was unallowable because the faculty member earned it while working for the same department for which he performed his regularly appointed duties. 07/12/12 Florida State HHS (NIH) HHS OIG A- Audit of select costs charged directly to HHS awards 04-11University 01095 The auditors found that the University did not always claim selected costs charged directly to HHS awards in accordance with Federal regulations and NIH guidelines. Findings included $3 million in questioned costs. Auditors sampled selected general ledger accounts within the University’s accounting system that are generally recognized as administrative and clerical in nature and usually treated as indirect costs Administrative and Clerical Findings Auditor’s findings included unallowable salary for administrative and clerical type work such as cleaning glassware, ordering supplies, and supervising data collections. The auditors determined that neither the Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) nature of the work performed on the projects nor any other circumstances justified any unusual degree of administrative support or showed that the employees were necessary for the performance of the awards. The University noted instances where the auditors questioned an entire salary charge even though administrative duties were only part of the employees’ job responsibilities. Auditors commented that the employees’ administrative activities were not related solely to the project to which their salary was charged. Because the administrative activities did not solely benefit the project to which the salary costs were charged, they applied cost principles at 2 CFR part 220, App. A, § J.10.b (1)(b), which states: “The apportionment of employees’ salaries and wages which are chargeable to more than one sponsored agreement or other cost objective will be accomplished by methods which will … (3) Distinguish the employees direct activities from their F&A activities.” They could not determine the percentage of effort spent on administrative activities because the effort reports did not reflect time spent on administrative tasks. General Use Supplies-Lab Supplies Charged to Award Auditors found that transactions for general-use supplies, such as toner were direct charged to the award. The University disagreed with most of the disallowed transactions which it asserted were primarily for lab supplies and that the items were readily identifiable with the specific sponsored project to which they were charged. As an example, the University noted the questioned cost for pipette tips, which are lab supplies. The University argued lab supplies are not general-use supplies, and that the items were readily identifiable to the specific sponsored project to which they were charged. The University stated that most of the Principal Investigators whose lab supply charges we questioned had established reasonable allocation methodologies. However, during the audit work most of the Principal Investigators informed the auditors that the allocation method they actually used was: The project that first needed an item ordered it and charged the entire cost of the item to the award. Salary Costs-Researcher who Managed Zebra Fish Reprinted by permission of Charlene Blevens, [email protected] Page 97 Updated 09/13/2016

Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) Facility Direct Cost of Award Auditors found transactions where the documentation did not corroborate the amount of effort charged to the award or that not supported with sufficient documentation. The sample included a direct charge to an award for 100% of the biweekly salary of a laboratory researcher but according to the principal investigator, 40 % of the researcher’s effort was devoted to the award, and the remaining 60 % involved managing a zebra fish facility and other non-research-related duties. Auditors noted that although these non-award duties may have benefited Federal awards in general, they were administrative in nature and not assignable to a single award. Salary Costs Lack of Documentation A technology specialist’s salary was charged to an award but did not have an effort report documenting the time charged to the award. Insufficient documentation for Student Registration Fees The University charged student registration fees but did not provide support showing that the student was appointed to the award. Graduate Student Compensation paid in Excess of NRSA Stipend Level and First Year Post Doc NIH guidance found in NOT-OD-02-017. Entry-level postdoctoral NRSA stipend provides a useful benchmark for an award amount… In general, graduate student compensation will not be considered reasonable if it is in excess of the amount paid to a first-year postdoctoral scientist at the same institution performing comparable work. During the audit period, the NRSA stipend level for an entry-level postdoctoral student was $37,368 per year and entry level postdoctoral students doing comparable work earned between $16,640 and $31,200 per year at FSU. The selected sample included direct costs to three awards for a doctoral student with an annual compensation of $67,176. The University argued that the individual, who was a speech language pathologist with over 12 years clinical experience; was not serving as a graduate student on the grants where his salary was charged. Reprinted by permission of Charlene Blevens, [email protected] Page 98 Updated 09/13/2016

Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) Thus, the University was not bound by the NIH graduate student compensation guidelines.” The auditors noted that the graduate student’s area of study was Communication Disorders; his classes, including Doctoral Research, all related to autism spectrum disorders and the NIH grants to which his tuition remission was charged were for autism spectrum disorders research. Therefore, there was no meaningful distinction between the work this individual performed on research grants as a graduate student and the work the individual was hired to perform in his capacity as a speech language pathologist. There was no support for hiring the individual as a graduate student on one research grant and in a professional capacity on another. Further, paying the individual less than what the University would have paid a practicing speech language pathologist in the area does not support the salary charges to the NIH grant. Questioned Service Center Costs Rate Charged not designed to Recover Cost of Services Auditors found that rates charged by the animal facility and telecommunications centers were not designed to recover only the aggregate costs of the services. For the animal care facility the University computed the rates by averaging the rates that other universities charged. University stated that the facility was heavily subsidized so it knew the rates charged were below cost. The telecommunications center did not charge based on actual usage of the service provided. Furthermore, it charged administrative fees that were not part of the aggregate cost of providing the service. Unallowable Cost for Memberships and Office Supplies The center’s expenses included unallowable items such as memberships and office supplies. The auditors also noted that the expenses included a large amount for “technicians’ salaries.” During the audit of salary charges, auditors determined that these positions were charged directly to Federal grants. Use of Space Survey to Determine Activities in Lab The employee who managed the zebra fish facility was charged 100% to a NIH Award. According to the Reprinted by permission of Charlene Blevens, [email protected] Page 99 Updated 09/13/2016

Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) University, the zebra fish facility is used only to support one NIH grant and that no other activity occurred in the lab and the lab is a complicated endeavor; therefore, the direct charging of the employee’s salary was appropriate. The auditors asserted that the NIH grant was not the only activity in the lab based on the University’s space survey which allocated a portion of the lab to instruction. The cost of the zebra fish facility, including the cost of the technician, was included in a per diem rate used to charge costs to multiple projects. Lack of Biennial Review University did not perform biennial reviews on the facility to adjust the rates based on actual costs.

Auditors referred to the following guidance: 2 CFR part 220, App. A, § J.47.b, costs of services provided by specialized service facilities, when material, must be charged directly to applicable awards based on actual usage of the services on the basis of a schedule of rates or established methodology.HHS Guidance, “The costs for these services should be charged directly to the users through a billing rate mechanism. The billing rates should be designed to recover the aggregate costs of providing the service. Billing rates must be adjusted biennially.

03/29/12

University of Notre Dame

NSF

NSF OIG 12-1-003 Foxx & Company

Computer Purchases - Transactions not Reasonable On one award the University requested 10 computers in the award budget but purchased 15. According to the University the computers were needed to accommodate additional recruits working on the project and were used solely to collect study data however, the PI told the auditors that the extra computers were purchased as backups in case one broke down during a presentation. Audit of Costs Claimed and Cost Share on 5 Awards University of Notre Dame, UND, was selected for audit because of potential weaknesses in internal control over its financial and grant administration of its NSF awards noted in OMB A-133 Single Audits and NSF Desk and Site reviews. Questioned costs included unsupported participant support costs, unsupported travel costs, unsupported and unallowable subaward costs for the University of Chicago (UC) and Michigan

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) State University (MSU)], and $80,800 of participant support costs that were approved by NSF in UND's subaward budget, but not included by UND in its subawardee MSU's approved budget. Finding 1 – Incurred Costs not Supported by Adequate Documentation and Lack of Approval for Unmet Participant Support Costs--University of Notre Dame (UND) UND could not provide supporting documentation such as expense reports, invoices, and participant lists (including sign-in sheets) for participant support and travel costs for a portion of the transactions selected for audit. According to the University of Notre Dame officials, supporting documentation may have been destroyed in accordance UND’s record retention policy. Other documentation could not be located or was maintained by the PI and not readily available. In addition, $80,800 of participant support costs were proposed in the original subaward budget (approved by NSF), but UND did not include this amount in the subaward budget given to MSU. (Action taken without NSF approval). Auditor Recommendations & Auditee Response a. develop procedures to retain documentation supporting award costs maintained by other departments within the university for at least three years after the close of federal awards, b. perform periodic reviews of its policies and procedures to ensure that procedures are working as designed including documenting attendance at participant support activities and ensuring that travel incurred on federal awards is documented, c. establish and implement policies and procedures to ensure that university officials obtain prior approval from NSF before using funds budgeted for participant support on other cost categories Auditee Response to 1c UND believes it obtained approval from NSF prior to moving the participant support costs for the Sub agreement and believes it did not need prior approval since it participates in the FDP and has the authority to move subaward amounts budgeted for participant support to other cost categories without Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) NSF approval. Auditors recommend that NSF determine if the University’s actions pertaining to the participant support is in accordance with the FDP. d. provide documentation to support the questioned travel, participant support and subaward costs. Auditee Response to 1d UND provided a schedule of questioned cost. UND was unable to provide documentation for various reasons stated in the schedule. Many of the participant support questioned costs were due to lack of attendance records or documentation. All Travel cost remained questioned by auditors. **One of the questioned costs on travel related to travel documentation for various trips to seminars and meetings when no time was charged by individuals to the grant. Auditor’s position is that since no time was charged the travel should not be direct charged. Finding 2 – Lack of Documentation to Support Incurred Costs related to Subaward at the University of Chicago (UC) During the audit UC could not provide participant lists (including sign in sheets), detail hotel invoices showing participants, invoice details of reception refreshments and dinners, and actual source documents for charges made by Argonne and Cal Tech. However, as part of its written comments to the draft report the University was able to provide additional documentation that resolved a large portion of the original questioned costs. Unresolved questioned costs included stipends paid to 12 individuals working for UC, MSU and ND, stipend payments to “no shows” for a conference and a payment to Cal Tech which did not have a breakdown. According to NSF’s General Grant Conditions (GC-1) employees of the institutions should not be paid from participant support. Awardee Response UC strongly maintained that both the official documentation and the supplemental documentation gathered during the audit fully support the costs. Further, UC maintained that federal regulations do not require “sign in” sheets to support conference costs. The disallowance of those costs because of the absence Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) of such sheets is unreasonable, particularly since we provided ample evidence of attendance.”

03/12/12

San Diego State Research Foundation/El Centro School District

NSF/DOE

FBI Press Release NSF OIG DOE OIG FBI

Finding 3 – Lack of Documentation and Unallowable Costs for Participant Support and Travel Costs related to Sub-award at Michigan State University (MU) MU did not maintain detailed written policies and procedures related to participant support costs nor could it provide adequate documentation to support costs claimed during the audit. However, during the draft report process, Michigan State University was able to provide support for the majority of the costs questioned in the draft report. Michael P. Klentschy, pleaded guilty to mail fraud charges in two related cases alleging fraud in elementary school math and science grants. The 2010 indictment charged Klentschy, a former school district superintendent and two former professors, Olga Amaral and Leslie Garrison, of San Diego State University and employees of the university’s Research Foundation with conspiracy to enrich themselves by unlawfully diverting NSF and DoEd grant money to their own use and benefit and with fraudulently obtaining and intentionally misapplying grant funds. NSF awarded $5.67 million to the school district. Klentschy and Garrison were responsible for the scientific and technical direction of the program funded by the grant. Klentschy authorized the transfer of more than $1.2 million in federal grant money as a sub-award between 2001 and 2007. As part of his plea arrangement, Klentschy admitted that during his tenure as superintendent: (1) he fraudulently arranged to hire, on a federal grant, a partnership entity; to pay that entity nearly $400,000; and, in return, was paid $90,000 of grant funds back from the entity that were disguised as “research assistant” payments although Klentschy was not a research assistant for that partnership and was not entitled to that money; (The partnership entity was identified as G&A Associates, controlled by Amaral and her husband, according to the indictment.) (2) he made arrangements with an individual involved with a grant to pay him more than $78,000 disguised as “salary” for being an “assistant research director” when, in fact, he

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) was not an assistant research director and was not entitled to that money; (3) arranged to pay two close family friends with federal grant monies for work that was not completed; and (4) knowingly and intentionally sought and obtained nearly $60,000 in duplicate travel reimbursements for the identical travel expenses by knowingly and intentionally providing duplicates of receipts to two or more reimbursement sources. Compilation from articles: December 02, 2010|By SILVIO J. PANTA | Imperial Valley Press Staff; 03/8/12 mass live.com;03/12/12 FBI Press Release and 11/30/10 US Attorney Press Release 01/31/12 University of NIH/NSF/U Press Former Penn State Professor Charged in $3 Million Convicte Pennsylvania S Dept. of Release, Federal Research Grant Fraud – Sentenced 41 months d Energy the United A felony Information filed in US District Court in 11.30.12 States Harrisburg against Craig Grimes charged him with wire Attorney’s fraud, false statements, and money laundering. Count I charged that between 2006 and 2011, Grimes Office defrauded the National Institutes of Health ("NIH") Middle of federal grant monies. Grimes, acting through his District of Pennsylvan solely-owned company, SentechBiomed, State College, PA requested a $1,196,359.00 grant from ia NIH to perform research related to the measurement of gases in a patient's blood. In the application, Grimes specifically represented to NIH that he would direct approximately $509,274.00 to the Hershey Medical Center to conduct clinical research on adult and infant subjects. The money was never paid. Instead, the grant funds were misappropriated, in part, by Grimes for his own use. The clinical studies/trials were not performed. Count II charged Grimes with allegedly making false statements to the United States Department of Energy in connection with a second federal grant. In 2009, Grimes, while a PSU professor, completed a grant application seeking a $1,908,732.00 grant from the Advanced Research Projects Agency - Energy (ARPA-E) which was created to foster research and development of energy-related technologies. The ARPA-E grant was funded by the American Recovery and Reinvestment Act. It requires applicants for grants to disclose other funding sources. In the application Grimes completed and had submitted to ARPA-E, he allegedly stated there was no other funding, when, in fact, he had received a grant from the National Science Foundation. Count III charged Grimes with money laundering the proceeds of the fraudulent proceeds he received from

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) the National Institutes of Health.

01/31/12

John Hopkins University

NSF

NSF OIG 12-1-002 Mayer Hoffman McCann PC

Conviction Ex-PSU professor gets 41 months in research fraud U.S. Middle District Chief Judge Yvette Kane sentenced Former Penn State University professor and researcher Craig Grimes to 41 months in prison and ordered him to repay more than $660,000. 2013 PennLive.com & AP Press Release Audit of NSF $32.8 M cooperative agreement JHU was selected for audit because NSF award funds have not been audited as part of JHU’s OMB Circular A133 audit from fiscal year 2002 through 2009 and the OIG wanted to determine the status of prior findings identified in prior NSF reviews. The purpose of the engagement was to determine whether costs and cost share claimed by JHU and its sub grantees for the NSF award audited appear fairly stated in the Schedule of Award Costs, the adequacy of internal controls and to determine whether JHU adequately monitors its sub grantees and ensure that previously identified audit recommendations have been satisfactorily addressed and implemented. The audit resulted in $169,532 of questioned NSF funded costs, The questioned costs include $12,925.34 in improper application of indirect costs and $138,750 in unsupported payments totaling $151,675 made to Carnegie Mellon, one of the sub grantees and $17,857 from two inadequately supported charges made by JHU. Finding 1 - Post-Subaward Fiscal Monitoring of Sub grantees should be improved. JHU uses a risk based approach to determine which sub grantees need to be monitored and the level of monitoring to be performed. JHU’s PIs or Co-PI’s review sub grantee invoices for mathematical accuracy and the availability of funding. Contingent upon the specific sub grantee organizational risk classification and the nature of the work proposed, JHU resources are focused on performing on-site monitoring on sub grantees who demonstrate the greatest potential for non-compliance. Because all ten sub grantees that received funds from JHU under the audited award were considered low risk, no sub grantee on-site monitoring was performed. However, the auditors visited one of the sub grantees

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) (Carnegie Mellon University) and found various issues. The issues found at the sub grantee resulted in questioned costs totaling $151,675, due to unsupported claims and improper application and recovery of indirect costs. Auditors opinion on reliance on external audits for determining risk Fiscal monitoring of sub grantees considered low risk at JHU is inadequate because the monitoring process completely relies on the sub grantee external auditors and assumes that the costs claimed under the sub grants are allocable, allowable and reasonable when no sub grantee external auditor findings are reported, even though there is a chance that the certain sub grant costs were not selected for audit. This could lead to NSF funds being used for purposes other than those intended under the NSF awards. JHU response They believe its current sub recipient monitoring policy adheres to OMB requirements and they did due diligence in ensuring that OMB Circular A-133 requirements were accomplished. JHU stated that they advise its sub-grantees of requirements imposed on by federal laws and regulations by referencing OMB Circular regulations in their sub-awards agreements. Finally, JHU disagrees with the finding related to the wrongful application of the indirect rate by one of its sub-grantees. Finding 2 - Inadequate Supporting Documentation for Costs Charged to the Grant Internal Service Charges JHU was not able to provide proper support for two of the transactions selected for testing. This resulted in $17,857 of questioned costs. JHU agrees that supporting detail could not be located for a piece of equipment purchase. However, JHU disagrees that internal service providers should be required to use a purchase order. The auditors sustained the position that prior approval should be obtained for all external and internal purchases. Finding 3 - Unsupported Sub grantee Costs (Record Retention) Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) During testing of sub grantee costs at Carnegie Mellon University (CMU) the auditors were not provided with supporting documentation for several items. CMU officials stated that they were not aware of the record retention policy for NSF grants. CMU follows the university’s general retention policy which is 7 years; therefore, supporting documents dated prior to 2004 were not being retained by CMU. Auditors Assertion JHU is responsible for ensuring that its sub grantees adequately comply with the terms and conditions of their sub awards. Finding 4 - Improper Application and Recovery of Indirect Costs by the Sub grantee. The auditors noted that CMU applied the incorrect indirect rate to certain costs incurred during the audit period. CMU applied the valid rate at the beginning of the award period but did not make any adjustments as the rate changed throughout the life of the award. JHU disagreed with the finding. Carnegie Mellon University (CMU) has rates negotiated as fixed with carry forward at one year increments, as opposed to; JHU with predetermined rates over multiple years in one Negotiated Indirect Cost Rate Agreement (NICRA) CMU used the correct methodology in applying their F&A rates to invoices billed to JHU. Auditor’s Response MHM disagrees with JHU’s analysis of CMU’s indirect costs charged to the award. Based on OMB Circular A21, grantees shall use the negotiated rate in effect at the time of the initial award throughout the life of the sponsored agreement. However, the term life is defined as each competitive segment of a project. A competitive segment is defined as the period of years approved by the Federal funding agency at the time of the initial award. This grant had multiple award dates as funding was added to the project throughout the grant period. Technically the life of the award was renewed with each new modification as the award dates continued to change. In our opinion, using the same rate for the entire award will defeat the purpose of having updates rates every year. Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) 2011 12/31/11

HHS OIG

NEW: Ohio State University

Audit of Administrative and Clerical Costs 110 charges for administrative and clerical salaries and 259 charges for administrative costs were reviewed. Of those reviewed 11 did not have adequate documentation or support. The auditors accepted all salary charges. They accepted 248 of the 259 administrative charges. The University adjusted the other 11 charges. The auditors concluded that direct charging for the costs of copying services was justified on an NIH project entailing the production of recruitment, education, data collection, and consent material for a long-term treatment study involving 60 type-2 diabetics. Similarly, we concluded that postage and express delivery charges were warranted on a number of projects that required mass mailings to program participants or shipments of biological samples.

10/13/11

State University of New York Research Foundation

NIH,CDCAd ministratio n for Children and Families, HRSA, and Substance Abuse and Mental Health Services Administra tion

HHS OIG

Audit review of administrative, clerical, and extra service compensation expenditures claimed as direct costs. Of the 322 expenditures that we reviewed, 275 complied with Federal regulations, but 47 expenditures totaling $82,922 did not. Expenditures did not solely benefit sponsored agreement Computer Purchases at the End of the Project Computer purchases during the last week of—or after the end of—the associated project did not benefit the project The budget period extension cited by the Foundation related to a separate project. Purchase of a laptop computer The purchase did not solely benefit the associated project because the laptop was assigned to a graduate assistant—not to equipment linked to the project.

