1. Offices of Inspector General Audit Update
Dr. Brett M. Baker
Assistant Inspector General for Audit
National Science Foundation
Kay Daly
Department of Health and Human Services
March 12, 2013

2. Department of Heath and Human Services, Office of Inspector General
Presented by: Kay Daly
Department of Heath and Human Services, Office of Inspector General

3. Agenda Overview of Office of Inspector General (OIG)
Five Components of OIG
Work Plan for 2013
- Colleges and Universities
Presence of OIG in Colleges and Universities
Audit Results
Revised Reporting Process

4. Office of Inspector General
Mission - To protect the integrity of Department of Health & Human Services (HHS) programs as well as the health and welfare of program beneficiaries.
Daniel R. Levinson, Inspector General

5. Who we are Established- 1976
Largest Inspector General's office in the Federal Government - more than 1,700 employees
OIG's oversight:
All programs under other HHS institutions, including the Centers for Disease Control and Prevention, National Institutes of Health, and the Food and Drug Administration.

6. National Coverage

7. Office of Inspector General
Office of Evaluation and Inspections
Office of Investigations
Office of Management and Policy
Office of Counsel to the Inspector General
Office of Audit Services

8. Office of Evaluation and Inspections (OEI)
Mission- To protect the integrity of HHS programs, as well as the health and welfare of beneficiaries, by conducting evaluations that provide timely, useful, and reliable information and recommendations to decision makers and the public.

9. Office of Investigations (OI)
Mission- To protect the integrity of the programs administered by the United States Department of Health and Human Services.

10. Office of Audit Services (OAS)
Mission - Identify and report ways to improve, through a shared commitment with management, the economy, efficiency and effectiveness of operations and services to beneficiaries of HHS programs.

11. OAS Organization Gloria L. Jarmon
Deputy Inspector General for Audit Services
Michael J. Armstrong Region I
Lori S. Pilcher Region IV
James P. Edert Region II
Stephen Virbitsky Region III
Kay L. Daly Assistant Inspector General for Audit Services
Lori A. Ahlstrand Region IX
Sheri L. Fulcher
Region V
Patricia M. Wheeler Region VI
Patrick J. Cogley Region VII
Brian P. Ritchie Assistant Inspector General for Audit Services

12. HHS OIG Work Plan- FY 2013

13. HHS OIG Work Plan- FY 2013

14. HHS OIG Work Plan- FY 2013 National Institutes of Health
College and University Compliance With Cost Principles
Equipment Claims by Grantees
Review of Extra Service Compensation Payments Made by Educational Institutions
Recharge Centers at Colleges and Universities
Cost Sharing Claimed by Universities
Cross-Cutting and Other Public-Health Related Reviews
Reimbursable Audits
Requested Audit Services

15. College and University Compliance With Cost Principles
Assess compliance of costs claimed based on select cost principles issued by OMB Circular A-21, Cost Principles for Educational Institutions
Conduct reviews on the basis of:
Dollar value of Federal grants received
Input from HHS operating divisions and the offices of Assistant Secretary for Financial Resources, and the Assistant Secretary for Administration

16. Equipment Claims by Grantees
Assess whether equipment purchases over $25K complied with NIH Grants Policy
Objective: identify unauthorized changes in scope

17. Review of Extra Service Compensation Payments Made by Educational Institutions
Determine whether extra service compensation charged to federally sponsored grants, contracts, and cooperative agreements:
Complied with Federal Regulations;
Were calculated properly; and
Approved by the sponsoring agency.

18. Recharge Centers at Colleges and Universities
Determine if specialized service facilities (recharge centers):
Have rate schedules that ensure that amounts charged are reasonable, consistent, and comply with Federal regulations; and
Charge expenses that are reasonable and necessary to function.

