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HHS Pilot Audits of Select Universities by the Office of Inspector General

The Office of Inspector General (OIG) of the Department of Health and Human Services (HHS) has published its work plan for the federal fiscal year 2005. It is more than likely that we are not one of the schools that have been targeted for an audit this year due to the fact we have not received any notification. However, we want to share with you the items that their work plan will target that affect college and university grantees. The items on the work plan are a good indication of what concerns the federal government has about grant administration at educational institutions!

 

The HHS announcement states that the work plan includes audits of university administrative and clerical salaries, recharge centers, the level of the principal investigator’s commitment and the effectiveness of the single audit process in assessing compliance with time and effort reporting. Other items on its FY 2005 agenda include a review of adverse event reports by institutional review boards (IRBs), an assessment of policies and procedures to ensure privacy of medical records, and an investigation of violations of select agent regulations.

 

Plans are to conduct pilot audits at universities in five areas. These audits are a result of findings that HHS uncovered while conducting audits for other federal agencies and investigating and resolving qui tam suits, which are filed by whistleblowers.

 

One university will be selected in each audit area, and the audits may be expanded to additional universities depending on the findings in the pilot audits.

 

The pilot audits will be in the following areas:

  • Direct Charging of Clerical and Administrative Salaries. This audit will determine whether the university is complying with the applicable provisions of Circular A-21 and whether clerical and administrative salaries are being direct charged in accordance with the exceptions provided in A-21. The audit also will review a system’s processes for and documentation of these exceptions.
  • Cost Transfers. This audit will determine whether cost transfers are made in accordance with applicable guidelines and will review the university’s cost transfer policy, a sample of cost transfers, and explanations and documentation of late cost transfers.
  • Cost Sharing/Matching. Voluntary committed cost sharing will be the primary focus of this audit. The auditors will review proposed cost sharing commitments to determine whether they are fulfilled during the life of the project. The audit also will determine whether cost sharing commitments meet allowability criteria and whether other aspects of the university’s cost sharing system meet applicable requirements.
  • Subrecipient Monitoring. The audit will review the university’s subrecipient monitoring system to ensure that it meets federal requirements. Specifically the audit will determine whether someone with firsthand knowledge of the scientific aspects of the university project is reviewing the progress and ensuring that payments are in line with the progress. The audit will sample some non-university subrecipients and how they are monitored. The OIG also may conduct site visits to a few subrecipients.
  • Effort. This audit will compare effort committed and agreed to by the university to charged effort. The purpose is to determine consistency and compliance in the university’s effort reporting system and whether differences are large enough to impact the scope of the project.

While all of the details of the pilot audits as well as the specific auditees have not been publicly announced, it is known that at least two universities have been informed that a pilot audit will take place at their institutions. One reported that the OIG has said to expect auditors to be on campus for weeks if not months.

 

For relevant sites regarding A-21 and other federal regulations and policy manuals, visit the Sponsored Projects Accounting (SPA) portion of the Controllers Office website (http://www.k-state.edu/controller/) and click on the Management Resources line under SPA.