Promotional giveaways The Foundation improperly claimed expenditures for flash drives used as a giveaway item at a conference. Pursuant to OMB Circular A-21, Att. A, § J.1.f.(3), costs Reprinted by permission of Charlene Blevens, [email protected] Page 108 Updated 09/13/2016

Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) of promotional ite10.13ms and memorabilia—including models, gifts, and souvenirs—are unallowable The sponsored agreement proposals, award documents, and other materials in files contained no evidence indicating that these purchases provided direct benefit to the sponsored agreement. Initially all were disallowed. Subsequently the auditors allowed the costs associated with the flash drives used as outreach for the University’s counseling center. (Those embossed with counseling centers address and website). Expenditures for office supplies

Improperly claimed as direct administrative expenditures for office supplies (e.g., toner, paper, binders, binder clips, tape, folders, and pens).Pursuant to OMB Circular A-21, Att. A, § F.6.b. (3), items such as office supplies, postage, local telephone costs, and memberships shall normally be treated as F&A costs. Expenditures required no unusual degree of clerical support. The Foundation provided no evidence that the nature of the work performed on the sponsored agreements justified any unusual degree of clerical support to accomplish sponsored agreement objectives. The Foundation could not provide documentation justifying that the sponsored agreements met the definition of a “major project.” Extra service performed on duties not related to sponsored agreement Extra service compensation was claimed for one employee who performed duties not specifically provided for in the sponsored agreement or approved in writing by the sponsoring agency.

Pursuant to OMB Circular A-21, Att. A § J.10.d, grantees shall not charge sponsored agreements in excess of a faculty member’s base salary. In “unusual cases” where consultation is across departmental lines or involves a separate or remote operation, and the work performed by the consultant is in addition to his regular departmental load, any charges for such work representing extra compensation above the base salary are allowable provided that such consulting arrangements are Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source)

specifically provided for in the agreement or approved in writing by the sponsoring agency. 06/28/11 North Central Carolina University

Depart of Ed, Local, State and Private Grants

State Auditor

The former executive director of a minority program headquartered at NC Central University diverted $1 million to a checking account for payments to herself and others over a six-year period in a money skimming scheme. The North Carolina Office of The State Auditor released a report on misappropriation by former director of minority program. Nan Coleman, executive director of the Historically Minority Colleges and University Consortium, was fired in 2009 for poor performance, and Chancellor Charlie Nelms ordered an internal audit of the program. NCCU turned over its findings to state auditors last year. They found that from 2004 to 2009 Coleman had spent $287,000 from the account on herself and improperly paid tens of thousands more to others associated with the program, including nearly $62,000 to former Provost Beverly Washington Jones, according to the audit report. According to the audit, some of the money was spent visa check card on "questionable" purchases such as repairs to cars apparently owned by Coleman and her husband, travel expenses for him, women's clothes and hair care products. The consortium represented a dozen public and private institutions of higher education across the state that have traditionally had heavy minority enrollment. It got millions of dollars in state, federal and private grants to help minority children close the achievement gap with white children.NCCU was a member of the consortium and served as its fiscal agent. Coleman had sole control over the undisclosed bank account and by opening it may have made herself responsible for repaying the full amount diverted into it, the audit says. Coleman wrote more than $60,000 in checks from the account payable to herself. Checks totaling $62,000 were paid to a company she owned, and nearly $47,000 was taken out in ATM withdrawals, according to the audit. Two of the ATM withdrawals, totaling $900, came after she was fired in August 2009. When auditors repeatedly asked Jones about money she might have received from the account, she told them she had gotten reimbursement only for travel

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) expenses to conferences, according to the audit report. They showed her two checks totaling $3,750, and she said those were the travel expenses she had referred to. Auditors then showed her $8,009 in checks made out to her for "vendor services" and "evaluation services." "This is interesting," she said, according to the audit. "Maybe I did receive funding." After auditors showed her $13,000 more in checks made out to "cash" that bore what appeared to be her signature and asked why she would have received that money, she said she didn't have a response. Also, the audit said, $23,500 in questionable payments was made from the account to two administrative assistants and a former consortium contractor. The News Observer.com 03/31/11

Boston University

NSF

NSF OIG OIG11-012 McBride, Lock & Associates

Cooperative Agreement with 13 Partners BU was selected for audit due to high dollar value and number of NSF awards, collaborative nature of awards and deficiencies reported in 2005 NSF program site visit.

Award audited: Cooperative agreement for a Science and Technology Center, the Center for Integrated Space Weathering Model (CISM). BU is the lead and manages efforts of multiple partners including 13 other academic institutions and industries. Total cost claimed on award was $27.8 M. Auditors performed on-site audits at 3 subawardees and identified noncompliance with NSF requirements and questioned costs at each location. Subaward costs totaled 72% of cost claimed on award. Questioned costs were $412,400 of the $19.9M total subaward costs. Cost Share questioned totaled $174,397. Auditors noted 3 compliance and internal control deficiency findings. Finding 1: Did not have a formal plan for monitoring subawardees. Performing effective annual review of A-133 reports, Obtaining supporting documentation, Performing desk reviews and site visits. University relied on controls and self-assessments made by the subawardees. Subawardee Findings Bond and Interest Payments Charged as Depreciation Unapproved charges for payroll, foreign travel Reprinted by permission of Charlene Blevens, [email protected] Page 111 Updated 09/13/2016

Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) Extensive and unnecessary side trips to resort areas, including hotel, rental and per diem charges Duplicate Payments Management Fees Indirect costs for phone, postage and shipping charged as direct. Conference give awards not required to accomplish award objects 700 calculators, 1,000 mouse pads, 300 tote bags with CISM logo Translation costs of website to Spanish Visa application fee for entry into US Auditors stated requirements are to ensure that required A-133 audits have been conducted and: • Obtain certification that the required A-133 audit has been completed, • Obtain certification that audits by other regulatory agencies have or have not been conducted, • Obtain and review all audit reports for pertinent findings and ascertain with subawardee that timely and appropriate correction action was taken if findings were indicated, • If subawardee is required to but fails to have an A-133 audit performed or does not correct the findings, take appropriate sanction action, such as refusing to issue subsequent awards or implementing other mitigating controls, • Evaluate impact of A-133 audit findings on TBU, • Assess the effect of subawardee actions on the University’s ability to comply with federal laws and regulations, and • Document the results of the assessment. Finding 2: BU does not have adequate internal controls to ensure that cost share is properly identified, recorded, reported and monitored. Deficiencies: Identifying and recording cost share in the accounting system monitoring and reporting subawardee cost share; and reporting accurate cost share amounts to the NSF Cost share expenses were not recorded in separate accounts in the accounting system, the cost share certified by BU for the subawardees did not agree what the subawardees reported on their cost share reports, and, cost share items included unallowable costs. Auditors attributed this to minimal policies and procedures. Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source)

Finding 3: System of internal controls over the personnel and payroll function not adequate: To prevent the continuation of payroll checks or deposits after an employee terminated. There was no process or requirement in place requiring notification to HR or other outside department when an employee terminated. To ensure that sick leave is accurately recorded and reported for CISM employees. CISM did not maintain accumulated sick leave balances as required by University policy. Auditor Recommendations Establish comprehensive risk-based subawardee evaluation and monitoring procedures for NSFsponsored programs and adjust any erroneous subawardee management fee claims made on the award since its inception; Require designated University personnel to review cost share reports to ensure that sufficient detail is provided to allow a meaningful evaluation of the reasonableness of reported amounts, Reconcile cost share recorded in the general ledger to cost share reported by Boston University and the subawardees, and, provide written procedures and training to the designated University personnel regarding the correct process for properly evaluating, recording, and reporting all committed cost share associated with sponsored awards; Develop written policies and procedures that address accounting for employee terminations and employee sick leave, and implement methods to ensure adherence to the approved policies and procedures to ensure compliance with Federal requirements. Vendor discounts claimed as cost sharing Vendor discounts of $157,226 were improperly claimed as cost sharing by sub recipients. UCAR claimed as cost share the vendor discounts offered to conference participants, primarily school district personnel, for books, software and software licenses. The vendors provided discounts of approximately 40% to 50% off of the retail price of the software and licenses, and also assigned a value to time spent by employees of the software company attending Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) and instructing conference participants in the use of the company’s software. The auditors view was that the offering of discounts by a vendor represents a marketing strategy for product promotion and sales to third party school districts and does not involve the sharing of project costs by the subawardees. It is not allowable as cost share. Additionally the auditors noted the sale of these items was not demonstrated to be necessary for achieving the award’s mission, which is “to develop advanced computer models to specify and predict space weather from the surface of the sun to the surface of Earth.” 03/31/11 Ohio State NSF NSF OIG Cooperative Agreement -31 Sub awards 11-01-009 Auditors questioned $1.7 M in costs and identified $10 University McBride, M at risk cost sharing (cost share commitment $12.36 Lock & M) Associates Cooperative Agreements; 3 NSF Awards audited included 31 sub awards which made up 27% of total $17 M cost charged to NSF. Selected for audit due to extensive collaboration between prime and subawardees, large salary and indirect cost expenditures and substantial cost sharing. Prior OSU audits identified material noncompliance and internal control weakness in grant administration. Largest of 3 awards audited was a $12.3 M partnership among 7 Universities with OSU as the lead. Audit included site visits to 2 subawardees, with identification of noncompliance at one subawardee of $142,617 which represented 51% of their total cost and cost share claimed.

Finding 1- In adequate Subawardee Monitoring Lack of policies and procedures over subawardee selection and monitoring OSU relied on A133 audits to provide sufficient assurance and that subawardees will comply with award terms and conditions. Auditors stated, “size and reputation of a potential subawardee, do not preclude possibility of weak internal controls”. Auditor’s recommendations: 1. Develop and implement risk assessment and Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) monitoring procedures such as subawardee questionnaires and formal risk assessment criteria. 2. Reject invoices if detail information such as name and position title of personnel whose effort is charged is not provided to support costs claimed. OSU changed procedures to review A-133 report before the subaward is issued.

Finding 2 – Inadequate Controls for Meeting Cost Share Commitments- not adequately monitored Cost sharing identified and quantified in proposal narratives is not consistently accounted for and identified on proposal budget. Unallowable cost share of $26,345 for picnics, parties, meals and expedited VISA processing charges for bringing foreign nationals to the United States. $27,549 of postage, telephone and related costs (normally indirect) and $210,043 of costs with no support provided. 1. OSU Cost Share Policy did not specifically address the OMB Technical Bulleting requirement that an estimated amount of PI or researcher time must be computed and included in the research base. 2. OSU did not consistently require or maintain adequate documentation to support cost share claimed by subawardees or require such documentation. 3. Recommended cost share expenditures be tracked in a separate project account for each NSF award. 4. Develop and implement written policies and procedures to access and document subawardees risk of claiming non-allocable or non-allowable cost sharing expenditures. Include a process for reviewing cost share expenditures for allocability and allow ability. Review expenditures to determine that they are allocable, provided by the subawardees’ own funds and not federal funds and are claimed only once.

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source)

Finding 3 – Inadequate Controls for Meeting Participant Support Cost Commitments – not identified, segregated and monitored. Costs were not identified and segregated in the accounting system. Cost incurred by subawardees not monitored to ensure committed amount is expended. Majority of deficiency related to stipend component. Much of participant support coming from subawardees. OSU ledger reflected $36,300 as stipends and budget stipulated $954,100. Charged cash advance as stipends, no receipts provided. OSU added requirement to subaward agreement to report participant costs as a separate line on each invoice.

Finding 4 - Inadequate Effort Reporting System Deficiencies were found in 2005 audit. In 2006 OSU implemented enhanced controls over payroll and effort reporting processes and implemented electronic effort reporting system. Audit procedures did not identify any payroll costs subsequent to the changes in 2006 that lacked proper certification. During audit interviews, the PI on one award expressed that if effort reports present research for awards other than his own; he certified the entire report without further action. Auditors expressed that the process for approving effort expended by staff on more than one project needed to be further improved. OSU established a process to require an annual agreement which certifiers are required to red and acknowledge their responsibilities with regard to timely and accurate effort reporting before accessing effort reports to be certified. OSU noted that the Internal Audit department provided support in effecting the culture change within the University community that was needed. Finding 5 – Inadequate Polices, Procedures and Training – not adequate to ensure compliance Recommendation to expand policies, procedures and training programs that address the noncompliance identified during this audit in the areas of cost share, Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) participant support costs, and subaward costs. 03/25/11

North Carolina Central University

NSF

NSF OIG 1 1 - 1-0 1 1 WithumSm ith+Brown, PC

Internal Control Review. North Carolina Central University, NCCU, selected for audit based on past internal control weakness and subsequent activities that NSF auditors became aware of. Activities included a fraud committed on Federal awards by a senior official; an A-133 audit which reported material weaknesses and an agreement to repay the Department of Ed $1.1 million dollars for Federal loans taken out by students at an unauthorized satellite campus operated by a member of the NCCU Board of Trustees. Lack of Adequate Internal Control for Budgeting and Accounting, including Participant Support Costs. Auditors questioned entire participant support costs in 9 active NSF grants due to lack of separate GL code to identify participant support costs in the general ledger system. Auditors questioned the lack of specific accounting records and supporting documentation that delineates participant support cost by cost category and award. Auditors also noted that budget transfers were not always properly approved. Staff reported that internal guidelines require that if a budget needs to be revised or if the budget needs to be transferred from restricted account codes (e.g. Participant Support Costs), prior approval from NSF is required. In addition, when budget transfers exceed 25% of the respective account balance at the time of transfer, NSF approval is sought. NCCU responded that written policy does not mention a requirement to seek prior approval. Auditors Noted a transfer out of budgeted Participant Support Costs into Travel Costs. University & Federal Travel Policies Not Followed. Auditors questioned travel costs in excess of allowable Federal lodging and per diem meal rates as not properly approved or unsupported. NCCU follows state travel polices instead of federal. Auditors recommended documentation in cases where deviations from federal travel policies are approved. Auditors also recommended that since NCCU is following State rules and plans to continue to do so, NSF decide and confirm whether the NCCU policy of following State Rules for

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) Travel Policy is allowable for its federal NSF awards. Lack of Adequate Control over Equipment Purchases. Two instances were noted where NCCU purchased equipment that was not in compliance with the terms of its NSF awards. Global Positioning System (GPS) for robots purchased instead of computers outlined in the proposal. Auditors noted that the award allowed the purchase of equipment which included robots, accessories and 20 computers. Specific approval from NSF was not obtained when NCCU bought 5 GPS systems for the robots instead of the 20 computers. Laptops Purchased used in Department Auditors noted that during physical verification of 20 laptops purchased for a grant program, 12 laptops were available in the department and not issued to the students as proposed by NCCU. The number of students finally enrolled in the program was lower which resulted in reduced scope of the project. This warrants a specific approval from NSF for excess laptops purchased and retained with NCCU and not issued to students. NCCU responded that in both cases, NSF approval was not sought based on award interpretation flexibility. Payroll and Fringe Benefits Procedures Not Followed. In one instance it was noted that an employee charged 100% of salary cost to an NSF award, even though only70-80% of actual labor effort was expended working on the NSF award. Auditors recommended strengthening internal review to ensure that salary charged to NSF grants should be adjusted for work performed on other NSF projects. Inadequate Accounting and Reporting of Indirect Costs. Auditors noted that the indirect cost base set up in the accounting system was incorrectly set up based on auditor computations. All excess indirect costs were questioned for 9 active NSF grants. Fixed Assets Physical Inventory Deficiencies. Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) NCCU omitted one location during its annual physical inventory count. The auditors noted the lack of proper controls which can cause the loss or misuse of NSF supported assets. No costs were questioned. Lack of Compliance with NCCU's Own IT General Controls. Auditors found program changes were not approved by designated personnel; ii) patches to critical servers were not applied on a timely basis; iii) user accounts of terminated employees were not completely disabled and were found to be partially active; iv) list of authorized users displayed at the data center was not current and did not match the system generated list of users having access to the data center. Auditors recommended that the access for terminated employees is revoked on a timely manner from both the Active Directory and Financial System. The auditors noted the lack of IT controls could compromise the systems that are used to administer NSF projects. No costs were questioned. Inadequate Internal Controls over NSF Grant Compliance Requirements for Cost Share and Conflict of Interest. NCCU was found to have not complied with the 1% cost sharing requirement for the fiscal year ended June 30, 2009 for awards started prior to June 1, 2007 which contained a requirement for 1% cost sharing. (Note: elimination of NSF cost sharing requirement per CG-1 was effective June 1, 2007). Auditors recommended that NCCU determine the dollar amount of the cost sharing for all NSF projects that were prior to June 1, 2007 cut-off and make adjustment to claims accordingly. Auditors noted that inquiry and procedures indicated that the annual disclosure statements were not completed by the PI’s for any of the awards under audit for fiscal year 2009. 2010 07/29/10

Dept of Theft: Former University Official, Marshal, Sold Justice Computer Items Bought with Federal Grant Press Marshal pleaded guilty in U.S. District Court April 26, Reprinted by permission of Charlene Blevens, [email protected] Page 119 Updated 09/13/2016 Wilberforce University

Depart of Energy

Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) Release 2010 to one count of theft of government property for stealing more than $10,000 worth of computer equipment purchased with a federal grant and selling it through his established Internet business in 2007. Marshall instructed vendors to ship merchandise directly to him.

In March 2007, the Wilberforce Information and Technology Department staff conducted a preliminary visual inventory of equipment located in the Lab. They discovered approximately 103 hard drives and other computer equipment missing from the Lab. 07/22/10

Cornell Weill Medical College

NIH QuiTam Lawsuit False Claims Act

PRNewswir e Health Law Week, 01/08/201 0

Qui Tam Lawsuit Brought by Post Doc Fellow in NIH Training Grant for a career in research in the neuropsychology of HIV/AIDS The jury specifically found that, over the course of the five-year grant, Dr. van Gorp and Cornell knowingly submitted three progress reports containing false or fraudulent statements to NIH in order to continue the funding of the grant. Van Gorp indicated on the grant application that an average of 75% of fellows' time would be spent on research while 25% of their time would be spent on clinical work with HIV/AIDS patients. The district court found that whether the differences between the grant application and the program in practice were "difficulties" was a fact question and a motion for summary judgment was denied. Daniel Feldman brought suit alleging that van Gorp and Cornell used the funds for inappropriate purposes, including requiring the fellows to see an excess of private fee-for-service patients with other medical conditions. At trial, Dr. Feldman showed that of approximately 160 clinical patients seen by the fellows over five years on the NIH-grant, only three patients were HIV- positive. Instead of seeing HIV- patients, the fellows often evaluated "medico legal" cases, referred by insurance companies or attorneys who were in litigation over disability or worker's compensation claims, or criminal defendants. Dr. van Gorp was wellknown for his expert witness testimonies for the defense of several high-profile criminal defendants in New York during that period.