19. Cost Sharing Claimed by Universities
How are universities meeting cost sharing requirements?

20. OMB Circular A-133 established cognizance-
Reimbursable Audits
OMB Circular A-133 established cognizance-
Designated which Federal agency has primary responsibility for audit of all Federal funds received by an entity.
HHS OIG holds audit cognizance over all State governments and most major research colleges and universities.
HHS OIG received reimbursement for audits that it performs on non-HHS funds.

21. Types of audits: Types of Audits Recipient capability audits;
Contract and grant closeouts;
Indirect cost audits;
Bid proposal audits; and
Other reviews designed to provide specific information requested by management.

22. Presence of OIG in Colleges and Universities
OIG is currently wrapping up two major types of reviews:
American Reinvestment and Recovery
Act (ARRA) grant audits; and
Direct cost audits.

23. OIG ARRA Audits at Educational Institutions
ARRA grant reviews:
Rutgers University
Georgetown University
University of Central Florida
Thomas Jefferson University
Wayne State University
University of Wisconsin-Madison
Northwestern University
University of Texas- Health Science Center
Iowa State
University of Utah
University of Washington-St Louis
Claremont McKenna College
University of Colorado

24. OIG Direct Cost Audits at Educational Institutions
Direct cost reviews:
Thomas Jefferson University
Florida State University
Ohio State University
University of Texas- Southwestern Medical Center
Dartmouth
University of South Florida
University of Colorado, Denver
University of California, San Diego
State University of New York - Albany
State University of New York - Stony Brook
University of North Carolina – Chapel Hill

25. Findings Undocumented administrative costs
Cost did not solely benefit sponsored agreement
Admin costs improperly charged as direct costs
Clerical salaries improperly charged as direct
Extra Service Compensation – not provided for in the sponsored agreement or approved by sponsoring agency

26. Reporting Process- ARRA Grant Audits
Draft Report-
-Issued to Auditee
-Provided 5 days to comment on audit findings
Draft Report-
- OPDIV comments are provided to OIG
- Summarize all comments
Final Report-
-All comments are attached as an appendix
Draft Report-
-Comments are provided to OIG
-Auditors review and summarize Auditee’s comments
Draft Report-
-Issued to OPDIV with Auditee’s comments
-Provided 30 days to comment on recommendations
Final Report-
-Addressed and Issued to OPDIV
-PDF version provided to the Auditee

27. Reporting Process- Non- ARRA Grant Audits
Draft Report-
-Issued to Auditee
-Provided 30 days to comment on audit findings and recommendations
Draft Report-
-Comments are provided to OIG
-Auditors review and summarize Auditee’s comments
Final Report-
-All comments are attached as an appendix
Final Report-
-Addressed and Issued to the Auditee

28. OMB’s Proposed Uniform Cost Principles (Jan 2013)
Joint HHS-NSF OIG review of four universities
Demonstration Project on Time and Effort Reporting

29. Questions?

30. NCURA Financial Research Administration Conference
NSF OIG Update
NCURA Financial Research Administration Conference
March 12, 2013
Brett M. Baker, Ph.D, CPA, CISA
Assistant Inspector General for Audit
National Science Foundation

31. Overview
NSF Audit Planning
Audit Analytics
Federal Initiatives

32. Office of Audit Office of NSF Inspector General
Audit NSF-funded grants, contracts, and cooperative agreements
Determine whether claimed costs are allowable, reasonable, and allocated properly
Oversee annual audit of NSF’s financial statement
Promote economy and efficiency in NSF’s financial, administrative, and program operations
OIG Semiannual Report

33. Audit Planning Work Required by Law:
Agency Financial Statement Audit (CFO Act)
Federal Information Security Management Act (FISMA)
Improper Payment Elimination and Recovery Act (IPERA)
American Recovery and Reinvestment Act of 2009 (ARRA)
Other:
OIG Risk-based Assessments
Referrals from Investigations
NSF Management Challenges
National Science Board and NSF Suggestions
Congressional Requests

