University Compliance Office1 Compliance Office Presentation Washington University in St. Louis September 5, 2002 Senior Compliance Auditors Becky Evans Byron Morgan Clayton Avenue Campus Box

University Compliance Office2 Agenda 4 Description and purpose of the University Compliance Office 4 Typical compliance review process 4 Significant compliance issues noted in the 5 reviews completed

University Compliance Office3 What is the Washington University Compliance Program ? The Washington University Compliance Program is the expression of a commitment by Washington University to carry out its educational, research, and health care activities in compliance with all relevant laws and regulations and with the highest integrity.

University Compliance Office4 What is the Washington University Compliance Program? Contd Washington Universitys Board of Trustees approved the establishment of the Washington University Compliance Program and a University Compliance Office in April A Code of Conduct was then developed with input from many members of the University community, and issued to University community members in April Three full-time compliance auditors perform proactive and investigational (as needed) compliance audits. The results of compliance audits are incorporated in formal compliance training programs that are being developed or refined.

University Compliance Office5 Specific Role of the University Compliance Office 4 Verify that effective compliance is occurring in all activities governed by federal law and regulation, and by University policy. Verification does not mean performing the work of compliance. –It means making sure that all relevant activities have effective compliance organizations. –It means making sure that these compliance organizations have effective policies and procedures, effective training programs, and effective techniques for monitoring compliance.

University Compliance Office6 Specific Role of the University Compliance Office Contd 4 Conduct compliance audits. Auditing is not the same as monitoring. Auditing and monitoring are both means of checking to see if compliance has occurred. However, there are important differences: a) Monitoring is typically done by the activity that is being monitored. b) Monitoring typically occurs much more frequently than auditing. c) Monitoring is less formal. d) Monitoring and auditing should work together.

University Compliance Office7 Specific Role of the University Compliance Office Contd 4 Develop, revise, and maintain a University Code of Conduct. 4 Maintain a University compliance hotline for the reporting of suspected violations or concerns. 4 Maintain effective and ongoing communication with the Universitys senior management and with the Audit Committee of the Board of Trustees concerning the state of compliance in University activities that require compliance.

University Compliance Office8 Typical Compliance Review 4 Based on annual plan & special requests 4 Usually 4 to 8 weeks in length 4 WU Guidelines for Direct-Charging Costs to Grants (Blue Book) 4 OMB Circular A-21 (cost principles) 4 NIH/NSF Guidelines 4 Focus on PARS and Supporting Documentation for charges to grants

University Compliance Office9 Typical Compliance Review Process 4 Opening Meeting 4 Review samples of supporting documentation 4 Interview sample of PIs and other employees (sourced to federal funds) 4 Review of grant proposals and award documents as necessary 4 Questions back and forth between department administrator and compliance auditor (usually by ) 4 Draft report to department head and administrator (includes opinion on overall compliance and recommendations requiring action) 4 Department administrator responds to recommendations 4 Final report issued

University Compliance Office10 Significant Issues From Past Reviews 4 PARS and Effort Reporting 4 Direct Charges to Grants –Documentation –Justification –Unallowable & Questionable Costs 4 Proportional Benefit 4 Cost Transfers 4 Animal & Human Subject Protocols 4 Training Grants

University Compliance Office11 PARS 4 Legal Document, Official University System for Reporting Salary Charges to Grants 4 Completed timely and signed properly 4 Reflect actual effort 4 Administrative Issues –Administrative Job Codes –Effort on Grant Proposals and Committees –Other Administrative Activities 4 Key Personnel & Effort Reporting

University Compliance Office12 PARS-Administrative Issues Activities generally not direct charged to grants, but recovered indirectly through Facilities & Administration Rate (F&A) The expenses under this heading are those that have been incurred for administrative and supporting services that benefit common or joint departmental activities or objectives in academic deans' offices, academic departments and divisions, and research centers." (OMB No. A-21 F.4.a.)

