The University was not able to provide documentation supporting eligibility determinations made for recipients of fellowships under the Foreign Language program.
The University receives funding under the Foreign Language program for fellowship stipends which are paid to individuals who meet certain program eligibility requirements. During our testwork over 30 individuals who received fellowship stipends, the University stated that it was unable to provide documentation supporting eligibility determinations without the express written consent of the students selected for testing. As a result, we were unable to test whether individuals receiving stipends met the Foreign Language eligibility criteria.
Expenditures made for stipends under the Foreign Language program totaled $741,406 during the year ended June 30, 2009.
The Higher Education Act of 1965, as amended (Title VI, Part A, Section 602), requires students receiving fellowships to be U.S. citizens, nationals, or permanent residents training in area or international studies and in modern foreign languages programs that have or are developing performance-based language instruction.
In discussing these conditions with University officials, they stated FERPA requirements do not allow the University to share the information required for testing without written approval of the students, and given that the request was made late in the audit cycle, the University did not have adequate time to obtain the required permission.
Failure to provide supporting documentation for eligibility determinations inhibits the ability to perform an audit of the program in accordance with OMB Circular A-133. (Finding Code 09-11)
Recommendation:
We recommend the University work with legal counsel and the US Department of Education to clarify whether access to documentation supporting eligibility determinations can be provided to its auditors.
University Response:
Accepted. Due to Family Educational Rights and Privacy Act (FERPA) requirements, and the late notice of the audit firm of the need to inspect forms protected by FERPA, the University was unable to contact students within the required time frame to obtain approval to release the requested information to the audit firm.
Federal Agency: US Department of Agriculture (USDA) US Department of Defense (USDOD)
US Department of Housing and Urban Development (USHUD) US Department of Commerce (USDOC)
US Department of the Interior (USDOI) US Department of Justice (USDOJ)
US Department of Transportation (USDOT) US Library of Congress (USLOC)
National Aeronautics and Space Administration (NASA) US Department of Veterans Affairs (USDVA)
National Science Foundation (NSF)
US Environmental Protection Agency (USEPA) US Department of Energy (USDOE)
US Department of Education (USDE)
US Department of Health and Human Services (USDHHS) Corporation for National and Community Service (CNCS) US Social Security Administration (USSSA)
US Department of Homeland Security (USDHS) US Agency for International Development (USAID) Program Name: Research and Development Cluster
Cooperative Extension Services
Supplemental Nutrition Assistance Program (SNAP) Education and Human Resources
Student Financial Assistance Cluster
National Resource Centers Program for Foreign Language and Area Studies or Foreign Language and International Studies Program and Foreign Language and Area Studies Fellowship Program (Foreign Language)
AIDS Education and Training Centers (AIDS) Temporary Assistance for Needy Families Child Care Cluster
Maternal and Child Health Services Block Grant to the States (MCH Block Grant) CFDA # and Program Expenditures: Various ($495,076,709)
10.500 ($11,027,702)
10.551/10.561 ($8,061,545)
47.076 ($3,966,723)
84.007/84.032/84.033/84.038/84.063/84.268/84.375/
84.376/84.379/93.264/93.342/93.364/93.925 ($464,703,423)
84.015 ($3,260,797)
93.145 ($3,197,968)
93.558 ($5,803,087)
93.575/93.596 ($4,967,177)
93.994 ($7,067,476)
Award Numbers: Various (R&D)
Finding 09-12 Inadequate Process for Preparation of Schedule of Expenditures of Federal Awards
The University did not initially include all federal grants in the schedule of expenditures of federal awards (SEFA).
During our testwork of the SNAP program, we identified expenditures totaling $1,485,594 that were improperly excluded from the draft schedule of expenditures of federal awards for the year ended June 30, 2009. Upon further review and investigation, management of the University identified 17 federal grants with net expenditures of $2,561,009 that were improperly excluded from the SEFA . Management subsequently included these grants in the final version of the schedule of expenditures of federal awards that is included in this report.
According to OMB Circular A-133 § .300(d) and (e), a recipient of federal awards is required to prepare appropriate financial statements, including the schedule of expenditures and to ensure that audits required by this part are properly performed and submitted when due. Additionally, OMB Circular A-110, Uniform Administrative Requirements for Grant and Agreements with Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations, requires nonfederal entities receiving federal awards establish and maintain internal control designed to reasonably ensure compliance with federal laws, regulations, and program
compliance requirements. Effective internal controls should include procedures to ensure expenditures for all federal awards are accurately and completely reported in the SEFA.
