Orange isn’t my color – How to stay out of audit jail A Review of University Audit Findings

Presenters Jeremy Hamlin, CPA – Contract and Grant Accounting Manager Jeremy Hamlin is the new Manager for Main Campus Contract and Grant Accounting at the University of New Mexico. He graduated from the Anderson School of Management, with his BBA in Accounting, and is a Certified Public Accountant (CPA). Before becoming Manager of Contract and Grant Accounting, Jeremy was a Supervisor in the department for two and a half years. Prior to coming to UNM, he spent eight years in public accounting, specializing in governmental audits and single audits. His audit experience from the perspective of both an auditor and auditee has solidified his understanding and knowledge of federal compliance requirements. Frances Marin, MA – Contract and Grant Accounting, Senior Financial Services Accountant Frances Marin is a Senior Financial Services Accountant for Contract and Grant Accounting at the University of New Mexico. She received her BBA in Accounting at University of New Mexico, and her Master of Accountancy at New Mexico State University. Her experience in monitoring contract and grants for higher education began in 2006, under NMSU Office of Sponsored Projects Accounting, followed by the position of Senior Staff Accountant in charge of federal grants and contracts for Claremont Colleges in California, and currently as a monitor of sponsored funds for UNM. Additional experience includes the position of Financial Analyst in private industry, Internal Auditor for NMSU, and ten years working for the Internal Revenue Service, as a taxpayer specialist and office auditor.

Today’s Objectives Identify areas susceptible to audit scrutiny in Federally Sponsored Research Obtain an understanding of the importance of financial compliance in the world of sponsored research and restricted accounting by reviewing major audit findings from other universities Define the roles and responsibilities of PI’s/Project Managers, Department Administrators and Accountants, and the Contract & Grant Accounting Office Review resources available to help keep you clear in case of audit inspection

What is an allowable cost? Necessary Reasonable Consistent Treatment Adequately Documented Allocable

Key Audit Issues Purchases near end of period of performance. Timing of Purchases (Pre and Post Award) Unreasonable, Unallocable, and Unsupported expenditures. Travel that does not directly benefit the award. Participant Support Does not include Employee costs No prior approval to rebudget

Lessons Learned from UNM audits (in the world of sponsored research and restricted accounting)

NSF-OIG Audit Covered 3 years (FY14-FY16) Over $1.7 Million in expenditures tested 250 transactions on 92 NSF Awards

Areas Highly Scrutinized Purchase of equipment at the end of an award Unreasonable travel costs Re-budgeting participant support costs without prior, written approval

Active Award Risks Unallowable, Unallocable, Unreasonable Costs Inadequate Documentation Burn Rate Late / Inadequate Reports (Financial & Progress) Sub-awards vs. Consultants and inadequate monitoring Excessive cost transfers Excessive re-budgeting with potential change in scope

Award End Risks Late Final Reports (Financial & Progress) Excessive cost transfers at end of award Spend-out Refer to graph on next slide Unmet cost share

Monitoring Financial Performance As presented by Marie Maguire, CPA at NSF-OIG Presentation at NCURA 58th Meeting on August 10, 2016

THE IMPORTANCE OF compliance (in the world of sponsored research and restricted accounting)

Federal Compliance… WHY do we care? Strengthens trust between the sponsor and recipient More trust, more funding Suggests a presence of stewardship necessary to safeguard the Federal Government’s programs As taxpayers, we should all care about this Negative publicity may cause harm to reputation (including the University) May cost $ millions in payback Loss of Federal expanded authorities, additional oversight

How to comply Effective management and monitoring of spending Familiarity and adherence to laws, regulations and guidelines Both federal and sponsor guidelines Effective planning Utilize resources available

Roles and Responsibilities The Players: Principal Investigator (PI) or Program Manager Department/Unit Administrator & Accountants Contract & Grant Accounting (Core Office)

Roles and Responsibilities Principal Investigator/ Project Manager Department/Unit Administrator and Accountants Contract & Grant Accounting Be aware of sponsor requirements and regulations Be aware of and assist in compliance with sponsor requirements and regulations, including federal compliance requirements Accounting and compliance management on all aspects of the award Adhere to terms and conditions of award Assist in compliance with terms and conditions of award Financial liaison with sponsoring agencies Monitor and oversee all project activity (including spending) Provide administrative support for day to day aspects of the project, including transaction postings Prepare billings, financial reports and other accounting statements. Review and approve transactions (JV’s, Requisitions, Labor Redistributions) Prepare required progress reports. Certify effort twice per year Facilitate reporting requirements with PI and C&G Accounting. Pre-review effort twice per year Provide support for Effort Certification reporting system, submit financial reports to sponsor, and track compliance Authorize expenditures via invoice approval for consultants and subcontractors Monitor expenditures of award funds, obtain authorized signatures. Post transactions Financial liaison with campus departments. Review and approve transactions (JV’s, Requisitions, Labor Redistributions) Submit Final Progress Reports. Certify Fund Recon and Patent Questionnaire. Assist as needed with audit inquiries. Assist C&G Accounting with closeout and/or audit inquiries Closeout awards w/in 90 days of project end. Complete and submit Final Financial, Property, and Patent Reports. Direct point of contact with external auditors

Resources Uniform Guidance Federal Acquisition Regulation (FAR) http://www.ecfr.gov/ Title II, Part 200 Federal Acquisition Regulation (FAR) https://www.acquisition.gov/browsefar Research Terms and Conditions https://www.nsf.gov/awards/managing/rtc.jsp OMB Compliance Supplement https://www.whitehouse.gov/sites/whitehouse. gov/files/omb/circulars/A133/2017/Complian ce_Supplement_2017.pdf

References Federal Grants News for Colleges and Universities http://grants.complianceexpert.com Report on Research Compliance http://www.hcca-info.org Anomalous Drawdown Patterns Presentation given by Marie Maguire, CPA at the 58th Meeting of National Council of University Research Administrators (NCURA) on August 10, 2016

THANK YOU FOR ATTENDING! Q&A Session