University Compliance Office13 PARS-Administrative Issues Contd Activities generally not direct charged to grants, but recovered indirectly via Facilities & Administration Rate (F&A) Faculty and staff departmental administration duties may include, but are not limited to: 4 preparation and review of Personnel Activity Reports 4 preparation of departmental budgets and/or payroll 4 review of departmental accounts and financial statements 4 preparation of grant applications 4 planning for building projects and renovations 4 selection and recruitment of faculty 4 selection of graduate students 4 selection and training of staff 4 editing professional journals where the journal provides funds which are administered by WU or where WU is a sponsor REF:( (by function Med School website)

University Compliance Office14 PARS-Administrative Issues Contd Job titles generally not direct charged to grants, recovered through indirectly through the F&A Rate. Administration and clerical titles that are typically coded as departmental administration may include, but are not limited to: 4 administrators 4 accountants 4 bookkeepers 4 accountants 4 office managers REF:( (by function Med School website) 4 purchasing assistants 4 payroll assistants 4 secretaries 4 stockroom attendants

University Compliance Office15 Key Personnel & Effort Reporting 4 Does effort in the proposal match actual effort ? (salary charged to grant and cost sharing matched with University payroll system) 4 Who are the key personnel listed in the proposal ? 4 Per NIH guidelines effort decreases (key personnel) of 25% or more have to be reported to the agency. (Does the department have a system to monitor this ?)

University Compliance Office16 Review of Direct Charges Non-Personnel 1. Normally Allowable (A-21 F.6.b) 2. NOT Normally Allowable (A-21 F.6.b) 3. Questionable (Okay, if… A-21, BUOB Manual) 4. Unallowable (A-21 J.)

University Compliance Office17 BACK TO BASICS!

University Compliance Office18 The Golden Rule Direct Costs 4 Direct costs are those costs that can be identified specifically with a particular sponsored agreement……or that can be directly assigned to (such activity) relatively easily and with a high degree of accuracy. (A-21 D.1.)

University Compliance Office19 Significant & Common Compliance Issues Noted: 4 Missing or unclear PI or Designee Approval of Expense 4 Lack of PI Justification !

University Compliance Office20 Approvals 4 A-21 (B4d) - ….(e.g., signature or initials of the principal investigator or designee or use of a password) will normally be considered sufficient. 4 WU Policies for Direct-Charging Costs to Grants (Blue Book) - Designee is in the position to know the linkage of the expense with the funded project is close and clear.

University Compliance Office21 Approvals Compliance Problems Noted: 4 Missing approvals (Most common - cost transfers, consortium payments, modifications) 4 Clarity of approvals (Whose initials/signature? Which initials/signature?) 4 Appropriateness of designee

University Compliance Office22 Documentation 4 Careful and clear documentation of actions is proof of the investigators conscientious exercise of the fiduciary responsibility inherent in the expenditure of public funds……. WU Blue Book

University Compliance Office23 Documentation Contd 4 …...Proper documentation for charges or cost transfers to a grant should pass the stand alone test. An interested party, without additional explanation, must easily understand the paper audit trail for a charge or transfer. WU Blue Book

University Compliance Office24 Normally Allowable Direct Costs 4 Lab Supplies & Services 4 Other Expenses 4 Travel 4 Equipment 4 Consortium Costs 4 Consulting Costs (Reminder: Use Consulting Form) 4 Animal Expenses 4 Human Subject Expenses 4 PI Approval and Back-up Still Required

University Compliance Office25 Normally Allowable Compliance Issues Travel 4 Traveler Not Paid From Fund Charged 4 Absence of Receipts 4 Inappropriate Receipts - need details 4 Misc. - Question phone charges, use of meal per diems, Use TA for >$500 and not CR

University Compliance Office26 Normally Allowable Compliance Issues Equipment 4 Lack of Justification for General Purpose Items (especially small equipment) 4 Purchase of Equipment Within Final 60 Days of Project Period (project not renewed) 4 $25,000 or more - Screening Certificate, 3 bids - in good shape!

University Compliance Office27 NOT Normally Allowable Direct Costs - A-21 F.6.b 4 Supplies (3403) (Can the item be justified as project specific?) 4 Office Supplies (3411) (Admin Core?) 4 Postage (3512) 4 Laser Printer Supplies (3455) 4 Phone - Monthly (3530) - Is it Off Campus ? 4 DP Line Costs - Monthly (3532) (Is there a special circumstance?) (3532) 4 Dues-Memberships (3557)

University Compliance Office28 Questionable Direct Costs 4 Uniforms (3424) 4 Laundry (3537) 4 Advertising (3540) 4 Recruitment (3541) 4 Relocation (3552) 4 Books (3575) 4 Subscriptions (3576) 4 Publication of a Book (3517)

University Compliance Office29 REMEMBER! 4 PI MUST JUSTIFY (Do the costs benefit the project(s) being charged closely and clearly?) 4 PI MUST APPROVE 4 DOCUMENT! DOCUMENT! AND….. 4 Dont Assume the need for the expense is understood! 4 Dont expect SPA to remember last months justification.