In discussing these conditions with University officials, they stated that through human error federal attributes were not correctly noted during initial award creation and preparation of the draft SEFA.
Failure to prepare a complete and accurate SEFA prevents the University from having an audit properly performed in accordance with OMB Circular A-133 which may result in the suspension of federal funding.
(Finding Code 09-12) Recommendation:
We recommend the University review the current process for preparing the schedule of expenditures of federal awards and implement changes necessary to ensure expenditures for all federal awards are properly reported.
University Response:
Accepted. The draft version of the SEFA submitted for review to the auditors in November 2009 contained omissions of items for which up was necessary. Due to personnel changes and human error, the follow-up was not completed until the final version of the SEFA intended for inclusion in the published FY09 Audit Report Package was provided to the audit firm. The final version was correct. The University has existing procedures to enter the federal attributes at the time of the award creation in the Banner Grants Module and internal processes to periodically cross-check the accuracy of the required attributes.
Federal Agency: US Department of Agriculture (USDA) US Department of Defense (USDOD)
US Department of Housing and Urban Development (USHUD) US Department of Commerce (USDOC)
US Department of the Interior (USDOI) US Department of Justice (USDOJ)
US Department of Transportation (USDOT) US Library of Congress (USLOC)
National Aeronautics and Space Administration (NASA) US Department of Veterans Affairs (USDVA)
National Science Foundation (NSF)
US Environmental Protection Agency (USEPA) US Department of Energy (USDOE)
US Department of Education (USDE)
US Department of Health and Human Services (USDHHS) Corporation for National and Community Service (CNCS) US Social Security Administration (USSSA)
US Department of Homeland Security (USDHS) US Agency for International Development (USAID) Program Name: Research and Development Cluster
Cooperative Extension Services
Supplemental Nutrition Assistance Program (SNAP) Education and Human Resources
National Resource Centers Program for Foreign Language and Area Studies or Foreign Language and International Studies Program and Foreign Language and Area Studies Fellowship Program (Foreign Language)
Student Financial Assistance Cluster
AIDS Education and Training Centers (AIDS)
Maternal and Child Health Services Block Grant to the States (MCH Block Grant) CFDA # and Program Expenditures: Various ($495,076,709)
10.500 ($11,027,702)
10.551/10.561 ($8,061,545)
47.076 ($3,966,723)
84.007/84.032/84.033/84.038/84.063/84.268/84.375/
84.376/84.379/93.264/93.342/93.364/93.925 ($464,703,423)
84.015 ($3,260,797)
93.145 ($3,197,968)
93.994 ($7,067,476)
Award Numbers: Various (R&D)
Finding 09-13 Inadequate Procedures for Closing Federal Projects
The University does have adequate procedures in place to ensure federal projects are closed in a timely manner.
The University administers thousands of individual federal projects from several federal agencies and pass-through entities which have varying project periods. The University has formally documented policies and procedures for closing out federally funded projects which generally require projects to be closed within 90 days after the project end date. Procedures have been established to send a notice of terminating accounts to the principal investigator or program coordinator 90 days prior to the project end date. The notice provides information about the process for closing projects and includes an information request for any extensions granted and other project information necessary to complete the project close out. Personnel in the Grants and Contracts Office are responsible for ensuring the University has met its obligations under the project, closing the general ledger accounts, and returning any unexpended grant funds to the federal agency or pass-through entity.
During our review of the schedule of expenditures of federal awards for the year ended June 30, 2009, we noted expenditures (or negative expenditures) were reported for several projects with end dates prior to June 30, 2007.
Specifically, we noted the following:
Year ended
Number of projects with end date during fiscal year
Year ended June 30, 2009 Number of cost
Totals 274 5,377 3,162,703 (4,818,720)
Upon review of a sample of 60 transactions recorded in projects with end dates prior to June 30, 2007, we noted the vast majority of the transactions selected were to transfer expenditures to the correct project accounts. The underlying transactions being transferred had been erroneously recorded to an incorrect project several years prior to the date of the transfer. Accordingly, the periodic financial reports previously submitted for several of the University’s federally funded projects inaccurately included or excluded project expenditures which were later transferred between projects.
OMB Circular A-110, Uniform Administrative Requirements for Grant and Agreements with Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations (OMB Circular A-110) requires accurate, current, and complete disclosure of the financial results of each federally-sponsored project or program in accordance with the applicable reporting criteria. OMB Circular A-110 also requires nonfederal entities receiving federal awards establish and maintain internal control designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure expenditures (including cost transfers) are allowable in accordance with federal regulations.