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) Other Key Issues Argued Formal HIV-courses that were never taught, key faculty on the grant who were never introduced to the fellows, and a breadth of HIV-research to which the fellows were never exposed. Defendant Argument Defendants denied making any false statements, and contended that, based on the subsequent career paths of the fellows; the grant had achieved its ultimate objective. They argued that the program was akin to a car trip, and that it did not matter what route one took, as long as some of the fellows ultimately arrived at the desired destination – a career in HIV-related research. Jury Finding Jury concluded that the original application and the first progress report, submitted prior to the arrival of the fellows, did not contain any materially false statements, once the training program was underway, the jury found the defendants falsely described the fellows' actual activities under the grant in a way that was capable of influencing the government to continue the funding. 10.01.10

07/05/10 06/30/10

Cornell Daily Sun

Cornell Appeal of Fraud

South Carolina State University

Earmarked Funds US Dept. of Transporta tion

Washingto n Examiner Commenta ry & The Herald

Cornell was found to have violated three of five charges under the False Claims Act and ordered to pay $887,714 in total damages. In a formal complaint to the court, whistleblower Dr. Daniel Feldman, a former Cornell fellow, alleged that not only did the fellows spend “less than half” of their research time devoted to studying HIV/AIDS, but that they spent “vast majority” of their clinical work “on patients who were not HIV-infected and who were also paid by private insurance.” Feldman dropped out of the program after 15 months. S.C. State University could not account for $25 million in federal earmarks The paper reported that the University's board voted to conduct an external audit on the James E. Clyburn University Transportation Center to find out how millions of state and federal dollars have been spent. More than $50 million has flowed through the center since it was launched in 1998. S.C. State leaders have

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) about half that money on hand for the building's first phase. But they've been unable to explain where the rest of the money went. A June 14 report in the (Charleston) Post and Courier revealed that 12 years after the center was launched, the site for a new building sits vacant, no transportation research is under way and the program lost its designation as a federal transportation center. A previous federal audit on one of the center's programs, the National Summer Transportation Institute, found the university's financial records in such disarray accountants couldn't figure out where millions of dollars went. John Smalls, the university's senior vice president of finance and facilities, estimated the report would cost about $100,000 and said the university might be able to get approval from the U.S. Department of Transportation to use grant money to pay for the audit. Smalls disagreed that the university hasn't been accountable for grant money. He said grant money is reviewed every year but conceded the review doesn't provide specific details on where the money went. Washington Examiner Commentary by Mark Hemingway

The Herald newspaper in Rock Hill, S.C. 03/22/10

03/15/10

California Institute of Technology

NSF

NSF OIG 10-1-009

University of Delaware

NSF

NSF OIG 10-1-008 Withum Smith +Brown

Follow up to NSF Effort Audit In a follow up audit of its effort reporting system, the audit found that Caltech had fully implemented all 7 audit recommendations. Caltech established a new robust system for tracking effort and a new policy was issued by the Provost to all Caltech faculty and required the new process for all grant proposals. A new Effort Commitment module was established in the grants accounting system to track and report PI effort commitments. This module includes companion cost sharing accounts. NSF Effort Audit Audits found that Internal Controls over Effort Reporting System Need Improvement – Audit stated that the sample size used was small in proportion to the population.

Finding: Salaries and Wages charged to the NSF did not always benefit grants or were incorrectly charged to NSF grants. Reprinted by permission of Charlene Blevens, [email protected] Page 122 Updated 09/13/2016

Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) Administrative time was charged directly, time spent preparing proposals for 2 graduate students and 2 professionals, time spent serving on a university hiring committee. Excess salary was paid without adequate documentation. Documentation simply stated that full time researcher performed additional research. Finding: Employees were not sufficiently educated on the salary distribution and effort reporting processes. Interviews noted a lack of understanding by employees on certification process, including their responsibilities. One employee stated he did not realize he was working on a NSF grant. Another employee stated that half the time charged to NSF was for research for another agency. Subsequent documentation provided supported work performed by the employees on NSF grants. Department effort administrators were expected to make themselves aware of the requirements and process and were responsible for providing assistance and training to their employees.

03/03/10

University of Missouri Columbia

NSF

NSF OIG 10-1-006 McBride, Lock & Associates

Finding: System weaknesses were not identified and corrected in a timely manner Audit identified several system weaknesses that resulted in a number of reporting errors on reports. Auditors found that the system was not programmed to adjust for 9 month salary being paid over 12 months, and journal entries and some contracts for summary salary were not included in the system. Developers did not fully coordinate programming with grants management individuals. 1. Effort reports were not certified within the established turnaround period. Certified after mandatory 60 day period. 2. Independent Comprehensive Evaluations University believed that A-133 audit met the requirement for independent evaluation. Subsequently internal auditors developed an audit approach to evaluate system but did not interview employees to corroborate information on effort report. Audit of internal control over financial reporting and monitoring of subawardees. Audit identified significant compliance and internal control deficiencies in financial management of subaward and payroll costs.

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) (Previous A-133 identified significant material noncompliance and internal control. An NSF desk review identified a lack of documenting policies and procedures) University did not concur with all of the findings related to Subawardee monitoring. The Universities external auditor had stated that the sub recipient monitoring process was adequate and in compliance with A-133. Finding 1: Subawardee Monitoring Recommendations  Send out Sub recipient Confirmation Letter and Questionnaire, if applicable, to all subawardees as part of the risk assessment and monitoring process. The University sends out the letter and questionnaire to only those subawardees where it is unable to obtain sufficient documentation to complete the risk assessment. The University reviews the Harvester Report or A-133 report. If these are no findings the date3 and results are documented and the risk assessment is completed. If there are findings and the University has not obtained a copy of the A-133, the University sends out the Confirmation Letter. The University did agree that the policy pertaining to sub recipient Confirmation letter was not always followed. 

Request and thoroughly review A-133 audit reports and reports from other regulatory agencies and internal auditors for all subawardees. UM did not concur that a review of reports for other regulatory agencies and internal auditors for all subawardees was not required. The NSF auditors did not agree and noted that these audits had disclosed significant internal control weaknesses at 2 subawardees that could affect the subawardees ability to report accurate cost information.  Designate supervisory personnel to perform a review of risk assessment.  Follow up to determine if weaknesses in this report that were identified in the subawardees audit reports were adequately resolved. Finding 2: University does not have adequate internal controls and safeguards in place to adequately process all labor cost transfers to ensure that labor effort certifications are properly recertified. Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) Auditors recommended revision of policies regarding adequate explanations and documentation to justify need for payroll adjustments and to require a secondary independent review and approval. Develop internal controls and implement to ensure adherence to approved cost transfer policies. Provide training to all staff involved in processing labor cost transfers. 02/16/10 University of Attorney A former University of Buffalo Researcher, William General Fals-Stewart, was arrested Feb. 16 on multiple charges Buffalo New York of attempted grand larceny, perjury, identity theft, Buffalo offering a false instrument and falsifying business Regional records. Office Authorities claimed that Fals-Stewart engaged in the fraudulent conduct in an attempt to rescue his & The reputation after leaving his UB job, under pressure, in Buffalo 2005. Officials have said he had been accused of News scientific misconduct by fabricating data in a federally funded study. The Buffalo News February 25, 2010 Attorney General announced criminal charges against a former University at Buffalo researcher, who allegedly hired professional actors to testify on his behalf during a formal misconduct hearing and then attempted to seek $4 million from the state for monetary damages. In September 2004, Fals-Stewart was accused of scientific misconduct for allegedly fabricating data in federally funded studies at the University at Buffalo and Research Institute on Addictions. Allegations were based upon discrepancies between the number of volunteers he reported to the National Institute for Drug and the actual number of volunteers who participated in his studies. Fals-Stewart paid the actors to testify and provided them with scripts to use during the proceedings that were riddled with inaccuracies regarding his research. Fals-Stewart told the three actors that they would be performing in a mock trial training exercise. They were not aware that they were testifying at a real administrative hearing, nor did they know they were impersonating real people. Because of these false testimonies, Fals-Stewart was exonerated at the administrative hearing. Claiming that the misconduct allegations tarnished his reputation, FalsStewart sued the University, seeking $4 million from the state in damages. Cuomo’s office discovered the alleged fraud, forced Fals-Stewart to withdraw his lawsuit and Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) initiated a criminal investigation. Attorney General of New York Press Release

02/16/10

Washington University St. Louis

NSF

NSF OIG 10-1-005 Williams Adley & Company

A week after he was charged in an elaborate scheme to defraud state taxpayers, a former University at Buffalo researcher was found dead Tuesday afternoon in his home. NSF Effort Audit Audit recognized notable accomplishments of timely certifications of labor effort reports and strong support by management and those involved to develop accurate effort reports. The audit did not identify any specific deficiencies concerning labor effort reporting. The audit did identify areas of concern. The University did not require effort training for all campuses. Auditors acknowledged that A-21 and related circulars do not specifically require mandatory training. The auditors’ position is that that the circulars are meant to provide overarching guidance and are not intended to provide specific requirements. Institutions are expected to identify and employ necessary controls. They believe that mandatory training for key personnel is critical to the reliability of the effort reporting program. They recognized that WUSTL had developed excellent training material. Effort system not fully integrated for all personnel to include academic, administrative, and research effort. Prior to Jan 2009 effort reports were paper based. Effort reports covered months in which some salary was charged to a sponsored project. Effort expended on non-sponsored activities was not always reflected on the effort report thus effort did not reflect 100% of employees activity during the full effort reporting period. New system implemented appears to have resolved the identified issues. The need to provide cleaner guidance on how to process significant prospective changes to salary distribution. University relied on Departments to make their own determinations and entries regarding significant

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) changes. In some cases, departments relied on informal e-mails to document the request for a change. University did not provide detailed written guidance about the process or written justification for changes and the approval required for entering those changes. Lack of Comprehensive Internal Evaluation of Effort Reporting Audit process identified through its Compliance office was not fully comprehensive. 01/14/10

University of Nevada - Reno

NSF

NSF OIG 10-1-003 Williams Adley & Company

NSF Effort Audit The audit noted that the University made significant improvements in its effort system by establishing a new web-based system, issuing new policies and procedures and hiring a full time Effort Reporting Specialist. Audit Findings Salaries Exceed Two-Month Salary Limitation Lack of policy implementing limitation on 2 month salary charges. Summer salary was paid via overload which was not integrated into the effort system. Clear timeliness standards where not established for the payment of overload salaries and overload salaries paid after the effort reports were certified did not require re-certification of effort reports. Cost Transfers without Adequate Justification Cost Transfers Processed during Last Month of Grant Manual provides guidelines for when cost transfer may be appropriate but does not establish procedures for documenting reasons and/or justifications. No office was tasked with responsibility for adequacy of justifications. Did not properly require additional senior management review for transfers made during last 45 days of project. Salary Charges for Employees that did not benefit the Projects Tuition Remission Costs Did not have sufficient procedures to ensure that graduate student tuition remission costs were proportionately charged to research projects directly benefiting from the actual work. No procedure for reallocation of tuition costs and associated fees if there

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) are subsequent changes to a students work activity. Cost Share Effort Not Reflected on Report Did not report committed cost sharing when NSF funded PI effort was replaced with cost shared effort. Contrary to OMB Clarification Memo, did not have an established methodology for imputing amount of donated effort to include in research base when projects do not contain any paid faculty or senior researcher salaries. Policy did not provide guidance on how to address situations when federally funded effort was replaced with cost share effort. If University cannot document committed effort was provided, federal regulations require advance agency approval when there is more than a 25% reduction in effort. Did not Perform Independent Internal Evaluation Internal audit only performed a review for control weaknesses. Report also cited lack of formal backing for internal audit department. Employee Training for Key Officials Not Mandatory Employee participation in effort reporting was mandatory. One graduate student interviewed who certified her own effort stated that she was unaware of the specific names of the research projects or the PI’s for the 6 research projects she was being paid from.

2009 11/09/09

NSF Effort Audit Effort Reports Not Certified by Person with Suitable Means of Verification One departmental staff member used a transparency to mass produce a signature without anyone evaluating employee effort. Reviewers compared percentages to payroll reports due to a misunderstanding of the purpose of the effort report. Evaluating the percentages was unusually difficult due to semester periods that were for different periods of time (3, 4 or 5 months), the effort reports presented effort on a granular level for periods of time, (days or weeks) within the period forcing the employee to certify effort occurring on a specific day or days and effort reporting periods overlapped semesters. Reprinted by permission of Charlene Blevens, [email protected] Page 128 Updated 09/13/2016 Stony Brook University Research Foundation

NSF

NSF OIG 10-01-001 McBride Lock & Associates

Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) State funded activities were not ways included on an integrated basis as required by federal regulations SUNY University and the Foundation have separate payroll systems. The Foundation’s payroll system processes salary for full-time researchers, faculty on summer research appointments post doc scholars research support and project assistants and graduate research assistants. SUNY processes salary for state employees including faculty, administrative and support staff and graduate teaching assistants. Graduate student activities for state-funded teaching assistantships were not captured by effort system. The Foundation took the position that because SUNY is a separate employer, graduate teaching assistance ships were not required to be included. The auditors disagreed based on OMB recognition that in an academic setting, teaching, research, service and administration are often inextricably intermingled. The auditor’ position was that the unique relationship with SUNY did not relieve it from complying with the A-21 requirement. Auditors stated that Foundation procedures for included state-funded work activities for faculty, staff and graduate students should be consistently applied. Lack of Written Justifications and Explanations on Labor Cost Transfer The Foundation provided policy and procedure guidance and both the Foundation and SUNY had prescribed forms. Stony Brook’s practice was to not require justifications for transfers within 30 days of the original transaction date but Foundation policies and procedures did not disclose support for the practice. SUNY did not always utilize the prescribed forms which contained a field requiring an explanation. When the prescribed form was used full justifications were not always provided. The Foundation implemented new cost transfer policy and guidance but Stony Brook employees responsible for federal grants management were not provided formal training of the procedures and generally continued to use the prior cost transfer process. Unallowable Costs Incorrectly Charged Administrative employee charged salary directly Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) without provided justification in the NSF budget proposals for direct charging as required by OMB and NSF regulations (F.6.b.(2))(NSF grant policy requires direct charging of administrative salaries by clearly described in the budget justification). Employee charged absence to grant in excess of number of days allowed in Stony Brook policy and Disclosure Statement. Lack of Independent Evaluation Foundation and Stony Brook believed A-133 met A-21 requirement. Auditor stated that A-133 audit was not, nor was it intended to be a comprehensive review of the effort reporting system. Stony brook uses an after the fact paper system. Reports are approved within 90 days of the ending date of Spring, Summer and Fall Session. The Foundation is the legal grant recipient and the research projects are performed at Stony Brook.

11/02/09

University of Wisconsin

NSF

NSF OIG Williams, Adley & company 10-1-002

NSF Effort Audit NSF conducted a review in 2006 and 2007 both prior and after the implementation of a new effort reporting system. The new system corrected many of the weaknesses identified in the 2006 reviews. Wisconsin generally had a well-established and sound grants management program. In 2006, as part of the implementation process for the new web-based ECRT system, Wisconsin’s consulting group conducted a “snapshot review” of the current state of its effort reporting system and found:  All effort reports not adding up to 100 percent and encompassing all professional effort.  Improvements in training needed.  No formal procedures for tracking and monitoring effort commitments.  PARs not timely received.  Procedures for tracking cost sharing make it difficult to determine if key personnel are meeting their cost commitments.  Delays in processing cost transfers.

The review of the new system by the NSF auditors identify the following areas: Reprinted by permission of Charlene Blevens, [email protected] Page 130 Updated 09/13/2016

Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) Improvements Needed in the Payroll Distribution and Effort Reporting System Wisconsin did not fully comply with NSF’s salary limitations for faculty research leading to overcharging NSF grants. Raises were not factored into calculations to ensure adherence to the 2/9th rule. When the faculty received salary increases in April, their salary was increased just for 2 months. It was not retroactive for the full year. Therefore, when calculating the 2/9th limit Wisconsin needed to prorate the individual base salary appropriately before calculating the summer pay rate The University did not have a training policy until the implementation of the new ECRT effort reporting system at which time Wisconsin mandated training for everyone involved in the effort reporting process. NSF’s Two-ninths Rule. Wisconsin did not have a process that fully implemented NSF’s two-ninths rule on faculty summer pay. Specifically, there were no policies and procedures to cover supplemental compensation when computing PIs’ summer salaries for conformance with NSF policy. Employee Training For Key Officials Was Not Mandatory. PIs and department administrative officials are important officials for effort Reporting. Suitable Means of Verification Requires Definition Policy did not define what constituted a “suitable means of verification”; require documentation by the signing official that they obtained such verification, or hold certifying officials accountable for following certification policies and procedures With the implementation of the new system, Wisconsin implemented significantly revamped policies and procedures and mandatory training. In response to the audit the University  Created a schedule of Internal Audit reviews of the effort reporting system.  Wrote a definition of “suitable means of Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) verification.  Reviewed practices for application of the NSF Twoninths rule regarding salary payments to faculty and is working with the Council on Governmental Relations and NSF on a clarification to the application of the current NSF policy on the Twoninths Rule.  Continued training programs and created a refresher course that will be available for all certifiers. Agreed to resolve $2,941 (out of $31 M in FY 07 salary charges) in disputed salary payments. 08/19/09 University of NSF NSF OIG Audit of large Center awards which continued over an 09-1-014 extensive period of time and had significant cost Michigan Withum, sharing, and substantial subaward, consultant, Smith & equipment and participant support costs Brown U-M was chosen for an audit because of the high dollar value, number and collaborative nature of many of their awards. . Overall, the auditors determined that except for approximately 3% of total claimed costs and less than 1% of cost sharing, the costs claimed appear fairly stated. The questioned costs included salaries, travel, internal service charges, participant support, and other direct costs for lack of adequate documentation. Auditor Findings Lack of Effective Record Retention System for Maintaining Source Documentation. The auditors selected 657 cost transactions for audit testing, 300 remained unsupported at the time the field work concluded. The auditors extended the deadline and 69 unsupported transactions were noted in the audit report. UM officials indicated that it required over 10 people more than 250 hours to assemble the documentation. 69 transactions noted were broken down as follows: • 25 time and effort reports concentrated primarily in one grant, • 29 inadequately supported journal entries • 1 lump sum journal entry to move equipment fabrication charges from one project to cost sharing. • 8 cost sharing transactions where the auditors could not determine the relationship to the NSF grant. • 5 direct cost transactions for an internal copier Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) recharge, dental insurance payment, administrative and research salaries and a health insurance subsidy cost • 1 purchase card transaction for laboratory supplies. The auditors attributed this to policies and procedures which did not clearly identify the types of documentation to be maintained and reviewed in order to comply with Federal requirements and costs that were recorded into the general ledger in a way that did not match the document storage and retrieval system coding making it difficult to retrieve information. Lack of Adequate Centralized Monitoring Control. The OSP (central office) reviews and approves transactions on a risk assessment basis (equipment purchases, foreign travel, consulting, cost transfers, budget creation/modification). The university felt that the number of instances of identified unallowable costs was infrequent and immaterial. The auditors noted that OSP performs its monitoring control at award closeout, which is usually years after a cost is incurred. Questioned Costs:  Alcohol charges on a hotel bill for $637  Salaries of $21,083 for two months for an employee who was no longer employed by the University  Payments totaling $3,200 for a foreign visitor to Ann Arbor at $100/day for meals with no receipts. The changes were in violation of University policy and in excess of the Federal Travel Regulation. Lack of Procedures for Monitoring and Enforcing Labor Certification and Effort The finding relates to 37 employees who certified their labor effort reports prior to the end of the certification period, which was not in accordance with either U-M’s own policy or OMB Circular A-21. The auditors did not take exception to the University policy as stated. The University used the Plan Confirmation where at least annually the employee must certify that work was performed. University Policy required; “At the end of each certification period, the distribution is confirmed when the employee signs the Effort Certification Report” and “The Cost Reimbursement Office of Financial Operations will initiate an email to all Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) employees required certifying in early July of each year.”