University Compliance Office30 Unallowable Direct Costs (A-21 J., SPA Policy Memo 1/31/02) 4 Legal Fees (3080) 4 Memorial Contributions (3443) 4 Supplies (3487) 4 Supplies-Other (3499) 4 Financial (3521) 4 Bank Fees (3524) 4 Entertainment (3550) 4 Social Expenses (3553) 4 Prizes/Awards (3554) 4 Bad Debt Expense (3560)

University Compliance Office31 Unallowable D irect Costs Contd 4 Gifts (3569) 4 Alcohol (3574) 4 Other Dues/ Memberships (3587) 4 Other Services (3588) 4 Misc. Expenses (3599) 4 Other Travel-Dues (3657)

University Compliance Office32 Proportional Benefit 4 From A-21: "If a cost benefits two or more (grants) in proportions that can be determined without undue effort or (administrative expense), the cost should be allocated to the (grants) based on the proportional benefit." (C4d(3)) 4 The cost in question should be specifically identifiable with the group of grants relatively easily, and with a high degree of accuracy. 4 Credible documentation of this identification must be maintained by the department. 4 The Principal Investigator must approve the use of proportional benefit and the method of its use. 4 Distribution of allowable direct costs by proportional benefit is an automated feature of FIS. Supporting documentation required. REF:

University Compliance Office33 Cost Transfers 4 Cost transfers from one grant to another are permitted in order to link a cost more appropriately with the benefit it is providing. Detailed explanation required. To correct an error is not an acceptable explanation. 4 Cost transfers from one grant to another are not permitted in order to solve funding problems or for other reasons of convenience. (C4b) 4 Cost transfers must be submitted within 120 days of the original charge or within 30 days following the ending date of the grant, whichever is sooner. 4 Approval by PI. 4 Payroll cost transfer tips from SPA (6/21/02) REF: SPA Website (direct charges-interim guidelines), Research News Website (message library-other), General Accounting Manual Chapter 15

University Compliance Office34 Human Subject Protocols 4 IRB Protocol is approved under PI of grant, has same title as grant, funding agency matches, & approval is effective during grant award period 4 Consent forms signed & dated by PI & subject, signed during period of active protocol, and title on consent form agrees to approved protocol title

University Compliance Office35 Animal Studies 4 Protocol used for purchases is approved for use by the PI of the grant being charged, and the title and agency also match the grant 4 Date of animal purchases fall within IACUC approved protocol period 4 Species ordered matches species in approved protocol 4 PI/designee approved requisition

University Compliance Office36 National Research Service Awards (NRSA) Ref. NIH GPS Pg Key area of non-compliance for T32s Stipends & other allowances paid out prior to submitting Appointment Form to NIH (GPS Pg. 206 & NGA Restrictions) Other - wrong insurance charges, wrong stipend levels, missing amended Appointment Forms

University Compliance Office37 Resources 4 WU Policies for Direct-Charging Costs to Grants (Blue Book ) – SPA Website –ttp://spa.wustl.edu/direct.htmlttp://spa.wustl.edu/direct.html 4 OMB A-21 – 4 NIH Grants Policy Statement – 4 National Science Foundation Grant Policy Manual –

University Compliance Office38 Resources Contd 4 Washington University Research News – penView&Count=1000http://researchnews.wustl.edu/medadmin/rnews.nsf/WSM?O penView&Count= Washington University Policies (Systems & Procedures) – 4 Code of Conduct Compliance Office -

University Compliance Office39 Compliance Definition 4 Com-pli-ance - The act of agreeing passively to a request, rule, or demand. The tendency to yield to others. 4 WU Environment - - Agreeing passively = a required job duty for each of us - paid to do it - Others = mostly government entities