Optimizing the Nation's Investment in Academic Research A New Regulatory Framework for the 21st Century (2016) / Chapter Skim
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6 Regulations and Policies Related to the Financial Management of Research Grants
6 Regulations and Policies Related to the Financial Management of Research Grants
Pages 117-134
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From page 117... ...
2 The Single Audit is designed to ensure that recipient institutions of federal grants comply with federal program requirements for how federal dollars can be spent. The Single Audit Act was intended to reduce burden on grant recipients that were previously subject to multiple ongoing audits, and it established standards for achieving consistency and uniformity among federal agencies for the audit of states, local governments, and nonprofit organizations (e.g., research institutions)
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From page 118... ...
Nature of Concern Concerns have been raised about a lack of understanding amongst federal agencies, inspectors general, and research institutions regarding what constitutes compliance with financial policies and procedures. There are concerns about the general offices were initially established under the 1978 Act, there are currently 57 different and autonomous offices of inspectors general.
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From page 119... ...
Not uncommonly, final audit findings that end in discussion and negotiation between designated agency staff and institutional staff resolve the audit with penalties that are significantly smaller than what was reported in initial findings. Institutions regret that, in contrast to preliminary findings, final resolutions receive little or no attention.
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From page 120... ...
Recent NSF Office of inspector general (OIG) audits of six major research universities receiving a total of almost $2 billion in annual federal research fundinga reported initial audit findings (that is, disallowed expenditures, a significant portion of which was associated with the use of NSF's 2-month senior investigator salaryb)
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From page 121... ...
e "Management Responses to External Audits and Internal Reviews," National Sci ence Foundation, accessed August 24, 2015, http://www.nsf.gov/bfa/responses.jsp. f "Yale University to Pay $7.6 Million to Resolve False Claims Act and Common Law Allegations," U.S.
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From page 122... ...
In an effort to promote transparency and to disseminate the results of the resolution process, NSF recently began posting comparisons of initial findings and the final outcomes of audit resolutions on its website. 11 These final audit outcomes are published in the NSF OIG semiannual reports to Congress in the audit resolu 9 Allison Lerner, Inspector General of the National Science Foundation, Presentation to the Committee, April 17, 2015.
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From page 123... ...
of in spectors general audits of research institutions, the total amounts of initial findings, the total amounts paid by institutions after audit resolution, and any significant management, technology, personnel, and accountability steps taken by research institutions as the result of a completed audit. Reexamine the risk-based methodology in identifying institutions as candidates for Offices of inspectors general audits to take into account the existing compliance environment and oversight on campuses, recognizing that many research institutions have clean single audits, are well managed, and have had long-standing rela tionships with the federal government.
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From page 124... ...
14 Nature of Concern As noted by the Federal Demonstration Partnership (FDP) , "Effort reporting is based on effort that is difficult to measure, provides limited internal control value, is expensive, lacks timeliness, does not focus specifically on supporting direct charges, and is confusing to faculty when all forms of remuneration are considered." 15 For many institutions, effort reporting also requires the development or purchase, and the continuing maintenance, of expensive specialized software systems.
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From page 125... ...
One public university in the Midwest stated that nine separate full-time employees spend approximately one quarter of their time each year monitoring certifications, at a total estimated cost per year of $117,000. 17 Another public university, in the West, estimated that its total administrative cost of monitoring certifications for the effort reporting system exceeded $560,000, including $320,000 in the central administrative accounting office and an additional $241,000 for faculty and staff time across various academic departments.
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From page 126... ...
26 Also, shortly after the release of Part 1 of the committee's report, the NSF OIG provided the results of its audit of the pilot payroll certification program at Michigan Technological University. 27 Neither of these audits 22 "Payroll Certifications: A Proposed Alternative to Effort Reporting," The Federal Demonstration Partnership, January 3, 2011, accessed August 24, 2015, http://sites.nati onalacademies.org/cs/groups/pgasite/documents/webpage/pga_055994.pdf.
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From page 127... ...
Instead, OMB requires that "charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed and be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated." 29 Furthermore, it states that "cognizant agencies for indirect costs are encouraged to approve alternative proposals based on outcomes and milestones for program performance where these are clearly documented. Where approved by the Federal cognizant agency for indirect costs, these plans are acceptable as an alternative to the requirements of paragraph (i)
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From page 128... ...
One institution piloting an alternative approach -- Payroll Certification -- experienced a significant reduction in burden over a 3-year period, changing from processing more than 14,000 paper-based effort reports to 2,100 online payroll certifications. 32 Research institutions can take advantage of the flexibility provided by Uniform Guidance by adopting more effective and efficient management and certification systems as long as they have robust internal institutional controls "supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated." 33 RECOMMENDATION 6.2.
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From page 129... ...
This lower threshold may result in compliance costs far exceeding any corresponding reduction in waste, fraud, and abuse. Analysis The Uniform Guidance requires documented multiple bids for university purchasing transactions exceeding $3,000.
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From page 130... ...
RECOMMENDATION 6.3. The committee recommends that the White House Office of Management and Budget amend the Uniform Guidance as follows: Amend Section 200.329 to read: Procurement by micro-purchases.
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From page 131... ...
Nature of Concern It was anticipated that the Uniform Guidance would provide uniform financial reporting requirements. Without consistency among agency policies and practices, compliance with financial reporting requirements leads to additional administrative burden for universities (see Box 6-4)
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From page 132... ...
RECOMMENDATION 6.4. The committee recommends that the White House Office of Management and Budget amend the Uniform Guidance to establish a mandatory 120-day timetable for the submission of all financial reports for all federal research funding agencies.
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From page 133... ...
The federal government expects universities to abide by cost accounting standards to ensure that double charging on federally sponsored agreements does not take place. The cost accounting disclosure statement must be submitted to each university's cognizant 42 federal agency for review and approval during indirect cost negotiations.
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From page 134... ...
RECOMMENDATION 6.5. The committee recommends that the White House Office of Management and Budget amend the Uniform Guidance so that research universities are not required to submit a revised Cost Accounting Disclosure Statement (DS-2)
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