07/30/09

Purdue University

NSF

NSF OIG 09-1-013

Lack of Written Job Description for a Key Position Related to an NSF Program This was significant because of the large dollar value of the awards. The auditors did not feel that the description in the proposal was sufficient since it did not describe the actual responsibilities over the day-today operations of the Director. U-M responded that the faculty member appointed to the director position was fully aware of the responsibilities of the position, however when the auditors requested that the Director provide a description of what the responsibilities entailed, he could not provide a written job description describing his responsibilities. NSF Effort Audit The audit found that Purdue generally has a wellestablished and sound system with the exception of internal controls over PIs charging proposal writing and graduate students charging teaching activities as direct costs to NSF grants. The auditors found a lack of a periodic independent internal evaluation of the effort reporting system and adequate training of individuals certifying their labor efforts. The internal control weaknesses were considered significant. Internal Controls over Purdue University’s Labor Effort Charging Can be strengthened Of the 30 sampled employees, 3 of 9 Principal Investigators (PIs) charged proposal writing, and 2 of 12 graduate students charged teaching activities as direct costs to NSF grants in violation of both Federal and University policy. Although the mischarged amounts for the sample are not material individually it constitutes an internal control weakness that could result in more substantive errors. These internal control weaknesses occurred, in part, due to a lack of adequate training of individuals certifying their labor efforts, with respect to proposal writing and teaching activities, and the lack of a periodic independent internal evaluation of the effort reporting system. There was no mandatory requirement for PIs, who certify the labor efforts, to attend. In addition, management believed the A-133 audit and other reviews by the costing office provided the OMB circular A-21 required independent evaluation

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) of the labor effort system. However, these reviews only addressed limited aspects of the system. These incorrect charges amounted to about 20 percent of the graduate students ‘effort during a four-month period. Teaching activities do not directly benefit the NSF and accordingly should be charged to nonsponsored university activities. Additional Concerns for the New On-line System While we consider Purdue’s effort report certification process one of the better ones audited to date, we noted that Purdue had not developed written policies and procedures for the new system capability to ensure the continued timeliness of the certification process. 06/30/09

Cornell University

NSF

OIG 09-1008 Withum Smith+ Brown

NSF Effort Audit Cornell generally has a well-established and sound Federal grants management system. Our review of 30 sampled employees found no specific misstatements of effort, but the University allowed labor costs charged to NSF awards be certified by employees without firsthand knowledge or a suitable means of verification. Auditors commented on what they felt was a delay in action on a prior internal audit on effort reporting. They also noted that although OMB allows annual certification they believed that Cornell could enhance the reliability of its effort reporting system by certifying effort more often than once a year and that NSF-OIG may address this again in their capstone report after completion of the individual university audits. Labor Effort Certification System Not in Compliance with OMB Circular A-21 Suitable Means of Verification. Specifically, Department and unit administrative officials certified 8 of the 30 sampled employees even though they were not in a position to know whether the work was actually performed as shown on the effort reports. This same weakness was found by Cornell’s internal audit group. Cornell did not define in its policies what constituted a suitable means of verifying labor effort or establish adequate internal controls to provide for effective management and oversight of its labor effort reporting system. For example, Cornell did not train its PIs in effort

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) certification policies and procedures and does not require their involvement in the certification process. Group Certifications. Department administrative officials routinely certified effort reports using group certifications, in which all employees in a division were certified with a single signature. Group certifications certified effort of between 31 to 249 employees at the end of the annual certification period. Officials relied on informal discussions with the PI as a suitable means to validate the actual effort performed. The University Audit Office noted that several departments utilize a group certification process instead of having each individual self-certify, although University Policy No. 3.11, Effort Planning and Confirmation, states that certification should preferably be performed by the employee being certified. Auditors Comment on Management Response to Internal Audit on Effort Cornell management’s response to each issue was brief and essentially noncommittal. The responses indicated a certain degree of “tone at the top” indifference. Auditors noted that Cornell officials provided some documentation of “behind the scenes” actions it had taken to address some of the report findings. Therefore, while the official management response lacked a definite commitment to change, some officials did begin developing plans for corrective actions during FY 2007. No Documentation of Discussions with PI to Validate Effort Performed Officials stated they relied on discussions with the PI as a suitable means to validate the actual effort performed. However, the discussions were not documented and therefore could not be used as a suitable means to validate effort performed. Some of the more significant improvements noted by the auditors: • Require training of all employees involved in the effort reporting process, including PIs. • Develop a detailed definition of “suitable means” and include that definition in the effort reporting policies. • Require that anyone certifying an employee’s time Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) document how they obtained “suitable means” and maintain that documentation. In addition, no matter who signs a certification form the PIs need to be aware of and understand the effort certification process. • Verify the salary charges of sampled individuals that have 95 percent effort or more charged to Federal awards. • Verify the salary charges of all PIs that exceed 98 percent effort charged to sponsored awards and that submitted a proposal within the same year. • Implement a quality assurance program that will annually test whether certifiers using group certifications followed Cornell’s effort certification procedures. Other Matters to be reported Certification Frequency NSF OIG noted: 1) Almost all universities have multiple certification periods during a fiscal year and that Cornell only requires certification of effort once a year. 2) Cornell’s certification period is five months longer than the average of other major universities included in the NSF-OIG’s overall labor effort report up to this point and that while this was not in conflict with Federal regulations it does increase the risk that effort could be certified erroneously as the certifier needs to recall actual effort more than a year after it was incurred. 3) They did not making a recommendation but stated that NSF-OIG may address this again in their capstone report after completion of the individual university audits. Auditor Recommendations Cornell revise its policies and procedures to 1) define what constitutes suitable means of verification 2) require certification by employees with firsthand knowledge or certifiers with documented suitable means of verification, 3) train all employees involved in the effort reporting process on a periodic basis, 4) involve PIs directly in the effort certification process, 5) hold certifying officials accountable for Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) following certification policies and procedures, and 6) Develop a process to adequately address recommendations by the internal audit group in a timely manner. 7) Eliminating group certifications and by certifying effort more often than once a year. 06/30/09

Georgia Institute of Technology

NSF

NSF OIG 09-1-009 McBride Lock and Associates

NSF Effort Audit Our audit disclosed that Georgia Tech generally has a well-established labor effort reporting system with the exception of internal controls over prospective workload allocation changes (prospective changes), labor cost transfers, uncharged but committed labor effort and NSF reimbursement limitations to principal investigators. Identified as Significant Internal Control Weakness. Prospective Changes 1. Insufficient controls over changes to the data underlying the effort reports could allow improper charges to Federal awards to remain undetected, thus jeopardizing the reliability of not just effort reports, but also Federal award financial reports. This is critical since labor charges to NSF awards totaled $16 million in FY 2007. The amount of labor effort charges to other Federal agencies by Georgia Tech, totaled $49 million. 2. The lack of adequate controls over prospective changes and labor cost transfers serves to lessen the reliability of the labor effort reporting process at Georgia Tech. 3. For example: Policies and practices allow prospective changes to labor effort allocations to be made without documentation of justification or independent approval. Cost Transfers 1. Cost transfers within 60 days of posting to the payroll system can be made without documentation of justification or approval. Those beyond 60 days require justification. However, many justifications were inadequate, with little or no follow-up to ensure they were valid. 2. Departmental financial managers had the ability, by independently processing labor allocation

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) adjustments and cost transfers, to make changes to the labor effort system without adequate checks and balances. 3. The University has not established policies and procedures to provide for accurate reporting of uncharged but committed labor effort requested for the PI, and to ensure compliance with NSF’s rule limiting PI’s summer salary to two months. 4. Auditors Recommendations The recommendations were primarily directed toward enhancing the University’s oversight of the labor effort reporting system by 1. addressing policies concerning these issues, Requiring documentation of justification and approval of changes to monthly workload allocation reports and cost transfers, requiring follow-up on inadequately justified labor cost transfers, and ensuring proper training and oversight of these activities. 05/19/09 Southern ED US Indictment of Assistant Program Director in “Talent Talent Attorney Search” program for wire fraud, misapplication of Illinois Search for the funds from programs receiving federal funds, and University Program Southern obstructing justice. Edwardsville District of Kory L. Rush was indicted for wire fraud, misapplication (SIUE) Illinois of funds from programs receiving federal funds, and News obstructing justice by tampering with a witness by a Release federal grand jury. Rush is alleged to have misapplied, and permitted others to misapply, federal grant funds for his own personal use and the personal use of others. The indictment charges that federal grant funds were used to purchase gift cards, electronics, alcoholic beverages, groceries, and other consumer goods in violation of the rules and regulations limiting the expenditure of federal grant funds. Rush is further charged with encouraging a witness to provide false information to investigators in order to conceal the fact that Rush authorized $8,000 in payments to the witness for services that were never performed. 04/30/09 Southern ED Talent ED-OIG/ Audit of use of TRIO program funds and participant Search A05I0013 eligibility. Illinois Program SIUE was not entitled to receive $720,522 in Talent University Search funds. University uncovered irregularities in an Edwardsville Internal Audit and Self-Reported. (SIUE) Audit Findings Did not serve the required minimum number of Talent Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) Search (TS) participants; The auditors conducted a Physical file inventory of the participant files. The University could not locate participant files for all participant reported in the Annual Progress Report (APR’s). Of the 603 participants reported in 05-06, 219 files were located; in 06-07, 529 participants were reported and 323 files were located. In accordance with 34 C.F.R. § 643.32(b), 5 600 participants are required in each budget period. The auditors recommend that SIUE return on grants funds since it did not serve the minimum 600 participants. The auditor’s position was that the TS grant is a competitive grant and inaccurate information on grant proposals could result in the Department denying other institutions funding and awarding grants to institutions that are not able to meet the objectives stated in their grant proposals. Inaccurate information in APRs also could result in the Department continuing funding to institutions that are not meeting objectives as stated in their grant proposals. Failed to provide adequate documentation for TRIO personnel costs; The Research Office maintains a database and generates after the fact activity reports. In the sample, 2 reports were not signed and 10 were signed by the Director who was not the direct supervisor. Some reports were signed 18 months to 3 years after the pay period in question. The written policies for the completion of activity reports did not state specifically that the activity reports should be signed only after the work has been completed. 1. Unallowable and inadequately documented nonpersonnel costs; Unallowable Costs – Field Trips Field trips to Six Flags, Speed Parks, St. Louis Gateway Sport, Raging Rivers, a St. Louis Blues’ hockey game, and a haunted theme park that had as their primary purpose the entertainment of participants. SIUE provided general summer activity schedules to show that educational activities were scheduled along with recreational activities. The auditors stated the schedules, as stand-alone documents, were not adequate to refute that the trips had as their primary purpose the entertainment of participants. The Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) schedules did not include itineraries, indicating that field trips also included visits to education venues, such as colleges or universities. Unallowable Costs – Gift Cards or Other Gifts Against SIUE policy, TRIO employees were permitted to use their purchase cards to obtain gift cards. In addition, employees did not always maintain records of who received gift cards or require recipients to sign for gift cards. Other Unallowable Costs Charges occurred in prior or subsequent grant years. Inadequately Documented Costs Costs that lacked evidence of the participants who attended the trip or how the cost was related to the project, or the list of participants attending the field trip did not agree with the list of participants SIUE provided the auditors. Failed to maintain adequate TRIO participant records

03/24/09

Cornell Weill Medical College

NIH DOD

Qui Tam False Claims United States

The CFR requires that grantees must have evidence showing (1) the basis for the grantee's determination that the participant is eligible to participate in the project; documentation of an individual’s low-income status evidenced by a signed statement from the individual’s parent or legal guardian or verification from another governmental source, such as a signed financial aid application or a signed income tax return. (2) the grantee's needs assessment for the participant; (3) the services that are provided to the participant; and (4) The specific educational progress made by the participant as a result of the services. The auditors founds in some cases files were missing or incomplete. Some files were missing the participant applications, contained unsigned applications or applications signed by a TS employee if the parent or guardian’s signature could not be obtained. $2.6 Million to Settle Civil Charges; Whistleblower Weill Cornell Medical College has agreed to pay over $2.6 million to settle civil charges that Cornell defrauded the National Institutes of Health and the Department of Defense as it sought more than $14

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) Attorney million in federal research grants for the Southern Committed Effort – PI failed to disclose full extent of District of various research projects New York The principal research investigator for the grants for which Weill Medical College sought funding failed to disclose to the Government the full extent of her various active research projects. These omissions deprived the Government of its ability to assess the researcher’s ability to perform the projects in the grant applications. The government alleged that Gudas’s failure to disclose other grants she received allowed her to “over-commit” her professional time, which is prohibited by NIH guidelines. 2. The funding in question was money that Cornell and Gudas received since 1997 from eight NIH Public Health Service research grants, totaling more than $13 million, and one Department of Defense grant totaling more than $1 million. Federal funding guidelines and regulations require researchers to disclose their active projects and the amount of research time they plan to devote to each project to ensure that researchers have adequate time to complete a project and that the project is funded appropriately. 03/10/09 UC San NIH DHHS Review of Admn and Clerical Costs - Substantially complied. Minor clerical errors. Francisco 02/27/09

Theft of $469,000 from University Visa Card  Division Manager pled guilty to using a UMN Visa used for grant allocations and office supplies and to making unauthorized purchases. Green was informed that her job would be eliminated due to reorganization. 3 days before her last day, green deposited a check made payable to UMB for $137,736.33 into her personal bank account. More than 200 credit card transactions were fraudulent. 02/26/09 University of NASA Houston Federal Investigators Allege Fraudulent Submission of Chronicle Invoices Florida Federal investigations allege that a Florida Engineering professor and three other members of his family fraudulently received millions of dollars from NASA by submitted fraudulent invoices and then funneled money to their personal bank accounts. FBI agents raided the university’s Innovative Nuclear Space Power and Propulsion Institute. Anghaie and family members Reprinted by permission of Charlene Blevens, [email protected] Page 142 Updated 09/13/2016 University of Maryland Baltimore

Maryland Attorney General

Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) set up a company where his wife was the president of the company. Agnhaie and his wife were accused of diverting hundreds of thousands of dollars of illegally obtained government funds from their corporate bank account to their personal account. Houston Chronicle 02.26.09 02/02/09 UCLA School of UCLA Theft - Former Head of Willed Body Program Faculty & sentenced to jail. Medicine Staff News Director of Willed Body Program sentenced to 4 yrs 4 months for profiting from the sale of body parts donated to UCLA for medical research and education. 01/31/09 University of South Theft using Purchasing Card Florida Sun Engineering Associate Dean accused of using a Central Florida ED-OIG/ University Credit card to purchase a home A05I0013S entertainment system and LCD tvs. Provided an altered entinel receipt to internal auditors to make it appear that business like items were purchased. South Florida Sun Sentinel 01.31.09 01/16/09 Duke NIH, CDC, HHS OIG Review of Administrative Costs – Pilot Audit FCA, HRSA A-04-05Auditors claimed unallowable claims of $1,661,011 University 01014 occurred because the University had not established adequate controls to ensure consistent compliance with the Federal requirements. University had largely left it to the discretion of its individual colleges, departments, and principal investigators to interpret University Policy and to comply with the Federal requirements. University asserted that in all cases the sponsoring agency approved the administrative costs in the budget. Salary Costs - University had not adequately documented that the grants, contracts, or other agreements met the definition of “major projects.” Many of the projects had little in common with the programs and activities listed in Exhibit C to the Circular as examples of what might actually be considered major projects. Further, neither the University nor the principal investigators provided any evidence that their projects required significant administrative and clerical support over and above the level normally provided. The cost proposals, technical proposals, award documents, and other materials contained in the University’s project files contained no evidence that any of these grants should have been charged for administrative and clerical support Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) Examples of other administrative costs from the sample that Auditors considered unallowable. 

Charged the entire cost of a laptop computer with the assertion that the computer was used solely for project data and allowed the employee “the opportunity to work from home or wherever she may be located at any time of the day. The auditors noted however, that the involved employee was budgeted to devote only 5 percent of her University time to the project which paid for her computer. 





The University charged an NIH project $193 for a swivel chair. In the justification, the University did not address the chair itself but pointed out that they had requested grant funding for miscellaneous office supplies. University charged an NIH grant $47 for two letter trays. When asked to explain circumstances related to the expense, the University asserted this was a major project that required “separate files for patient and site information in accordance with the scope of work.” The other administrative expenses charged directly to HHS-funded grants, contracts, and other agreements ranged from monthly local telephone line charges, pager services, and copier paper to general office supplies such as a pair of scissors, postage, paper, pens, markers, file folders, and envelopes. However, the project proposals, award documents, and other materials in the University’s project files contained no evidence indicating that the nature or extent of work carried out on the projects, or any other circumstances, required any unusual degree of administrative and clerical support to accomplish project objectives.

OIG Comment on Use of Extrapolation It is longstanding OIG policy to use statistical sampling techniques and recommend recoveries based on estimates of our sample results when it is conducive to our audit objectives. Because the University had charged HHS-funded projects for more than 55,000 separate items of administrative or clerical costs during our audit period, Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) use of statistical sampling techniques was the only practical methodology for accomplishing our audit objectives Report also stated that the Office of Sponsored Research did not provide adequate scrutiny for charges. Policies describe major project requirements and incorporated relevant working from regulations but did not provide further guidance to help PI’s determine whether a particular project falls within definition of major project. 2008 12/23/08

$7.6 Million Settlement, False Claims & Common Law Allegations in Management of Federally Funded Research Grants (3.8 Actual and 3.8 Punitive) Settlement focused on the following two types of mischarges: Cost Transfers not adequately explained and documented  (E-mail stated salary cost transfers made to spend down funds) altered documentation given to auditors. Time & Effort Summer Salary 100 percent of PI summer effort was wrongly charged to federal grants when the researchers expended significant effort on unrelated work. The only salary received by the researchers during the summer was the result of the effort they charged to federal grants. Absent the alleged grant mischarges, the researchers would not have been paid. Note: in press release the acting US Attorney stated that the settlement sent a clear message that the regulations applicable to federally-funded research grants must be strictly adhered to. Yale cooperated fully. The period covered Jan 2000 to Dec 2006. The grant awards were made by 30 federal agencies entities. Ref: Yale Audit 02/03/06 05/17/10 University of Chronicle Former U. of Louisville Dean Is Sentenced to More of Higher Than 5 Years Louisville Education “In the agreement, Mr. Felner pleads guilty to nine counts of mail fraud and tax evasion. Along with imposing the 63-month prison term, the deal requires Mr. Felner to make restitution of $510,000 to the Reprinted by permission of Charlene Blevens, [email protected] Page 145 Updated 09/13/2016 Yale University

NSF, DHHS, NASA, Army, Energy, DCAA, FBI

US Attorney Office

Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) University of Louisville and more than $1.6-million to the University of Rhode Island. Mr. Felner's alleged co-conspirator, Thomas Schroeder, has not entered a plea agreement. He is scheduled to go on trial in August. Prosecutors charged that Mr. Schroeder and Mr. Felner also defrauded an addiction center in Illinois where Mr. Schroeder previously worked. That allegation was not part of the original set of charges against Mr. Felner, but he admitted to that fraud in the plea deal.” The Chronicle of Higher Education CourierIndictment U of L Education Dean Felner 10/24/08 University of Journal UofL lost $576,000. Louisville .com A federal grand jury in Louisville indicted the Dean on 10 counts of mail fraud, money-laundering conspiracy and income-tax evasion. Felner is charged with fraudulently obtaining nearly $2.3 million in grant and contract money from U of L and the University of Rhode Island. The 45-page indictment says that Felner and a colleague from Illinois, Thomas Schroeder, 58, took $1.7 million from the Rhode Island school and about $576,000 from U of L, and attempted to embezzle another $240,000 from U of L. The indictment charges that from 2001 to 2008, Felner solicited survey business from school districts across the United States. The money from those contracts was supposed to go to the National Center on Public Education and Social Policy, which Felner founded at the University of Rhode Island. Instead, Felner and Schroeder allegedly diverted about $1 million from the Atlanta school district, $326,000 from Buffalo, N.Y., and $375,000 from Santa Monica, Calif., into another center that Schroeder founded in Illinois -- and eventually, into three bank accounts he and Felner controlled. The alleged scheme began two years before Felner came to Louisville, and officials said it was his former employer -- the University of Rhode Island, not U of L -that was the bigger victim. Huber said several police agencies, including the Secret Service Financial Frauds Task Force, and the U.S. Postal Inspection Service, contributed to the investigation, which Huber said was expedited because of "great community concern" about the allegations. If convicted, Felner faces a maximum of 75 years in prison and Schroeder up to 45 years. Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) Courier-Journal .com 09/24/08 Vanderbilt NSF NSF OIG NSF Effort Audit 08-1-014 Our audit found that Vanderbilt generally has a wellRegis & established and sound Federal grants management Associates( system. Vanderbilt needs to improve its internal NSF Effort controls for managing and administering its payroll Audit) distribution and effort reporting system to ensure afterthe-fact labor certifications are timely and reliable. Significant Internal Control Finding Effort Certified. Five of 30 sampled employees reported 10 to 50 percent less actual effort worked on NSF grants than certified on their labor effort reports. Approval Time. Certifying officials did not timely approve 12 of the 68 effort reports reviewed within six months after the end of the reporting period, ranging from 21 to 174 days late. Certification Date. 41 of the effort reports reviewed lacked documented certification dates. (signature dates were not documented) Tolerance Range. Vanderbilt did not establish any specific time frames for review and approval of either of the two effort certification reports. Although Federal regulations do not specify when labor effort reports should be reviewed and certified, sound internal control dictates that University officials should provide the after the-fact confirmation as close to the end of the reporting period as possible to ensure its reliability. Salary Charges to NSF. While charging their salaries to NSF projects, (i) two employee were inappropriately working on other sponsored research projects and (ii) three employees were devoting time and effort to grant proposal writing and other administrative activities, which cannot be directly charged to Federal grants. For the nine-month academic year a graduate student divided his research effort equally between a NSF project and a related privately-funded project. According to the student, the NSF-funded portion of the project was for the theoretical side of the research, while the privately-funded portion was for the practical application aspect of the research. However, the graduate student improperly charged 100 percent of his salary to the NSF grant. Summer Salary, amounts charged did not match effort During three summer months in 2005, a PI spent approximately 66 percent of her research effort Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) working on three NSF projects and 22 percent on a Vanderbilt project. However, the PI improperly charged two-thirds (67 percent) of her total summer salary to two NSF grants even though she had only devoted 44 percent actual effort. During an interview, a PI stated he spent approximately 80 percent of his time on NSF research activities and 20 percent writing grant proposals during the summer months. However, he improperly charged 100 percent of his summer salary to the NSF project.