34. Distribution of Audit Work

35. End to End Process for Grant Oversight
CASH
DISBURSEMENTS
PAY/
ENTITLEMENT
PRE-AWARD
REVIEW
CASH
REQUEST
AWARD
CLOSE-OUT
SOLICITATIONS
PROPOSALS
POST AWARD
AWARD
PRE-AWARD RISKS
ACTIVE AWARD RISKS
AWARD END RISKS
No /Late Final
Reports
Cost Transfers
Spend-out
Financial
Adjustments
Unmet Cost
Share
Unallowable, Unallocable, Unreasonable Costs
Inadequate Documentation
General Ledger Differs from Draw Amount
Burn Rate
No /Late/Inadequate Reports
Sub-awards, Consultants, Contracts
Duplicate Payments
Excess Cash on Hand/Cost transfers
Unreported Program Income
Funding Over Time
Conflict of Interest
False Statements
False Certifications
Duplicate Funding
Inflated Budgets
Candidate
Suspended/Debarred
DATA ANALYSIS Dr. Brett Baker 2010 35

36. Data Sources Internal Proposals: budgets, panel scores
Agency award systems, recipient reporting
External
Excluded Parties List System (EPLS)
System for Award Management / Central Contractor Registration
Dun and Bradstreet risk scores
Tax filings and public records
OMB A-133 Single Audit Act reports
Recipient financial system records
General ledger and subsidiary ledger(s)
Property, travel, and purchase card

37. Identification of Questionable Costs
Phase I
Identify High Risk Institutions
Phase II
Identify Questionable Expenditures
Agency Award Data
Award proposals
Quarterly expense reports
Cash draw downs
Agency Award Data
Award proposals
Quarterly expense reports
Cash draw downs
Awardee Transaction Data
General ledger
Subsidiary ledgers
Subaward data
Data Analytics
Continuous monitoring of
grant awards and recipients
Data Analytics
Apply fraud indicators to GL data
and compare to Agency data
Review
Questionable
Transactions
External Data
A-133 audits (FAC)
D&B, Recovery Board
SAM/CCR, and EPLS
External Data
A-133 audits (FAC)
D&B, Recovery Board
SAM/CCR, and EPLS

38. Risk Assessment and Management
Identify systems and key processes
Map out End-to-End Process
Identify key controls
Brainstorm Risk factors
Continuous Monitoring
Set Objectives and Define Universe
Build Targeted Business Rules, Run Against Data
Examine Anomalies in Transaction-Level Data

39. Federal Initiatives and Coordination
Recovery Accountability and Transparency Board (RATB)
Government Accountability and Transparency Board (GATB)
OMB Grant Reform
Federal Coordination
Council of Inspectors General for Integrity and Efficiency
Federal Audit Executive Council
Suspension and Debarment Working Groups

40. Recovery Accountability and Transparency Board (RATB)
American Recovery and Reinvestment Act 2009
To provide transparency of Recovery-related funds
To detect and prevent fraud, waste, and mismanagement
11 Inspectors General on the Board
Sunsets on September 30, 2013
Maintains websites for public information Recovery.gov FederalTransparency.gov EducationJobsFund.gov

41. Government Accountability and Transparency Board (GATB)
Apply lessons from Recovery Act oversight
Support collection and display of government spending data
Build upon RATB capabilities and techniques
Identify implementation guidelines for integrating systems
Ensure the reliability of data
Broaden fraud detection technologies
Members 5 Inspectors General: Education, NSF, HHS, Transportation, USPS 5 Agency representatives: OMB, HHS, Treasury, Defense, VA

42. OMB Grant Reform
To streamline the OMB circulars for financial assistance oversight
Cost compliance
Administrative principles
Audit monitoring and follow-up
Areas under discussion:
Single Audit threshold and testing
Annual time and effort reporting
Cost accounting requirements

43. Questions? Dr. Brett M. Baker, CPA, CISA
Assistant Inspector General for Audit
National Science Foundation