NCURA Western Regional Conference April 2008 Kathy Lorenzi

4/27/20082 Common examples of at-risk Sponsored Program Activities 1.Sponsored research agreements 2.International collaborations 3.Equipment and materials purchase and surplus (particularly defense articles) 4.Equipment usage 5.Material Transfer agreements 6.Nondisclosure agreements 7.Software licenses 8.Contract Services agreements 9.Payments to foreign nationals 10.Fund transfers to foreign countries 11.Equipment shipments to foreign countries for loan or field work 12.Information transfers to foreign countries 13.Foreign Travel 14.Foreign student admissions

4/27/20083 University of Minnesota – misuse of federal funds - $32M University of Southern California – Questioned Costs - $400K East Carolina University – Questioned Costs - $2.4M UA Birmingham – Clinical Research Billing - $2.4M Florida International University – Effort Certification and Direct Costs - $11.5M UC San Francisco – Animal Care Allegations - $92.5K Harvard / BIDMC Issues (Self Reported) – 3.25M Johns Hopkins University – Effort Certification - $2.7M Mayo Foundation – Mischarging federal grants - $6.5M Northwestern University – Committed Time / Effort - $5M Boeing – Darlene Drunyan scandal - $615M Boeing - Various export violations – Millions Morgan Stanley – violations of narcotics Trafficking Sanctions Regs $3,200 EMD Biosciences, Inc – illegal export of biological toxins - $904.5K

4/27/20084 You cannot audit your way to compliance Compliance works with the business units to maximize compliance with applicable laws, rules, regulations, policies and procedures Compliance functions are generally embedded in the business function and are part of the control structure On-going, daily assurance Audit is an independent, objective assurance and consulting activity designed to add value by evaluating the control structure Periodic and after the fact assurance This slide was borrowed from Angela Wishon

What is the cost? Loss of funding (only if you are lucky) Breach of Contract Termination costs People lose their jobs 4/27/20085

What is the cost? Legal liability Personal Jail Time Fines / Penalties Federal Sentencing Guidelines – Chapter 8, Sentencing of Organizations Self Disclosure 4/27/20086

What is the cost? Institutional / Personal suspension or (shudder) Debarment If suspended, no new awards, contracts from federal agencies or prime contractors for a given period of time. If Debarred, no more awards, contracts from federal agencies or prime contractors forever! 4/27/20087

What is the cost? Harm to researcher reputation Loss of credibility of the questioned work and all past work May result in termination New jobs in research field hard to find. Tainted students 4/27/20088

What is the cost? Harm to institutional reputation Name in papers – not in a good way Reduction in contracts, grants and awards Reduction in gifts and other contribution More oversight by federal and state agencies More rules / less flexibility Harder to entice new faculty Harder to keep your best faculty Harder to attract students What is the Value of your institutions reputation? 4/27/20089

What is the cost? Loss of public trust Less public and community support Loss of confidence on campus Campus moral suffers 4/27/200810

What is the cost? Export privileges denied What do you think would happen in this case? 4/27/200811

How do you avoid the cost of noncompliance? Change the paradigm about compliance Management taking a proactive role. Anticipate and prevent, not just detect & correct. Provide guidance and a framework. Covers much more than internal & external audit. The goal is to proactively manage risk rather than putting out fires as they occur. Slide borrowed from Angela Wishon 4/27/200812