07/08/08

St. Louis University

DOJ (press release Northern District of Georgia)

Hold Senior Management Accountable. We do not see the issue being resolved until Vanderbilt holds senior management officials, such as Department Chairs, accountable for timely labor effort report certification. Such senior officials have more leverage than Department grant administrative staff in ensuring employees or project PIs review and certify effort reports timely. St. Louis University Agrees to pay $1 Million to Settle Federal False Claims Act Allegations Settlement Resolves Allegations that the University’s School of Public Health Fraudulently Charged Faculty Members’ Additive Pay to Federally Funded Grants, Contracts and Cooperative Agreements A former Dean in the School for Public Health alleged that the University’s School of Public Health overstating the time certain faculty members were spending on grants received from the Centers for Disease Control and Prevention (CDC) in Atlanta, Georgia, thereby inflating supplemental income received by those faculty members through those grants. Grants received by the School of Public Health from the National Institutes of Health (NIH) and from the Department of Housing and Urban Development (HUD) also were impacted by the University’s actions, with similar improper inflation of hours worked and increases in the supplemental income received by faculty members. It was further determined that the School of Public Health failed to comply with federal requirements to maintain a system that accurately tracked hours worked on federal grants. Former FAMU Director McGill pleads guilty to conspiracy and theft from federal programs charges. McGill used education monies to pay employees for work unrelated to the grants, including overtime and

Dept of Ed DOJ (press Florida release) Agricultural FBI, OIG and Departmen Mechanical Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016 06/18/08

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) University t of Ed & bonuses. McGill required certain recipients to kick back (FAMU) Florida portions of the grant monies to her and to disguise Dept of these monies as consulting monies to the grants. To Financial conceal the fraud, McGill caused fraudulent invoices to Services be submitted to grant recipients. Defendant faces a term of imprisonment of 75 years and fines totaling $1,750,000. US. Department of Justice Press Release Ed.gov Investigativ Former FAMU Director Sentenced to 46 months in 10/16/08 e Report federal prison. The Court also ordered defendant McGill to pay $800 in special assessments to the United States and to make restitution in the amount of $212,461.21 to the Florida Department of Education. 05/02/08

University of California, San Diego (UCSD)

NSF

McBride Lock & Associates (NSF Audit)

NSF Effort Audit Significant Internal Control Procedural Cited 1) Late Effort Reports and Timeliness 59% of sample not submitted within due date. Limiting the review to the shortest amount of time possible helps ensure a more reliable certification of labor costs. 2) Lack of Formal Written Timeliness Standards & Accountability by Senior Managers Out of date and ineffective timeliness policy, 15-day turnaround time viewed as unreasonable & thus not enforceable. Establish formal monitoring processes and procedures; include periodic reminder notices with increasingly graduated scale to higher levels of management. 3) Independent Internal Evaluations University wide assessment not sufficiently comprehensive nor performed frequently enough. 4) Administrative Time Charged to NSF Awards Need to define activities associated with institutional base salary. PI & staff members charged 100% to award reported time spent on writing grant proposal or participating in University committees. Employees from 3 departments stated problem occurred because UCSD did not establish accounts for use when performing administrative type work. 5) Salary Exceeding NSF Faculty Salary Limitations or UCSD’s Incentive Award Policies Summer salary. PI charged 2 months of summer salary to one NSF grant and 1 month to another NSF grant in violation of NSF Two-Ninths Rule.

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) 6) Incentive Award not pro-rated to all funding sources Employee’s incentive award based on extra effort made to a specific research project allocated to benefiting projects and not on pro rata basis to compensation from all funding sources. Inconsistent with UCSD policy and not specifically disclosed to NSF and approved through the proposal process for the subject grants. 7) Voluntary Committed Labor Effort PI’s which do not request salary support not reporting level of effort. Contrary to OMB Clarification Memo UCSD did not have formal policy or process for imputing PI effort to include in its organized research base.

03/27/08

University of Illinois Urbana

NSF

NSF OIG Report Number 08-1 -005 Mayer Hoffman McCann, P.C. (NSF Audit)

University decentralized many of its grant management functions to the Academic Departments NSF Effort Audit The audit found that UI generally has a well-established Federal grants management program. However, the University needs to improve its internal controls over the labor effort certification process to ensure the reliability of the after-the-fact confirmation of actual salary charges to Federal awards. Significant Internal Control Procedural Cited Certification does not include total employee workload. Reports are available online but not specifically provided to PI’s during certification process. PI certifies a report of cumulative effort of individuals who work on their projects. UI Officials position: Regulations do not explicitly require certifying officials to provide after the fact confirmation to non-sponsored activities. Auditor’s position: Certification process cannot be relied upon to meet the Federal requirement for accurate labor charges if a PI lacks sufficient information. Late Effort Reports and Timeliness Late certification of Labor Reports diminishes reliability as time increases. Certifying officials rely primarily on memory since they are not required to track and maintain records of an employee’s activities. Lack of Formal Written Timeliness Standards & Accountability by Senior Managers Establish procedures effort certification compilation &

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) distribution, PI review and approval and follow up notices. Clear accountability needs to be assigned to senior managers. Average of 64 days to generate and distribute the report reasonable compared to established time frames at other universities. . Independent Internal Evaluations UI relied on A-133 audit. Establish a Level of Tolerance Range of accuracy for how much an employee’s actual effort can differ from certified effort before a cost transfer is required. Noted 5% used as some Universities. 03/10/08

University of California, San Francisco

02/12/08

North Central Carolina University

NIH

HHS OIG

Compilatio n of News Reports

Audit of Administrative and clerical expenses as direct costs to National Institutes of Health grants. No Recommendations. University substantially complied with Federal regulations for claiming reimbursement for administrative and clerical expenses. A North Carolina Central University administrator has been reassigned after a state audit revealed he had skimmed about $15,000 from federal research grants to pay his credit card bills. Franklin Carver was stripped of his duties as assistant provost and associate vice chancellor of academic affairs but retained his faculty position at N.C. Central. The money was taken from grants to the university from the U.S. Department of Health and Human Services as part of the Minority Biomedical Research Support and the Overcoming Racial Health Disparities program. A three-month investigation showed Carver authorized nine checks, totaling $36,041, between April 2003 and March 2004 to an N.C. Central undergraduate who was romantically involved with Carver, as well as Carver's nephew, the nephew's girlfriend and "fewer than 10" other people not affiliated with the university, according to Frank Perry, lead investigator in the State Auditor's Office. Carver instructed the people to cash the checks, return a portion of the money to him and keep the rest, the audit report states. The report further states that Carver authorized and approved two graduate assistant contracts for the

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) student with whom he was involved. The first, in August 2003, was a one-month agreement for $2,964 to perform research. The student stated that she never worked for the university, according to the report. The second contract, a one-year agreement for $18,700, was rejected by a university official. The auditor's report recommended that NCCU institute tighter controls to ensure grant money is used properly and that the provost repay embezzled funds to the university. WRAL.com news and The Daily Tar Heel 01/22/08 Georgia Tech NSF FBI $316,000 Personal Pro-Card Expenditures on Grant (Newspape An administrative coordinator used five purchasing r Story) cards that were billed to a grant funded by the National Science Foundation to buy more than 3,800 items. Purchases included season tickets to Auburn University football games in Alabama, a $1,900 frozen drink machine, holographic lighted palm trees, a Wave runner, wide-screen television, electric double wall oven, dishwasher, and air conditioning units for her RV according to an affidavit signed by FBI special agent William Share. The purchases went unnoticed until August 2007, when a tipster contacted the Georgia Tech Department of Internal Auditing, according to the search warrant. The Atlanta Journal-Constitution 02/12/08 2007 11/15/07

University of Utah

NSF

NSF OIG Report Number 08-0 1-002 Williams Adley & Company (NSF Audit)

NSF Effort Audit The audit found that while the University of Utah's payroll distribution and labor effort reporting system generally supports the salary costs directly charged to NSF grants, the University needs to enhance its written policies and procedures to provide clear and comprehensive guidance for a labor effort reporting system that is fully compliant with federal regulations. Significant Internal Control Weakness Cited

1) Lack of Formal Written Timeliness Standards & Accountability by Senior Managers Establish formal procedures and processes to promote timely certifications. Control weakness attributed to lack of clear, concise and well-documented policies and procedures. Cited A-110 .21(b) (1) University was Reprinted by permission of Charlene Blevens, [email protected] Page 152 Updated 09/13/2016

Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) issuing one reminder letter per quarter. Recommended periodic reminders at more frequent intervals, using an increasingly graduated scale to a higher-level management official. 2) Establish a Level of Tolerance The effort system was used to re-allocate substantial labor costs because these changes were not entered into the payroll distribution system when known in advance. Mentioned that some universities use 5% as the acceptable variance between actual and certified effort. Cited COGR March 2007 report which gave 5% as a general rule of thumb. 3) Suitable Means of Verification Define what is acceptable as suitable means of verification to support labor charges. One PI certified for a graduate student who devoted 28% of work to his the project but who also was working on another sponsored award for a different PI (72%). The PI did not speak with the graduate student or other PI to validate reasonableness. 4) Independent Internal Evaluation Perform a comprehensive evaluation of the system as well as establish formal policy for such required evaluations in the future. University relied on A-133 as Independent Internal Evaluation 5) Policies & Procedures Policies and procedures not updated. Auditor recommendations to improve internal control structure.

09/28/07

University of Maryland Baltimore County

NSF

Mayer Hoffman McCann (NSF Audit) OIG 07-1020

Recommended that NSF work with the cognizant audit agency to develop a corrective action plan. Audit of Cost Claimed on 4 NSF Awards Four Compliance & Internal Control Deficiencies in Fiscal Management Practice Lack of Monthly Review of Expenditures Audit identified a material weakness that UMBC personnel did not always follow the cost accounting procedures in place to ensure that the costs charged to NSF awards were accurate, allowable and allocable. Revolving account not established timely to separately

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) record non-reimbursable costs. Monthly review of expenditures not performed timely. (Change in reporting structure and new business manager on maternity leave) Lack of Monitor Subaward Costs  UMBC did not always monitor subaward costs it charged to NSF awards. Reliance on A-133 audit report does not constitute adequate fiscal monitoring of its subawardees .Recommended UMBC develop a comprehensive Subawardee fiscal monitoring plan which defines staff responsibilities.  Did not have adequate procedures to monitor the cost sharing expenditures claimed by its subawardees. UMBC never requested cost sharing data or cost sharing supporting documentation from its subawardees. Claimed cost share based solely on the cost sharing budgets. Recommended UMBC develop and implement written policies and procedures to obtain and review cost sharing data and related supporting documentation from its subawardees on a regular basis.

09/06/07 Brandeis University

NIH

HHS OIG

06/26/07

NIH

HHS OIG

Select Grants – Review of

Lack of Monitor Indirect Costs Claimed Did not have adequate procedures in place to detect errors in the amount of indirect costs it claimed to NSF. Relied on accounting system to calculate and record indirect cost to charge its NSF awards. If direct cost removed from an award the accounting system did not remove the associated indirect cost. Audit of Administrative & Clerical Expense The University misclassified a total of $31,303 to NIH. Specifically, the audit identified the following charges $13,400 for text and reference books, $14,107 for subscriptions to trade journals, and $3,797 for other supplies used for two open house parties to thank current volunteers and recruit new volunteers for University research projects (deemed public relations costs) that should have been included in its F&A Costs. Appendix A list specific costs. Books include course text books in excess of number of students under the grant, research article reprints, lab manuals and reimbursement of students and trainees for course textbooks. Review conducted at the request of two Members of Congress. No finding. University and colleges limited graduate student

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) Graduate compensation charges to the amount paid to a firstStudent year, post-doctoral scientist performing comparable Compensation work at the same institution. Report contained no recommendations. Prior Audit 10/26/94 05/15/07 University of CMS HHS OIG Review of Vendor Rebate Paid to Hospitals The University Medical Center received a rebate in the Iowa Hospitals form of a credit memo, which could only be applied & Clinics against the purchase of additional equipment. The University Medical Center used the credit memo to purchase new equipment and reflected the related annual depreciation expense on its Medicare cost report.

04/05/07

Thomas Jefferson University

HHS

HHS OIG

03/30/07

California Institute of Technology (Caltech)

NSF

NSF OIG OIG Report 07-01-013

The CMS OIG identified the rebate through a national statistical sample of rebates. The audit found that the provider did not reduce costs reported on it fiscal year Medicare cost report contrary to Federal regulations and CMS guidelines. The auditors recommended that the University revise and resubmit its Medicare cost report to reflect the rebate as a credit reducing its health care costs, Federal regulation 42 CFR 413.98 states that rebates are reductions in the cost of goods or services purchased and are not income. The CMS Provider Reimbursement Manual (part 1, chapter 8) requires provides to report all discounts on their Medicare cost reports. Audit of Cost Transfers to Federal Grants University generally documented cost transfers to federally funded grants in accordance with Federal requirements. Since 1996, NIH had designated the University as high risk because of questionable accounting for grant fund expenditures, specifically cost transfers. In 2000, the University entered into an institutional integrity agreement with HHS. The agreement stated that the University adopted new policy and procedures for cost transfers. NSF Effort Audit Our review disclosed that Caltech generally has a wellestablished and sound Federal grants management enterprise program. Caltech needs to enhance its PDC system to provide for accurate reporting of voluntary committed labor effort devoted by faculty members on Federal projects.

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) Voluntary Committed Labor Effort Include voluntary committed labor devoted by faculty members on Federal Projects. Payroll distribution system does not track and report actual employee activity/effort devoted to sponsored projects. Rather, the system is only required to validate salaries and wages directly charged to Federal grants. Salary costs associated with such unreported faculty effort does not properly get included in Caltech’s organized research base, thereby resulting in greater indirect costs paid by the Federal Government. Caltech has not established clear guidance and procedures to ensure that PIs properly identify and track effort voluntarily pledged as cost sharing in its Federal grant proposals. (In accordance with OMB’s January 2001 Clarification Memorandum.) Caltech should establish a methodology for reasonably estimating and calculating an amount of “committed cost-shared” PI effort to be reported in the PDC system for sponsored projects with no PI salary reimbursements and ensure such calculated amounts are supported by adequate documentation and included in the organized research base for computing the Federal indirect cost rate Late Effort Reports and Timeliness Effort Not Submitted within Policy Time Frame Caltech needs to improve the timeliness of PDC report distribution and certification. Of the 63 PDC reports reviewed for the 32 sampled employees, all of the reports were certified late beyond the 150-day timeframe established by Caltech policy. Committed PI Effort Reported on Grant Proposals not in Current and Pending Support Caltech did not always properly report effort that the PI had actually committed to research projects and activities in the Current and Pending Support information required to be submitted with NSF grant proposals. Establish procedures and guidance to ensure that PI committed person-months is accurately reported for all projects and activities, including the currently proposed grant, in the Current and Pending Support information submitted in NSF grant proposals as required by Chapter II, Paragraph C.2.h. of the Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) Foundation’s Grant Proposal Guide. Need to establish a formal requirement for Independent Internal Evaluation Establish a formal requirement for an independent evaluation of the PDC system to ensure its effectiveness and full compliance with OMB, NSF, and Caltech standards. Such a requirement should include procedures to ensure a systematic review of the payroll distribution system is performed to identify reasons for any deficiencies and to make appropriate recommendations, identify the specific office responsible for performing the evaluation, and how often such an evaluation should be conducted.

03/12/07

Georgia State University Research Foundation

NSF

NSF OIG (Conrad and Associates LLP)

Cost Transferred to NSF Grant from an Overspent Federal Award We found a lack of monthly PI monitoring of Federal grant expenditures, an excessive number of cost transfers involving 8 of the 12 months of one individual’s annual salary, and a cost overrun situation with the Air Force grant. Establish procedures that require that transfers of costs from overspent Federal grants to other sponsored projects require formal written justification and certification by the PI, the Division Chair, and the Associate Director of Project Accounting that the transfer of cost is proper and benefits the receiving award. Cooperative Agreement with 8 Partners Cooperative agreement which brings together 8 academic “partner” institutions from Atlanta Universities transferred from Emory University Inadequate Subawardee MonitoringAudit identified a significant weakness in GSU’s monitoring of Subawardee costs and cost sharing. Questioned costs include costs for which there was documentation that the recorded costs were expended in violation of the law, regulations or specific conditions of the award. Costs without adequate support by the awardee and costs that require interpretation of allow ability by the NSF. Recommended that GSU establish a risk-based monitoring program to ensure that costs were compliant.

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) Inadequate Documentation Payroll Expenses - Center charged for work done on another grant, GSU did not take adequate care in maintaining required documentation, and did not always follow its policies and procedures. Transfers made without explanation or source documentation. Could not locate personal action forms. Non-Payroll – Unable to provide documentation to substantiate that international travel expense related to this award or the travel was properly approved. Unable to provide documentation that purchases were properly authorized, supplies were received or that charges were incurred on behalf of the grant. Unable to provide the contract for consulting services for an invoice. Inadequate Documentation Cost Sharing For cost sharing contributions, the Center relied on the subawardees annual certifications of the amounts claimed, without requesting or maintaining additional documentation to prove the accuracy or validity of the claimed amounts.

