Audit’s Role in Sponsored Programs

•Who we are

•What we do

• Why so much focus on Sponsored Programs?

•What to do if an “Auditor” calls

•Policies related to Sponsored Programs

•Contact information

Agenda:

Cornell University Audit OfficeStephen T. Golding

Executive Vice President for Finance and Administration

Michael B. DickinsonUniversity Auditor

Kathryn A. TholenAdministrative

Assistant

Craig R. AdamsAssistant Audit Director Information Technology

Peter H. PergolisAssistant Audit DirectorWeill Medical College

Pamela A. DoranAssociate Audit Director

Robert C. BeveridgeIT/Financial Senior

Auditor

Jason T. SanfordSenior Auditor

Renee M. Kenney Staff Auditor

Audit CommitteeBoard of Trustees

Geoffrey YearwoodSenior IT Auditor

Clayton A. DowIT/Financial Senior

Auditor

Robert P. DiPalmaIT/Financial Senior

Auditor WMC

Amy LindertSenior Auditor

WMC

Kevin M. ReillySenior Auditor

WMC

Hunter Rawlings President

Maggie LiuStaff Auditor

• Support the mission of the University by helping protect its assets and reputation.

• Provide objective assurance and advice to University management and Board of Trustees.

• Review operations and controls, provide analyses, recommend improvements and promote ethical behavior and compliance with policies and regulations.

What does the University Audit Office do?

What are Internal Auditors looking for?

Efficient and Effective Control Environment Compliance with university policies and procedures Compliance with laws and regulations Compliance with award terms and conditions Best Practices!

Why so much focus on Sponsored Programs?

Top 3 Risks in University Audit Office Risk Assessment

Consequences of Non-compliance (Headlines)

Regulations create inherently high risk environment

Major Source of University Revenue

University Audit Office Risk Ranking Results

Ithaca Campus (Top 3)1) Research & Sponsored Programs

2) Animal Use in Research

3) Human Subject Use in Research

Consequences of Non-ComplianceFines, Penalties, and Repayments to Federal Government by Universities in the

Recent Past:

University of Minnesota - $32 million fine and loss of FDP expanded authority

Florida International University - $27 million for effort reporting violations and unallowable charges

NYU Medical Center - $15 million for inflated research grant costs

Thomas Jefferson University - $12 million for unallowable charges

Northwestern - $5.5 million for effort reporting violations

Cornell (Weill Medical College) - $4.4 million settlement on allegations primarily relating to effort reporting

University of South Florida - $4 million for charging clerical costs without justification, purchase of equipment after project had ended, etc.

Consequences of Non-ComplianceReputation – all of the following examples resulted in negative press

for the institutions involved which had an adverse effect on their reputation.

Michigan State – case involving conflict of interest case involving an anti-cancer drug which brought the university more than $160 million in royalties.

Boyce Thompson Institute – case involving research integrity where the PI falsified research documents resulting in 2 year debarment.

University of Pennsylvania – case involving the health and safety of human subjects where a participant in an experimental gene therapy trial died.

Regulations

OMB Circular A-21 – Cost Principles for Educational Institutions

OMB Circular A-110 – Uniform Administrative Requirements for grants and other agreements with Institutions of Higher Education

OMB Circular A-133 – Audits of States, Local Governments, and Non-profit Organizations

Sponsored Revenue(Extracted from FY05 Financial Statements)

(In Thousands)

Federal Grants and Contracts $447,644

State and Local Grants and Contracts $29,102

Private Grants and Contracts $32,397

Total Grant and Contracts = 20% of Total Revenue for FY05 $2,546,292

What to do if an “Auditor” calls

IMPORTANT – Sponsored Program Services and/or University Audit must be contacted prior to the commencement of an external audit and/or review (including Agency Accounts). Beware of any request for information from an external party,

it may be an audit “in disguise”.

Contacts University Audit Office, Pam Doran (5-9300) Sponsored Program Services, Jeff Silber (5-2016)

Types of External Auditors Certified Public Accountants provide assurance that the

university’s financial statements fairly represent its financial condition and perform the A-133 audit (KPMG).

Government auditors come from federal and state sponsoring agencies such as NSF, USDA, HHS and NYS Ag & Markets, as well as regulatory bodies, such as the EPA, IRS, and NYS Sales Tax.

Some sponsors will hire public accounting firms to perform reviews for them.

A-133 Audit Required for non-profit organizations which spend $500,000 or more (in a given

year) in total federal funds (including pass-through funds).

Performed by a public accounting firm or government auditor (KPMG for Cornell).

Resulted from the Single Audit Act of 1984 and sets forth standards for obtaining consistency and uniformity for audits of non-profit organizations expending Federal awards.

Reports are public knowledge – published on the Federal Audit Clearing House. Reportable Conditions typically prompt inquiries and/or audits from the cognizant

agency or sponsoring agencies.

Relevant University Policies Cornell University Policy 1.1: Cost-Sharing

Cornell University Policy 1.4: Care and Use of Animals in Research and Teaching

Cornell University Policy 3.6: Financial Irregularities

Cornell University Policy 3.8: Program Income from Sponsored Projects

Cornell University Policy 3.9: Capital Assets

Cornell University Policy 3.10: Recharge Operations and Service Facilities

Cornell University Policy 3.11: Effort Planning and Confirmation

Cornell University Policy 3.13: Graduate Tuition

Cornell University Policy 3.18: Charging Directly to Sponsored Projects Costs that are Normally Considered Indirect

Cornell University Policy 3.20: Cost Transfers on Sponsored Projects

Cornell University Policy 4.7: Retention of University Records

Additional Resources Available OMB Circulars http://www.whitehouse.gov/omb/circulars/ NSF http://www.nsf.gov/

Grant Proposal Guide Grant Policy Manual Federal Demonstration Partnership (FDP) Terms and Conditions

NIH Grants Policy Guidance http://grants2.nih.gov/grants/policy/policy.htm Department of Health and Human Services-Cornell’s Cognizant

Agency http://www.hhs.gov/ NCURA (National Council on University Research

Administration) http://www.ncura.edu/ COGR (Council on Governmental Relations) http://www.cogr.edu/

ContactsAudit Office: 255-9300

email: audit@cornell.edu

Web Page: http://www.aff.cornell.edu/audit/

Hot Line: 1-866-293-3077

Website Link available from:

http://www.aff.cornell.edu/audit/

http://www.cuinfo.cornell.edu/

Questions