02/12/07

New Mexico Title IV-E Contracted University Training Costs (A-06-06-0004)

ACF HHS OIG (Administra tion for Children and Families)

Preaward Charges in Advance of 90 day Limitation Audit of Training Contacts with New Mexico Highland University, Western New Mexico University, and New Mexico State University The state agency contracted with State Universities to fulfill a portion of its training needs. The contracts required the universities to provide the State match and provided for reimbursing the universities for their expenditures up to the yearly budgeted amounts which included direct training costs, administrative costs, and funding reimbursement rates. The contracts allowed the indirect cost rate to be applied to total direct costs. During audits and site visits, the State agency provided Administration for Children and Families (ACF) with copies of university contracts and approved budgets in which ACF approved the contractual and payment process to the universities at the enhanced 75-percent training rate. In compliance with contract language, Highlands University applied its indirect cost to a cost base,

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) which included equipment and stipends (determined incorrect by the OIG). The state argued that the universities had complied with the terms of their subcontracts, which stated that the indirect cost rate could be applied to total direct costs. The OIG agreed that the state could reimburse the university using the terms it negotiates but the costs were not reimbursable to the state under IV-E program. Reimbursement to the Universities for Unallowable Costs. Reimbursed costs were not supported by ledgers or invoices, expressly unallowable (such as donations and entertainment), or not reasonable and necessary for operating the program (such as candles, corsages, boutonnieres, food, and T-shirts), as well as the indirect costs associated with these unallowable amounts. 2006 11/15/06

Report to Congress

NSF

NSF OIG September 06 Report to Congress

An accounting assistant at a grantee institution responsible for processing payments for federal and non-federal awards was debarred from NSF after conviction of embezzling non-federal funds. A Utah university failed to provide guidance to the PI or exercise proper oversight of two NSF awards, with the result that participant support funds were not used for the stated purpose. University reimbursed $19,000.

09/28/06

Boston University

NIH

HHS OIG A-01-06-01 500

An OIG investigation involved a university employee who was subsequently convicted of embezzling more than $487,000, including $415,000 in NSF funds. In addition investigators discovered that the university certified to inaccurate cost-sharing contributions each year of the award, and could not support a number of expenses charged to the NSF grant. Review of Subaward Costs on NIH Grant Awarded to the prime grantee, Harvard University Medical School

Cost Transfer Policy not followed. Questioned $11,234 on subaward from Harvard University. Payroll cost transfer was unallowable in accordance with the University’s procedures, which state that salary adjustments that increase the level of Reprinted by permission of Charlene Blevens, [email protected] Page 159 Updated 09/13/2016

Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) effort beyond the level certified on the time and effort report will not be accepted. Transfers were  not supported by certified time and effort reports (the time and effort report supported charging time to the original project),  not properly authorized,  not adequately explained and supported,  not supported by corrective actions to be implemented, and/or  Made as much as 7 months after the original transaction. The explanations that the University provided to support the cost transfers were vague and unclear. For example, one explanation consisted of the following: “to match work done for study close-out--review of data/results--not process in May or June because of administrative oversight.”

09/26/06 University of Hawaii

NSF

NSF OIG (M.D. Oppenhei m& Company)

Late submission of final invoice to prime. The University did not file its final invoice within 45 days after the end of the subaward budget period, as the subaward agreement required. The final invoice, was submitted 85 days after the required 45-day period specified in the subaward, or a total of 130 days after the end of the Subaward budget period. Cooperative Agreement with Required Cost Share Cooperative Agreement five-year funding of $9,852,441 with a required cost-sharing match of $3,228,256. The original intent of NSF was to fund this marine biotechnology research for a period of ten years however, based upon an NSF site review the program was terminated after the initial five-year funding. Unrealistic Percentages for Allocating Labor Costs Related to Cost Sharing Contributions $1,741,879 of inadequately supported UH labor cost sharing. The grantee’s allocated labor costs for costsharing contributions were based on estimated and not actual costs. This practice is contrary to OMB Circular A21, Section J, item 8 (c) (1)

Inadequate Supporting Documentation for Subcontract Costs Questioned $305,706 of cost sharing and $265,449 of Reprinted by permission of Charlene Blevens, [email protected] Page 160 Updated 09/13/2016

Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) direct NSF funded costs claimed by the subcontractor, UCAL, Berkeley, because of inadequate supporting documentation. 09/26/06 New Mexico NSF NSF OIG Review of Cooperative Agreement with Sub awards & (M.D. Cost Share Highlands Oppenhei 5 year Cooperative agreement of $9,500,000 University m& Questioned Costs $ 165,472 Company) Lack of System to Identify, Account for, Monitor and Report Cost Sharing Questioned $1,959,263 of cost share due to a lack of adequate supporting documentation. NMHU could not readily identify in its accounting records the cost sharing amounts it had claimed to NSF. Lack of Adequate Fiscal Monitoring of Subawardee Costs. Questioned of $81,787 due to lack of supporting documentation. Inaccurate and Unallowable Expenditure Reporting Costs reported to NSF did not agree with official accounting records. Auditors questioned costs due to lack of documentation; purchase of materials and supplies at the very end of the grant period with no explained benefit to NSF program; salaries and wages charged to the award for a professor who did not work on the NSF program; and scholarship costs paid for students who were not eligible to participate in the program.

09/07/06

Tennessee State University

NSF

DOJ (Press Release)

05/01/07 Barbara Nye, Tennessee State PI Enters Guilty Plea

NSF

DOJ

Lack of Conflict of Interest Disclosures Professor Indicted on Wire Fraud. Dr. Nye A former professor at Tennessee State University indicted on one count of wire fraud and one count of mail fraud as a result of misrepresentations allegedly made in connection with administration of a grant from NSF. The professor used employees funded by NSF grant dollars in furtherance of private consulting performed on behalf of a company organized by a subordinate. Former Tennessee State Professor enters guilty Plea. Nye was the director of the Center of Excellence at Tennessee State University (“TSU”). As part of her work at TSU, she was the Principal Investigator of a multimillion dollar grant from NSF. The TSU grant included funds to hire employees known as “Teachers In Residence” (“TIRs”), who were expected to spend all

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) of their time working on the TSU grant. At the same time, Nye was the lead evaluator for a different NSF grant at the University of AlabamaHuntsville (“UAH”). This evaluation project was separate from her work at TSU and she was paid consulting fees from UAH for her work. Nye sent two employees of the TSU grant to UAH to work on her evaluation of the UAH grant and submitted the travel claims to TSU, knowing that it was for travel that was not related to the NSF grant and that it would be paid with NSF funds. Nye admitted that her false statements and other conduct caused a loss to the government of more than $10,000. Moreover, Nye further admitted that she abused positions of trust, specifically her job as director of the Center of Excellence and her position as Principal Investigator on the TSU LSC grant, in committing the offense to which she pled guilty. 09/07/06 Audit of Tennessee State Resulted in Indictment 06/30/06 15 Universities CDC HHS OIG Select Agent Audit Audit objective was to determine if the universities had established control over select agents in compliance with federal regulations. Eight universities had weaknesses in their inventory and/or access records. Records did not always identify individuals who had entered select agent areas or the dates and times of access. Six universities had weaknesses in access controls including procedures for issuing electronic access keys to select agent areas. Six universities had weaknesses in their security plans. In four cases, the universities had not used a systematic approach to identify threats or had not identified all relevant threats. Three universities had not provided training to all individuals with access to select agents or had not documented the means used to verify that individuals understood the training. 06/16/06 University of NIH HHS OIG Audit of Cost Transfers Policies not always Followed. The University had Chicago extensive cost transfer policies and procedures, which closely follow the NIH Grants Policy Statement and OMB Circular No. A-21 requirements but staff did not always follow those procedures and cost transfers were not always documented and authorized as required. Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) Background section provides a good summary of Federal Cost Transfer Requirements along with the type of transfers which would raise serious questions. 06/08/06 University of NSF NSF OIG NSF Effort Audit Pennsylvania No 06Weaknesses in the effort reporting system 1010 Auditor’s position: based on our statistical sampling results, we are 95 percent confident UPENN could not Demonstrate that at least $9.2 million or 37 percent of the $24.9 million of labor costs charged to NSF in fiscal years 2002 through 2004, actually benefited NSF awards as opposed to other Federal or university activities. Finding: Suitable Means of Verification UPENN’s business managers were certifying labor effort reports, though they were not in a position to know whether work was performed, and UPENN did not have specific procedures to help business managers understand the types of documents that were necessary to support the effort reports. Finding: Timeliness & Accountability by Senior Managers Effort reports were not certified in a timely manner as specified by UPENN policy. Department Chairs were not held accountable for ensuring effort reports were completed within the 45-day turnaround period.

05/24/06

University of Arizona

NSF

NSF OIG (Conrad & Associates, LLP)

Finding: Independent Internal Evaluations The auditors disagree with UPENN’s assessment that its annual A-133 audits and internal audits of individual sponsored projects meet the Federal grant requirement because both types of audits did not provide for a systemic review of the payroll Distribution system. Review of Cooperative agreement of $16.992M with 12 Sub awards Lack of controls over Subawardee Cost sharing expenditures. University certifications were the only source documentation maintained by the University to support the Subawardee amounts claimed as cost share. Lack of controls over Subawardee costs funded by NSF. University relied on clean A-133 report and certified invoices signed by a responsible fiscal person at the

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) Subawardee to support costs claimed by subawardees. Inadequate retention of electronic payment approvals. Electronic signatures of non-payroll items retained for 90 days. Inadequate review of consulting expenses. Business manager not required to verify that actual consulting services were rendered. Inadequate documentation of payroll expenses. Could not locate signed time sheets for 18 out of 1132 transactions. Overcharging of Publication Costs -2% administrative fee Unclear from documentation how university calculated 2 % administrative fee for print shop service unit. (note b-7 of audit) 05/04/06 North Shore Medicare HHS OIG Review of Wage data in Medicare cost report. A-02-05The hospital did not fully comply with Medicare University 01008 requirements for reporting wage data in its FY 2003 Medicare cost report. *Hospital overstated its wage data by $3,119,582 and 1,567 hours. The hospital used GAAP to include postretirement benefit and pension costs on Schedule S-3, part II, of the FY 2003 Medicare cost report but did not liquidate the entire amounts associated with these costs within 1 year of the FY 2003 cost reporting period. OIG: While we agree that the hospital computed these costs in accordance with GAAP, the costs were not reported in accordance with Medicare requirements. 04/10/06 University of Medicare HHS OIG Review of Maryland Medical Center's Organ Maryland A-03-04Acquisition Costs 000 10 Finding. Allocation of Costs, Insufficient Documentation The Medical Center did not always comply with Medicare laws, regulations, and guidelines for reporting its costs, including organ acquisition costs, to the Commission. Specifically, the Medical Center did not have systems that could allocate organ acquisition costs separately from non-organ acquisition costs and other hospital activities. Insufficient documentation and therefore unallowable. 04/06/06 Kentucky Title IV-E HHS OIG Review to determine the allow ability of Title IV-E A-0403training costs the State agency claimed Cabinet for 00022 EKU did not maintain accounting records in such a Health & manner that the cost of individual training projects Family could be determined. Services/Easte Sixty-three percent of the costs of training charged to rn Kentucky Title IV-E in Kentucky were paid under contract with Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) University Eastern Kentucky University (EKU) through the University Training Consortium. Of the $28.5 million in training costs, the State agency claimed $18.1 million ($13.5 million Federal share) through its contract with EKU. Issues arose on $7.2 million ($5.4 million Federal share) related to the balance of 566 courses.  Two hundred and forty-five courses related to general subject matter were claimed at the enhanced 75-percent rate instead of the required 50-percent rate.  Twenty courses did not meet the definition of allowable activities.  Three hundred and one courses may have been inappropriately allocated to Title IV-E.

03/31/06

Howard University

NSF

NSF OIG OIG 06-1008

EKU did not maintain accounting records in such a manner that the cost of individual training projects could be determined. Instead, EKU accumulated the costs in the accounting records by funding source. While the detailed supporting records identified the funding source, in most cases, they could not be traced to a particular course. Review of Adequacy of Internal Controls and costs charged on NSF grants. Lack of comprehensive policies, procedures, techniques, and mechanisms to effectively manage, account for, and monitor NSF grant funds.  Lack of written policies and procedures. While Howard had issued some policies and procedures pertaining to some key aspects of Federal grants management over the years, an internal control process was not established for monitoring and/or evaluating administrative actions to ensure that established procedures were being implemented and effectively achieving sound Federal grants management objectives.  Unable to verify whether the $12.3 million of cost sharing benefited the intended NSF projects.  The University did not separately track, and therefore, could not support $6.9 million of matching funds.  Lack of adequate documentation to support $5.4 million of claimed cost sharing provided by

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) seven Subawardee organizations.  Lack of adequate documentation to support the faculty salary computations. Insufficient documentation in accounting records. 03/31/06 Steven Raper, NIH & HHS OIG Raper.Civil Complaint Filed Against University of Pennsylvania regarding gene therapy trial. FDA’s M.D. Investigation based on allegation that physicians Office of University of withheld information and provided false information to Criminal Pennsylvania FDA and the University of Pennsylvania’s Investigational Investigati Review Board (IRB) regarding the gene therapy trial. ons (OCI) When patients experienced significant liver toxicities from the transfusion, the physicians amended the study protocol to remove the stopping rules which required that the trial be halted if patients experienced such toxicity. An 18-year old patient in the trial died.

03/23/06

Massachusetts HHS/ University of Massachusetts

NIH

HHS OIG A-01-04000 12

The investigation pieced together the chain of noncommunications and miscommunications that effectively kept the University’s IRB, FDA and the National Institutes of Health (NIH) all unaware that the patients were being exposed to greater and greater risk. Three documents were never sent to FDA because the Quality Assurance Director failed to submit them and two annual reports hand-carried to the local IRB contained understated toxicities. The father of the deceased, who initially stood by IHGT and the physicians after his son died, filed suit against the University of Pennsylvania and the three physicians. The complaint was immediately settled. In the settlement, the University of Pennsylvania and CNMC each agreed to pay grant restitution and fines. Both institutions agreed to increase research subject protection and spend millions of dollars increasing the size of their IRBs, revamping their review procedures, initiating and mandating training for clinical investigators and upgrading their adverse event reporting. Review of University of Massachusetts Medical School Administrative Cost Claims Administrative Costs Unallowable The State agency entered into an administrative services contract with the University of Massachusetts Medical School (the University) under which the University agreed to provide support services to the Medicaid State agency.

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) The State agency claimed administrative costs that were unallowable because they did not adhere to Federal regulations. Specifically, the State agency claimed reimbursement for: • unsupported contingency fee payments, • excessive payments to a subcontractor, and • employee salaries that had already been reimbursed through indirect cost rates. University did not prepare timesheets or obtain supervisor certifications for most employees whose salaries were claimed for Federal reimbursement. 03/03/06 Columbia NIH HHS OIG Review of Cost Sharing – No Finding A-02-05This final report states that Columbia University had University 02002 procedures in place to document mandatory cost sharing; removed salary above the cap when submitting grant application and claims for Federal reimbursement for NIH projects and properly included salary above the cap in the calculation of the Facilities and Administrative cost rate. The report contained no recommendations. 02/27/06 Roger Williams HHS OIG Audit of Roger Williams Hospital a Subawardee of the A-01-05University of Massachusetts Medical School Hospital 01504 Subawardee **Recommended that UMMS reimburse NIH for University of unallowable costs of Subawardee Massachusetts  Unallowable cost transfers and related fringe Medical School and indirect costs Unsupported animal care charges and indirect 02/03/06 Yale University NIH HHS OIG Review of Subawardee Costs Claimed by Yale A-01-05Audit of Yale University a Subawardee of the Subawardee 01501 University of Massachusetts Medical School University of **Recommended that UMMS reimburse NIH for Massachusetts unallowable costs of Subawardee Medical School Subawardee Unallowable Costs $193,779 **Expanded into Investigation  Cost Transfers not adequately explained and documented (e-mail stated salary cost transfers made to spend down funds) altered documentation given to auditors.  PI moved subaward funds to other projects that were over budget.  Types of direct charges questioned: laboratory stockroom supplies, (no evidence supplies used on subaward), charges for DNA Sequencing services requested by researchers not documented as Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) working on subaward, charges for maintenance of equipment purchased under another sponsored grant.  University did not have cost accounting procedures that address the direct allocation of fungible goods. Method used was unallowable because it is not a recognized method, consistently applied. (3 active projects in lab at same time)  Memo did not provide any supporting evidence that the various projects would consume the same level of supplies and materials, nor did it adequately account for smaller projects.  PI failed to provide the 25% level of effort proposed in subaward application, PI did not submit effort reports for lab technician, two effort reports not confirmed. University does not have procedures for monitoring the budgeted or minimum level of effort for key personnel. 07/03/06 Yale University Federal Portion of Three federal agencies served subpoenas on Yale Investigatio Press University n Release The Department of Health and Human Services, the Department of Defense, and the National Science Foundation each requested documents concerning the allocation of research expenses, the reporting of faculty effort devoted to grants, and numerous other matters relating to grant administration. Each of the three agencies involved issued a subpoena relating to a number of grants and/or contracts it had awarded to Yale over a period of years that varies from one subpoena to another, up to ten years. 07/21/06 Yale University Investigatio Portion of The audit findings concerned cost transfers and effort n Princeton reporting among multiple projects. They are by no Internal means unusual as recent audits at other institutions Memo have yielded similar findings resulting in large amounts of disallowed costs. Office of Research And Project Administration 06/30/06 Yale University Federal Portion of Scope: As of now, the investigations cover all aspects of Investigatio Internal federally sponsored research agreements where the n Memo sponsor is the Department of Defense, the Department from of Health & Human Services, the National Science General Foundation, or any component of any of those Council agencies. We do not yet know how far back the investigations will go. One of the subpoenas calls for documents going back to 1997. What counts as a document or record? Documents and records that must be preserved include anything with Reprinted by permission of Charlene Blevens, [email protected] Page 168 Updated 09/13/2016

Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) words or numbers or data pertaining to federally sponsored research. That includes all letters, emails, research notebooks, voicemails, memoranda, notes, instructions, reports, analyses, telegrams, facsimiles, diaries, calendars, studies, logs, journals, books, plans, records, forms, charts, graphs, audio, visual and digital recordings, photographs (positive prints and negatives), slides, worksheets, checks, credit card charge slips, expense records, computation sheets, computer printouts and programs, tapes, videotapes, diskettes, CD-ROMS, DVDs, microfilm, microfiche, and handwritten comments on any of the above. It includes all copies of documents which are not identical, due to highlighting, handwritten notes, corrections, revisions, or other differences, no matter how minor. All versions of each document must be preserved. 03/16/06

University of Miami Rosenstiel School

01/20/06

Georgetown University Medical Center

NSF

DCAA

NIH

DOJ Press Release

Audit of Incurred Cost and Property on Contract with NSF – no findings

Theft: Departmental Administrator embezzled funds which included allocated research grant money. Administrator and her sister received prison time and ordered to pay restitution. GWU reimbursed NIH for direct amount of embezzlement and indirect costs. The Administrator submitted authorization for payment of honoraria in the names of her sister and her brother in law for scientific lectures they never gave or had any capacity to give. She also submitted fraudulent requests for payment of casual labor by various relatives, including her sister and submitted fraudulent reimbursement for business expense primarily for restaurants near her residence. 01/09/06 University of DOJ $2.5 Million Whistleblower; False Claims Investigation Newspaper Settlement Connecticut Finding: Specialized Service Centers Overstated anticipated expenses, overcharged the government and billed for items not covered by the grants.  Billing Rates – Failure to revise and appropriately set its rate structure resulted in submission of numerous false claims. Finding: Excessive Compensation Summer Salary Allowed PI’s to charge a grant for the portion of Reprinted by permission of Charlene Blevens, [email protected] Page 169 Updated 09/13/2016

Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) summer salary that was in excess of the PI’s annualized salary.

01/06/06

Indiana State University

Dept of Ed

Dept of Ed OIG

Finding: Cost Sharing/Matching Amounts appropriated for cost sharing were not representative of the amounts actually paid by UConn.  Newsday, January 9, 2006 ( Associated Press); Hartford Current, January 10, 2006 Audit of McNair Postbaccalaureate Program Finding No. 1 – ISU provided McNair Project Services and Equipment to Ineligible Students (1) Inappropriately provided sophomores with McNair Summer Research Internships; (2) admitted ineligible students to the McNair project; (3) inappropriately paid McNair funds to an individual who was not enrolled at ISU; and (4) allowed non-McNair participants to use McNair project laptop computers. McNair guideline required summer research internships to be given to students who had completed sophomore year of student. Deviated from the University’s definition of junior-year-status which required 63 semester hours of credit and accepted students enrolled for two years regardless of number of credits. Did not maintain documentation to support its determination that the students were members of groups underrepresented in their academic disciplines. Inappropriately paid McNair funds to individual not enrolled at ISU. Student was finishing incomplete classes from previous terms but was not registered for classes. Deviated from ISU standard for enrollment was that a student be registered for a class. Allowed non-McNair participants to use project laptops. Laptops purchased with grant funds were checked out to students who were not participating in the project at the time. Allowed two scholars to retain the computers after leaving the project. Finding No. 2 - A McNair Official Received a Double Reimbursement A McNair official received travel reimbursements for attendance at a TRIO training conference from two

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) sources: ISU’s McNair grant and from a TRIO Training grant awarded to another university. 2005 12/28/05 University of EPA EPA OIG Review of Cooperative Agreement based on Nevada Reno Anonymous Compliant Allocation of Costs, Reporting, Policies & Practices Audit initiated from Anonymous Compliant Review of complaint on the Regional Environmental Monitoring and Assessment Research Program Cooperative Agreement Recipient personnel were working on other Federal grants projects while being paid from CPA funds. (Practice of charging another grant that had funding while waiting for grant funds to begin.) Recipient did not allocate expenses to the appropriate Federal grant or cooperative agreement.  (Employees not working on the EPA agreement charged travel costs to the EPA agreement and used EPA funds to pay tuition for 3 employees that should have been charged to other grants)  Project officer did not require the recipient to complete work plans, progress reports, and status reports. (Officer accepted an incomplete report nearly 3 years late)

09/29/05

Dartmouth College

NIH

HHS OIG

The University, in its fiduciary role, did not make sure the Center followed established policies and practices. Finding of Continuing Weakness in the EPA and Problems with project manager on this cooperative agreement. Review of Cost Claimed Overstated Salaries (Labor Distribution) The College claimed salaries that were not consistent with the PI’s actual activity and used an overstated labor distribution percentage. Proposal Costs Charged to NIH Grants Grant application activity charged to NIH Grants. Proposal costs should be treated as F&A.

Inadequate Monitoring of Sub recipient Costs College did not have adequate procedures for monitoring sub recipient costs.  No documented evidence that the College reviewed Reprinted by permission of Charlene Blevens, [email protected] Page 171 Updated 09/13/2016

Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) audit report to validate the results claimed in the sub recipient letter.  Invoices did not contain information showing current and cumulative expense.  Invoices did not contain dates of service.  Invoices did not contain required signature of sub recipient administrator or evidence of PI’s approval. Invoices did not contain required approval of sponsored programs manager. NIH HHS OIG Review of Cost Sharing and Cost Transfers at the 09/21/05 University of University of Rochester (No Findings) Rochester Cost Sharing Cost sharing was not required on the grants reviewed and University did not voluntarily commit to cost share on these grants. Audit noted that written cost sharing procedures appeared to meet the requirements but could not access the adequacy of the procedures. Removal of Salary Above Cap Removed salary above cap when submitting grant applications and claims for reimbursement. Properly recorded salary above cap in calculation of F&A cost rate. Cost Transfers  Developed and implemented written cost transfer procedures and controls in accordance with OMB Circular No A-110. 08/23/05 University of NIH HHS OIG Review of NIH Grant Recharge & Laboratory Supply Center Charges-Record Massachusetts Retention Medical School OIG could not determine who requested the recharge center services or laboratory supply charges and whether these costs were allocable to the NIH Grant. Records were not retained (Records should be retained for 3 years after the dated of the final financial status report). Cost Transfers made without Detailed Explanation The University used these journal entries to transfer significant costs to this grant from another NIH grant. The cost transfers were not accomplished within 90 days of the original transaction. The journal entries did not explain any unusual or exceptional circumstances that would allow these transfers to exceed the 90 day limit. --NIH policy states that grantees who transfer Reprinted by permission of Charlene Blevens, [email protected] Page 172 Updated 09/13/2016

Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) costs from other projects to NIH grants must provide and maintain documentation that fully explains why the transfer was necessary. University policy states that cost transfers much be accomplished within 90 days. 08/16/05 UC Berkley NSF NSF OIG Audit of Schedule of Award Costs, Compliance and (M.D. Subcontracts Oppenhei The audit found that UCB generally has a wellm& established Federal grants management program. Company) However, because the University has decentralized OIG Report many of its grants management functions to the Number Academic Departments, UCB needs to improve its 08- 1-004 internal controls to ensure proper implementation and oversight of its labor effort reporting system. Inadequate Monitoring of Subcontract Costs Subcontractor costs recorded in the progress logs in the center did not reconcile with those reported in the accounting system and reported to NSF. Cost Sharing Reporting Deficiencies Cost sharing reported to NSF did not reconcile with cost sharing reflected in the accounting system. Unable to support salary costs claimed by center staff – actual percentage of time spent on project was not documented. Inadequate Travel Documentation & Use of Non-Flag Carrier Lack of supporting documentation. 06/23/05 Cornell’s Weill NIH DOJ $4.4 Million Settlement; DOJ (US Attorney in Press Manhattan) Whistleblower – Physician Allegations Medical Over billing NIH grant College Grant money diverted to pay salaries of employees not associated with grant research. Chronicle of Higher Education, June 23, 2005 08/16/2005 NIH Wall Street In October 2003 2 FBI agents delivered subpoenas to Journal officials as 4 armed U.S. Marshals waited in the car Cornell’s Weill Article outside. Medical Prosecutor Allegations: College  Cornell falsely projected use of clinical research center in routine applications to keep five year grant going.  Medical school massaged reports of research activity to conceal that 2 faculty members controlled most of grant money. Reprinted by permission of Charlene Blevens, [email protected] Page 173 Updated 09/13/2016

Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source)  Corroborated allegations about phantom nurses.  Cornell enrolled adults in programs designed for kids.  Fraudulently double –billed government in 37 cases between Medicaid and NIH. The Wall Street Journal; August 16, 2005 06/05 NSF OIG, US Settlement and Compliance Agreement $1.4 Million Florida Attorney’s Settlement – Cost Share, Financial Administration Agricultural & Office OIG initiated investigation after receiving an allegation Mechanical that FAMU was not properly managing its award and University had committed potentially illegal acts. OIG coordinated (FAMU) its investigation with the U.S. Attorney’s office. FAMU, NSF and OIG executed Settlement and Compliance Agreements in June 2005. University documentation failed to account for $1.4 million of award funds received. Uncovered significant issues with university’s financial administration of award. University required to set up compliance program and repay NSF. NSF Newsletter, September 2005 05/26/05 Mayo Clinic NIH DOJ $6.5 Million DOJ Settlement; Whistleblower from Research Accounting Allegations: Government was charged for research unrelated to the NIH grants it received. Over expenditures due to: Improper Transfers from Overspent Grants – Costs from overspent grants and internal Mayo cost centers included on under spent grants. Accounting system unable to monitor and manage charges DOJ Statement, 05/26/05 04/26/05 UTMB HHS OIG Institutional Compliance Agreement- Calculation of Salary above Cap Galveston 04/14/05

University of AlabamaBirmingham

Medicare & NIH

DOJ, FBI,

$3.4 Million DOJ Settlement Two separate lawsuits under false claims act. Whistleblowers: Research Compliance Officer and Physician Allegations: Research work overstated; Medicare billed for research funded elsewhere  In grant applications overstated percentage of work effort the researchers were able to devote to the grant.  Billed Medicare for clinical research trials that were billed to the sponsor of research grants.

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source)  Focus on allegations involving the manner in which UAB investigators accounted for their overall effort. HHS OIG Audit 04/13/05 George Departmen OIG, FBI, Settlement $1,828,000 with University – False Claims t of US GWU internal investigation Washington Transporta Attorney Professor embezzling more than $900,000 University tion Allegation: Theft of Federal Funds; 3 year Prison Sentence for PI  Invoices contained fictitious labor, equipment and consulting equipment.  False representations to establish unauthorized graduate student stipends and a tuition scholarship for spouses of George Washington University employees.  “Bedewi filed claims for what turned out to be nonexistent expenses, with the money going to companies that he secretly controlled. In addition, he used federal money to pay unauthorized stipends to graduate students and to provide unauthorized scholarships to the spouses of GWU employees.” Washington Post, April 20, 2005  In addition to diverting money to New Generation Motors, Bedewi allegedly used some of the funds to make payments on his home equity line of credit, buy Washington Redskins season tickets, pay annual fees for a Florida condominium, make three monthly payments on an automobile lease and pay down credit balances for family members, according to the complaint. Washington Post April 13, 2004 Department of Transportation OIG memo, April 13, 2005 DOJ Press Release, April 19, 2005 Washington Post April 13, 2005 Departmen OIG, FBI, George Washington University Adjust Professor Pleads t of US Guilty Transporta Attorney On October 24, 2005 Paul G. Bedewi, former adjunct 10/24/05 tion professor at George Washington University (GWU) and George deputy director of the DOT-funded National Crash Washington Analysis Center in Ashburn, VA, pled guilty in U.S. University District Court, Washington, DC to one felony count of theft from programs receiving federal funds. Sentence 5 months. Reprinted by permission of Charlene Blevens, [email protected] Page 175 Updated 09/13/2016

Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) Bedewi was charged with embezzling $78,602 in DOT and GWU research funds through illegal stipends and unallowable purchases. Investigation found that Bedewi caused the Center to issue authorized and fraudulent graduate assistant stipends to his wife; and made unauthorized charges using a GWU-issued purchase card.

04/04/05

Oklahoma Department of Human Services (Finding related to Contracts with State Universities only)

HHS

09/21/04 State of Oklahoma Response (Audit portion pertaining to University Indirect Cost)

CMS OIG

HHS OIG

Portion of Response to Finding related to University of Oklahoma Training Contract Appendix C Page 1 & 2

Paul Bedewi is the cousin of Nabih Bedewi, former GWU engineering professor and director of the crash center. Training Contract with State and State Universities The state agency claimed indirect costs that it did not incur as Medicaid administrative costs. The State agency contracted with State universities to provide training and other services and claimed indirect costs that it did not pay to the universities as Medicaid expenditures. A State agency may not claim or receive Federal funds for money that it did not expend. CMS officials concurred with the OIG finding indicating that only the indirect costs that the State agency actually paid were valid Medicaid costs. For about 12 years, the State agency claimed indirect costs that it did not pay as administrative costs for one university contract. The State agency claimed the indirect cost rate specified in the contract and additional amounts that it did not pay the university. These additional amounts were based on the university’s assertion that its actual indirect costs were higher than the contractual amounts it charged the State agency. State Agency’s position was that they had incurred all of the costs in question as a direct expense of the State agency or as a “certified public expenditure” of the university. The State agency believed that claiming the indirect costs that it did not pay was an acceptable practice pursuant to 42 CFR § 433.51, which recognizes that a State can seek Federal reimbursement for funds paid directly by a State agency or funds certified by a contributing public agency. The contractual language between the State agency and the university indicated that the university would contribute the difference between the indirect cost rate agreed to in the contract (13.175 percent of direct costs) and the indirect cost

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) rate that the university said was its actual rate (59.2 percent of direct costs). As a result, the State agency believed that it could claim the 59.2 percent rate and receive Federal funding.

03/17/05

University of Vermont – Poehlman

NIH

HHS Office of Research Integrity

03/09/05

University of South Dakota

NSF

NSF OIG

OIG disagree with the State agency’s position that 42 CFR § 433.51 permits it to claim contributed indirect costs. The conditions contained in this regulation were not intended to disturb the basic statutory requirement that the State share is for “expenditures” under the State plan (section 1902(a) (2) of the Social Security Act). Our position and the position of CMS, the cognizant Federal agency, is that the State agency may claim only indirect costs that it actually paid to the universities through the contracts. One of the most expansive cases of Scientific Fraud and first PI to service jail time for fabricating data. Dr. Poehlman submitted grant applications to federal agencies that included false and fabricated research data in order to support the scientific basis for and his expertise in conducting the proposed research. Poehlman plead guilty to lying on a federal grant application and admitted to fabricating more than a decade’s worth of scientific data. Poehlman’s admission of guilt came after more than five years during which he denied the charges against him, lied under oath and tried to discredit his accusers. One of the most expansive cases of scientific fraud in U.S. history. Poehlman was sentenced to one year and one day in prison. First scientist to spent time in prison for fabricating data. The New York Times Magazine October 22, 2006 Audit of Grants Management and Expenditures on Selected NSF Awards Unallowable costs Claimed Finding 1: USD needs to improve its Annual Reporting Process and Management of Sub awards and Subcontracts Subaward and subcontracts not signed until after work had begun. Instances of inaccurate, untimely, and

missing annual reports Auditors Noted Growth in Grant Workload Outpaced Resources for Grants Administration Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) Finding 2. Unallowable Costs Claimed VP salary who worked in the research office incorrectly claimed as cost sharing. USD recovered Office of Research expenses as part of indirect costs and claimed the same costs as cost sharing. USD did not consistently charge its project administration costs as indirect and direct charged some of the costs to NSF awards. Consultant’s fee to write a grant proposal and related travel expenses incorrectly charged as direct costs. USD augmented the salaries of two faculty members using grant funds without NSF approval. One person was paid $5,000 and another $2,500 above their base salaries with grant funds 02/28/05 Dakota State NSF NSF OIG Audit of Grants Management and Expenditures Subcontract Management Needs Improvement University Two subcontracts did not contain a detail statement of work and subcontractor did not keep a detailed breakdown of expenses.

02/15/05

Florida International University

DOE

HHS OIG

01/14/05

Northeastern University

CDC

HHS OIG

Inadequate Grants Management  DSU did not notify NSF of problems on Rite Link Grant (material impairment of the ability to meet objectives of the award)  Inaccurate annual reporting to NSF  No clear oversight of Federal Awards Recommend office develop and implement written policies and procedures. $11.5 Million Settlement on Allegations of mischarged costs and overbilling Cost Transfers incomplete documentation, grants used as a clearing account, cost transfers after grant had closed.  Improperly billed for scientist time, travel and administration expenses.  2003 audit indicated that the faculty members’ time promised had not been properly documented and did not equate to actual effort. The Chronicle of Higher Education, Today’s News, February 15, 2005 Review of Claimed Costs Consultant Agreements not Adequately Documented Identified $194,890 in consultant and related indirect

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) costs that were not adequately supported as required under Federal regulations and University procedures. Internal control weaknesses relating to the monitoring of sub-recipient costs, Submission of untimely financial status reports that were not reconciled to financial records. OIG recommended that the University: obtain consultant agreements for all consultants working on Federal grants and monitor consultant activity by requiring activity reports, PI certifications, and invoices; refund $194,890 to CDC for unsupported consultant costs; improve sub-recipient monitoring; and report accurate, current, and complete financial results that reconcile to financial records. 2004 12/04/04

08/03/04

State of Maine & University of Maine

Title V-E

HHS OIG

Training Contracts with University Incorrect Calculation of The Federal Share of Indirect Costs related to University billed indirect cost rate.

East Carolina University

NLM

HHS OIG

Audit of Cost Claimed under National Library of Medicine Contract – $1.7 Million of costs set aside for adjudication due inadequate documentation & $565,000 Cost Adjustment Clerical and Administrative Costs, Time & Effort Contract charged for salaries of employees who had been instructed to falsely certify that they were devoting effort to the contract even though they were not working on project. Compensation charges for clerical and administrative personnel whose duties did not apply directly to the project. Contract charged for equipment even though it would not be used in project operations and payments to firms with business relationships with the former Co-PI, even though the services were either not rendered or were not related to contract operations.

Time and Effort Reports based on inconsistent methods,  No procedures in place to compare time and effort reporting for each employee to the approved Reprinted by permission of Charlene Blevens, [email protected] Page 179 Updated 09/13/2016

Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) funding levels for the contract.  No requirement for timely submission of effort reports. No procedure to reconcile reported time and effort to actual payroll distribution. DOJ $2.4 Million Settlement Harvard Allegation: Government was billed for salaries and 06/18/04 Medical School expenses unrelated to federal grants. & Beth Israel Agreed to pay $3.3 million over charges a researcher spent fewer hours than promised on a research study. Researchers not working on grant or did not meet citizenship requirements. July 2, 2004 Chronicle of Higher Education

04/16/04

03/02/04

Northeastern University

San Diego State Foundation

NIH

NSF

HHS OIG

NSF OIG 04-1-002

Federal prosecutors said the university and the hospital overstated information on related budgets and billed the government for salaries, goods and equipment that were either used on unrelated projects or ineligible for reimbursement. June 18, 2004 Wall Street Journal Review of Cost Claimed for Reimbursement on Grant awarded by NIH, National Eye Institute Summary salary of PI – Costs claimed for salaries were not adequately supported and should be disallowed. Point to University Guidelines for Managing Grants Audit to evaluate Additional Employment Policy allowing overload Compensation

Finding: Overload compensation charged without required specific agency approval. NSF evaluated whether CSU’s Additional Employment Policy, allowing overload compensation, complies with federal and NSF grant policies and procedures. Extra compensation above the base salary for faculty members can only be charged to federal awards in unusual cases involving “intra-university consulting” arrangements when specifically authorized by the awarding agency CSU’s Additional Employment Policy allowed faculty members to be paid up to 25 percent above their fulltime academic year salary from federal grant funds for overload compensation. 3. CSU had obtained a ruling from their cognizant federal awarding agency, the Department of Health and Human Services (HHS) concluding Reprinted by permission of Charlene Blevens, [email protected] Page 180 Updated 09/13/2016

Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) that their Additional Employment Policy was in compliance with OMB Circular A-21 federal cost principles. Based on this, SDSUF believed that specific federal agency approval for extra salary compensation was not required. 4. However, according to OMB officials, the HHS decision did not negate the requirement for SDSUF to follow OMB and NSF procedures limiting the allow ability of extra salary compensation to certain types of faculty effort7 and explicitly requiring sponsoring agency approval for such costs. 04/30/04

University of Washington

Medicare

HHS OIG

$35 million settlement for Medicare and Medicaid over billing – allegations by UW billing-compliance officer US Attorney McKay said the fraud settlement -- the largest ever against a teaching hospital -- was in the best interests of all involved. While the investigation led to guilty pleas by two prominent UW doctors, the university sharply contested the sweeping conspiracy allegations outlined in Erickson's suit, which was unsealed yesterday in federal court. According to the whistle-blower suit, the university changed its policies to allow doctors to bill the government for more expensive services than they had performed. UW Physicians, a group of doctors, started a compliance program in 1996 to check whether departments were following the government's billing policies and legal requirements. The program auditors found rampant errors. The lawsuit alleged; when compliance issues were found they hid the practice by changing the compliance policy, making it acceptable to charge for a treatment that was more expensive than the treatment actually provided.  Destroyed the old reports and wrote new, sanitized versions.  Altered records to make it appear as though a qualified resident was not available and an attending physician was needed to assist in a surgery. By JAKE ELLISON, SEATTLE POST-INTELLIGENCER REPORTER

Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) 02/27/04 John Hopkins NIH DOJ $2.6 DOJ Million Settlement Press Allegation: Faculty time and effort devoted to NIH University grants was overstated. Knowingly overstated time worked Charged more than 100% of salary An employee told federal authorities that researchers at Hopkins Bayview Medical Center had inflated the amount of time required to carry out studies on therapies for drug dependence Chronicle of Higher Education, March 12 2004 2003 5. 09/11/03

University of South Florida

06/05/03

Northeastern University

HHS OIG (Newspape r story)

NIH

HHS OIG

$4 million to the federal government for inappropriately spending research grants and failing to properly record purchases. Investigation began with an audit in 1999 and concluded in 2003. Charging clerical costs to grants without justification, purchasing equipment after a project already ended, paying for employees to travel who did not report working on a grant.  St. Petersburg Times 09/11/03 Unsupported direct labor and fringe benefits 1) PI did not submit effort reporting form to support summer salary 2) Animal care costs – Animal care facility set up as a recharge center, in proposal PI put direct salary in budget for animal care technician instead of rate. OIG determined that this made it a direct cost and required time and effort report. Use of Incorrect Indirect Cost Rate – University used the indirect rate that was in effect when the proposal was prepared instead of the rate in effect at the time of approval.

05/21/03 UC Berkeley

NSF

OIG 03-01-003

Procard Purchases – Purchases not supported by source documents (receipts). Manual Purchases – No signed purchase order, receiving reports, supervisory approval Research Management Services Audit The audit objective was to determine whether the RMS costs were allowable as direct charges to NSF awards. RMS costs include costs for administrative functions

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) such as payroll, purchasing, and travel-forms processing, award-expenditure monitoring, project accounting, and the receiving and inventorying of supplies. Federal regulations consider RMS costs to be indirect costs recoverable by an institution through its facilities And administrative (F&A) rate, the University charged these costs separately as direct costs of federal awards. As a result, the University inappropriately recovered administrative and clerical costs greater than the maximum allowed under federal regulations. Three critical factors in determining whether departmental administration is allowable as a direct charge to federal awards. 1) First, the federally funded project must require "an extensive amount of administrative or clerical support which is significantly greater than the routine level of such services provided by academic departments." [Emphasis added]. 2) Second, the individual involved must be specifically identified with the project. 3) Finally, the awardees project must explicitly budget for the administrative services in the federal project budget. We maintain that RMS administrative services were not greater than the routine level of such services provided by academic departments. In addition, RMS staff cannot be specifically identified with individual projects because the University did not maintain activity reports documenting this activity by award. OMB Circular A-21 limits administrative cost recovery to 26 percent of modified total direct costs. Because the University recovered the cost of administrative services both directly as RMS and indirectly as F&A, it exceeded the limitation imposed by OMB. 02/06/03 Northwestern NIH DOJ $5.5 million, DOJ Settlement-False Claims Act Press Whistleblower from Office of Research Sponsored University Programs Allegation: Researchers spent less time on NIHsponsored projects than they reported. Misrepresentation of time spent Failed to comply with effort reporting standards DOJ Press Release 02.06.0303-076 Chicago Tribune, February 7, 2003 Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) 2002  01/28/02

Review of 10 large research Universities

HHS OIG Review

12/17/02

40 Hospitals; Stanford, Emory University, Northwestern Memorial, University of Pennsylvania, Baylor University

Medicare

DOJ & US Attorney’s offices

06/30/00

Carnegie Institute of Washington

NSF

NSF ( by M.D. Oppenhei m& Company)

11/17/98

University of Minnesota

NIH

DOJ (NIH, OIG, FBI) Press Release

Review of Indirect Cost Rates at ten large research universities based in part, on an oral request from Congressman Dingell before subcommittee  Universities were forgoing a significant amount of revenue because of reduced indirect rates  Federal government was generally not receiving the lowest rate charged 3 of the 10 universities entered into agreements with foreign governments and most entered into agreements with foreign corporations $42 Million, DOJ Settlement with 31 hospitals; Whistleblower False Claims Allegation: Between 1986 and 1995, these hospitals improperly charged Medicare for tens of millions of dollars’ worth of procedures involving experimental cardiac devices that had not been determined safe and effective and were not properly reimbursable.

20001993 Program Income, Cost Bases  CIW did not offset third party income against its indirect cost  Stipends paid not included in the direct costs bases  Cost overruns charges as indirect  Excluded equipment purchases less than capital threshold from direct cost base Did not exclude unallowable costs $32 Million Settlement; Qui Tam Case False Claims The University agreed to pay 32 million to settle allegations of selling an unlicensed drug and mishandling of NIH Grant Funds. Program Income Issue – Money earned from drug should have been reported to NIH Human Subjects Issue – University used drug before obtaining required written informed consent. Dispute covered 29 federal grants in which university

Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) charged: 1. salaries & wages for employees who did not work 2. supplies that were not used on the grants Conduct was found in 1992; Qui Tam filed in 1995 (won in court) & NIH took administrative actions to improve grants management systems; 1996 US intervened in complaint;

HHS OIG

09/24/98 Tufts University 09/04/97

Washington State Department of Social and Health Services (DSHS)

ACF

HHS OIG (A-10-9600004)

*Largest settlement recorded for NIH Grants DOJ Released Statement, 11/17/98 Review to determine if expenditures incurred in the last quarter of Federal grants were reasonable and allowable. No findings. Audit of Training Contract Costs - primarily concerned the contract with Western Washington University (WWU). Use of Funds Donated From Private Sources for Matching WWU contracted with independent contractors to provide services at a predetermined daily rate and billed DSHS for this amount. WWU established a market value for the training higher than the amount paid to the contractors and included the difference between the market value and the amount paid to the contractor as contributions for use by DSHS in meeting its matching requirements for the various programs benefiting from the training. OIG Response: Federal regulations cited in our audit report in Appendix B describe when funds donated from private sources maybe considered as the State’s share in claiming FFP (matching) for the Medicaid program, and the regulations do not provide for thirdparty in-kind contributions in meeting this requirement.

Use of Market Value of Training Services as Federal Participation Instead of Actual Costs Paid WNU training center entered into agreements with university departments to furnish faculty to provide training services required by the contracts. WNU paid the departments actual costs and billed DSHS for the asserted value (market) of the training services which DSHS used to claim reimbursement for Federal programs (i.e., the AFDC, Food Stamp, Medicaid, JOBS, and Refugee Resettlement programs.) The DSHS Reprinted by permission of Charlene Blevens, [email protected] Page 185 Updated 09/13/2016

Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) reimbursed WWU only for its actual costs (i.e., the total billed less the matching amounts). OIG Response: Claimed costs for university employees in excess of actual costs incurred. Federal regulation 45 CFR 95.507, concerning cost allocation requirements, provides in subsection (b) (6) that costs claimed by the State agency for services provided by a governmental agency outside the State agency will be based on the actual costs incurred. Claimed Costs Associated with Classroom Space Provided in State-Owned Buildings as State Contribution OIG response: building space and equipment costs had already been charged to Federal programs through the DSHS Department Wide Cost Allocation Plan. Therefore, such contribution amounts represented a duplication of amounts already claimed for Federal reimbursement.

04/08/97

New York University Medical Center

09/02/96

Illinois Department of Children and Family Services

HHS OIG

ACF

HHS OIG (A-05-9500022)

Administrative Costs Claimed by University Covered under HHS Division of Cost Allocation indirect cost agreement unallowable as direct charge. The WWU used the indirect cost rate in billings submitted to DSHS for costs incurred under the training contract. Therefore, the salaries and benefits represented a duplication of amounts already charged. $15.5 M Settlement, Qui Tam Largest Settlement Amount Involving Research Overhead Expenses claimed as research overhead. 3-year investigation. Settlement involved a variety of disputes over what expenses can be claimed as research overhead. 1) Federal Prosecutors Alleged: Overstated housekeeping costs by relying on budget estimate. 2) Outdated space survey used to allocate utility costs. 3) Waste disposal bills already paid by other sources. 4) Also included in overhead, food for medical school commencement dinner and expenses from public affairs. New York Time Article Audit included contracts primarily with Governors State, Sangamon State and Northern Illinois Universities. Administrative Expense Included in Indirect Cost Billed as Direct Costs

Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) 1) The audit findings related to administrative expenses billed as direct costs to the contracts and included in administrative overhead reimbursed through an indirect cost rate and costs based on unsupported use charges and unsupported flat fees. 11/28/95 University of HHS OIG A Review of Recharge Centers  Rates based on actual cost of materials plus a Colorado percentage markup, which was not based on cost.  University did not have written policies and procedures for recharge centers  Surplus funds were transferred to other accounts  Equipment costs were expended instead of capitalized Net interest earned on pooled investment balances were not charged back to the fund or department that earned the interest. 09/25/95 Washington HHS OIG Review of University Recharge Centers  University did not develop billing rates based on University- St actual costs of providing services. Louis  Surplus and deficit fund balances were not properly accounted for.  Surpluses and deficits were included in the calculation of the indirect cost rate; the proposed rate may have been overstated and may have resulted in duplicate recovery of costs. (Surplus balances included in the indirect cost pool understanding the rate; deficit balances overstate the indirect cost rate.)  Comment on animal rates which are less than cost. 09/06/95 University of HHS OIG A Review of Recharge Centers  Billing rates not adjusted to eliminated operation Utah surpluses and deficits.  Recharge centers had not made cost studies to ensure that billing rates approximated costs for individual services.  Equipment costs from operating to reserve accounts were not based on equipment depreciation schedules maintained for the recharge center operations. HHS OIG Audit 07/07/95 University of HHS OIG A Review of University Recharge Centers  Some centers did not periodically adjust billing Iowa rates to eliminate operational surpluses and deficits  Some centers developed rates based on goals Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) conflicting with A-21 provisions: a) One center billed at rates which provided net income of 20% to fulfill the annual dept service requirement required by its bond covenants. b) One center billed at rates to provide surplus funds to purchase a new computer c) Another center billed at rates below cost to remain competitive in obtaining sponsored agreements for the University. d) One center offered some users rates below the scheduled billing rates. Some centers expensed equipment during the year of purchase. 10/26/94 Selected HHS OIG Audit objective – to determine whether graduate student compensation charged to federally sponsored Universities research was reasonable. Finding – Universities were not acting prudently considering their responsibilities to the Government and the public at large.  Three of the 4 universities paid graduate students more than postdoctoral associates who had already completed graduate studies and obtained a Ph.D. OIG stated that they believe that it is unreasonable to pay a less experienced individual more to perform similar services. 01/12/94 Review of HHS OIG Summary Report of Audits of Recharge Centers at 12 Universities - Findings service centers  billing rates were not adjusted for accumulated at 12 surplus and deficit fund balances; Universities  included duplicate or unallowable costs in the calculation of billing rates;  included recharge costs in the calculation of indirect costs rates;  used funds of recharge center account for unrelated purposes; billed some users at reduced rates. 04/23/93 261 Schools HHS OIG Internal Indirect Cost Reviews Performed by Colleges & Universities – “Self Scrubs” Examples of unallowable costs disclosed through the scrubs,  Entertainment related costs including alcohol, meals, catering services, football brunches, and sporting event tickets.  Miscellaneous expenses including prizes, awards, parking fines, purchase of rare books, greeting Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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Procedure Investigation/D OJ Other

ardee Compensation/E ffort Participant Support Policy &

Expenditures/Co sts Subaward/suaw

Documentation

Cost Transfer

Release Date

Cost Share

Audit/Review/ Newspaper Report

Costs w/o benefit to program

Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) cards.  Housing and Personal Living Expenses including cost of maintaining and furnishing the homes of schools’ presidents.  Student Activity costs such as busing, graduation exercises and student administration.  Other areas include advertising, public relations, fund raising and investment management, dues and memberships, trustees and alumni activities, lobbying and unallowable travel. Other Federal funds to Washington D.C. flowing to non-profit Audits to Note  Appendix A Audit Table

Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source)

08/28/13 07/30/13 06/09/13 06/07/13

Emory University Northwestern University Morgan State University Univeristy of Colorado Denver

X

X

06/04/13

Thomas Jefferson University

X

X

03/22/13 11/14/12 09/28/12 08/22/12 07/12/12 03/29/12 03/12/12 01/31/12 01/31/12 12/31/11 10/13/11 06/28/11 03/31/11 03/31/11

University of Wisconsin-Madison Morgan State University University of California, Santa Barbara State University of New York Florida State University University of Notre Dame San Diego Research Foundation/el Centro University of Pennsylvania - Grimes John Hopkins University Ohio State University Suny Research Foundation North Carolina Central University Boston University Ohio State University

03/25/11 07/29/10 07/22/10 07/05/10 03/22/10

North Carolina Central University Wilberforce University Cornell Weill Medical College Whistleblower 10.01.10 Cornell Appeals Fraud Verdict South Carolina State University Cal Tech Follow Audit

03/17/10 03/03/10

University of Delaware University of Missouri - Columbia

02/16/10 02/16/10 01/14/10 11/09/09 11/02/09 08/10/09 07/30/09 06/30/09 06/30/09 05/01/09 03/25/09

University of Buffalo Washington University in St. Louis University of Nevada - Reno Stony Brook University University of Wisconsin-Madison University of Michigan Purdue University Cornell University Georgia Institute of Technology Southern Illinois at Edwardsville University of Arizona

Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

X

X

X X

X X X X X X X X

X X

X X

X

X

Fraud

X X A&C A&C

X X

X

X X X

X

QuiTa m QuiTa m Fraud

X X

Fraud Fraud

X

A&C A&C Audit Theft

X X

X X X X

X X

X X X

G&A Intl Ctl DOE QuiTa m

X E E X X E E E E E E E

X X

Page 190

NSF NSF Fraud NSF NSF NSF NSF NSF NSF NSF

Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) 03.24.09 Cornell Weill Medical College Whistleblower 03/10/09 UC San Francisco 02/27/09 University of Maryland Baltimore 02/26/09 University of Florida 02/02/09 UCLA 01/31/09 University of Central Florida 01/16/09 Duke University Review of Admn & Clerical Costs 12/23/08 Yale University Settlement (ref 02.03.06) 10/24/08 University of Louisville 05/17/10 Former U. of Louisville Dean Is Sentenced to More Than 5 Years 09/24/08 Vanderbilt University 07/08/08 St. Louis University 06/18/08 Florida Agricultural and Mechanical University (FAMU) 05/02/08 University of California, San Diego 03/27/08 University of Illinois Urbana 03/10/08 University of California, San Francisco 02/12/08 North Carolina Central University 01/22/08 Georgia Tech 11/15/07 University of Utah 09/28/07 University of Maryland Baltimore County X 09/06/07 Brandeis University 06/26/07 NIH review of Graduate Student Compensation Costs 05/15/07 University of Iowa Hospitals & Clinics (vendor rebates) 04/05/07 Thomas Jefferson University 03/31/07 California Institute of Technology 03/12/07 Georgia State University X 02/12/07 11/15/06 09/28/06 09/26/06 09/26/06 09/07/06 06/30/06 06/16/06 06/06/06 05/24/06 05/04/06 04/10/06 04/06/06

New Mexico Title IV-E Contracted University Training Costs (A-06-06-0004) NSF September 06 Report to Congress Boston University University of Hawaii New Mexico Highlands University Tennessee State University 05/01/07 Barbara Nye, Tennessee State PI Enters Guilty Plea 15 University Select Agent Audit University of Chicago University of Pennsylvania University of Arizona Sahara Center North Shore University Hospital University of Maryland Eastern Kentucky University contract with Kentucky

03/31/06 Howard University 03/31/06 Stephen Raper, MD, University of Pennsylvania 03/23/06 University of Massachusetts (UMMS) contract with Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

E X

X E X

NSF Theft NSF

X

X

X

X X X X

NF Theft Theft Theft Theft

X X

Theft

X X

E X

NSF X X

E E X X X E X X

X X

X

Theft NSF NSF NF Theft Theft NSF

X X

NF

X NF

X X X X

E X E

X

X X

NSF CA S/U

X X

X X

X X

X E X

X

X X

CA CA,P Theft X

X X X X Page 191

E X E

X X

NSF CA, RC X AC S/U

Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) Commonwealth of Massachusetts 03/03/06 Columbia University X 02/27/06 Roger Williams Hospital (UMMS) 02/03/06 Yale University (UMMS) X 07/21/06 Princeton Memo 07/03/06 Yale Memo on Agency Subpoenas 06/30/06 Yale Internal Memo on Scope of Information 01/20/06 Georgetown University 01/09/06 University of Connecticut X 01/06/06 Indiana State University 12/28/05 University of Nevada Reno X 11/21/05 University of Miami Rosenstiel School 09/29/05 09/21/05 08/23/05 08/16/05 06/23/05 06/05 05/26/05 04/26/05 04/14/05 04/13/05

04/04/05

03/17/05

03/09/05 02/28/05 02/15/05 01/14/05 12/04/04 08/03/04 06/04 04/16/04 03/02/04 2004 03/12/04 09/11/03 06/05/03

Dartmouth College University of Rochester University of Massachusetts Medical School UC Berkley Cornell’s Weill Medical College Whistleblower 08/16/05 Wall Street Journal Article Florida Agricultural & Mechanical Mayo Clinic UTMB Galveston University of Alabama-Birmingham George Washington University 04/19/05 DOJ Press Release 10/04/2005 Deputy Director Pleads Guilty Oklahoma Department of Human Services 09/21/04 OKDHS Response (States argument for its claim of contributed indirect costs from University of Oklahoma) University of Vermont – Poehlman (one of the most expansive cases of scientific fraud & first PI to serve jail time for fabricating data) University of South Dakota Dakota State University Florida International University Northeastern University State of Maine Contract with University of Maine East Carolina University Harvard Northeastern University San Diego State Foundation University of Washington John Hopkins University University of South Florida Northeastern University

Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

X X X

X C X X X

X X

X

X

X X

C X

X

IRB S/U NF

C

X

X X

X

X

X X

X X

X

X E

X

X

X

X

X

NF RC

X X E C

X

2.5M RC CA,AC NF

X X

AC

X

X C E

X X

X

4.4M 1.4 M Admn 6.5M X 3.4 M 1.8M

X

X

X

S/UI

X

X X X

X X

X X X

Admn Admn 11.5M Admn S/UI

E X

X X

X X

E E X C

2.4M X 35M

Page 192

Summary of Audits, Settlements and Investigations Related to Federal Programs For Educational Purposes Only Issue University/ Funding Audit Audit Finding Date Gov’t Agency Agency (source) 05/21/03 University of California, Berkley Research Management 02/06/03 Northwestern University 01/28/02 Review of 10 large Research Universities 12/17/02 40 Hospital Whistleblower False Claims; Sanford, Emory, Northwestern, University of Pennsylvania, Baylor 06/30/00 Carnegie Institute of Washington 11/17/98 University of Minnesota X 09/24/98

Tufs University

09/04/97

Washington State Department of Social and Health Services Audit of Training Contract Costs New York University Medical Center

04/08/97 09/02/96 11/28/95 09/25/95 09/06/95 07/07/95 10/26/94 01/12/94 04/23/93

Illinois Department of Children and Family Services University of Colorado Washington University-St. Louis University of Utah University of Iowa Selected Universities Review of Graduate Student Compensation Charged to Research Review of Service Centers at 12 Universities Review of 261 Schools Internal Indirect Cost Self Scrubs

E C E

X X

2.6M 4M,P RC,AC Admn

X E

X

X X X X X

5.5M Indire ct 42M IRB PI 32M, PI NF,P SU

X

X

X

X X

SU RC RC RC RC

C RC Indire ct

1

Reprinted by permission of Charlene Blevens, [email protected] Updated 09/13/2016

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