In discussing these conditions with University officials, they stated there are valid reasons for delays in grant close-outs.
Failure to close projects and process necessary cost transfers in a timely manner may result in inaccurate periodic financial reports and disallowances of costs. (Finding Code 09-13)
Recommendation:
We recommend the University implement procedures to monitor the timeliness of project close outs.
Additionally, the University should review its current processes to identify any additional procedures necessary to reduce the number of late cost transfers being processed upon the close out of its federal projects.
University Response:
Accepted. The University acknowledges the grant closeout process can be complicated and delays may occur for a variety of reasons. There are instances of late award close-out. The causes of late close-out vary depending on the award and the situation. Incremental funding on multi-year awards may be delayed, causing valid and allowable expenditures to post during the wait period. Difficulties in collecting delinquent Accounts Receivable balances or completion of project deliverables may also contribute to delays in the closeout of awards.
The University notes the testing population included only the 274 federally-funded awards (direct and pass-through funding) with project period end dates prior to 7/1/2007 that had transactions posted in FY09, not the full population of all awards that were closed (termed) on all campuses during FY09 – which was 2,926 awards. The number of active awards during FY09 was 8,617 for all campuses. Of the 5,377 transactions noted in the table, 2,570 (48%) were adjusting entries with an absolute value of $100 or less that were necessary bookkeeping adjustments needed to bring the funds to termination status. In addition 2,716 (51%) were system-generated assessments (such as F&A costs) and are not considered cost-transfers. Further, the University notes that while the close-out process will apply to all the awards listed within this finding, many of the listed awards are currently active.
The University believes adequate controls are in place, and the majority of awards are closed in a timely manner.
The University will continue to monitor the timeliness of closeouts.
Federal Agency: US Department of Agriculture (USDA) US Department of Defense (USDOD)
US Department of Housing and Urban Development (USHUD) US Department of Commerce (USDOC)
US Department of the Interior (USDOI) US Department of Justice (USDOJ)
US Department of Transportation (USDOT) US Library of Congress (USLOC)
National Aeronautics and Space Administration (NASA) US Department of Veterans Affairs (USDVA)
National Science Foundation (NSF)
US Environmental Protection Agency (USEPA) US Department of Energy (USDOE)
US Department of Education (USDE)
US Department of Health and Human Services (USDHHS) Corporation for National and Community Service (CNCS) US Social Security Administration (USSSA)
US Department of Homeland Security (USDHS) US Agency for International Development (USAID) Program Name: Research and Development Cluster
Cooperative Extension Services
Supplemental Nutrition Assistance Program (SNAP) Education and Human Resources
Student Financial Assistance Cluster
National Resource Centers Program for Foreign Language and Area Studies or Foreign Language and International Studies Program and Foreign Language and Area Studies Fellowship Program (Foreign Language)
AIDS Education and Training Centers (AIDS)
Maternal and Child Health Services Block Grant to the States (MCH Block Grant) CFDA # and Program Expenditures: Various ($495,076,709)
10.500 ($11,027,702)
10.551/10.561 ($8,061,545)
47.076 ($3,966,723)
84.007/84.032/84.033/84.038/84.063/84.268/84.375/
84.376/84.379/93.264/93.342/93.364/93.925 ($464,703,423)
84.015 ($3,260,797)
93.145 ($3,197,968)
93.994 ($7,067,476)
Award Numbers: Various (R&D)
Finding 09-14 Inadequate Supporting Documentation for Cost Transfers The University does not adequately document cost transfers.
The University has formal policies and procedures which outline the documentation required to support cost transfers and a standard form has been developed to assist the University in collecting supporting documentation for each cost transfer. The standard form provides a series of potential reasons that a cost transfer may be required and prompts the preparer to other sections of the form to provide additional supporting documentation as prescribed by University policy. The form is required to be certified by the principal investigator or another responsible official and must be reviewed and approved by the Grants and Contracts Office.
During our testwork over 210 cost transfers recorded during the year ended June 30, 2009, we were initially provided brief journal entry descriptions as the supporting documentation for each of the cost transfers selected.
The journal entry descriptions consisted of a few sentences which generally stated an error had occurred in the original entry and that a transfer was required. These descriptions did not provide sufficient information to allow an independent party to understand the reason the cost transfer was required. Upon further investigation and inquiry, the University was able to provide other support which better described the reasons for some of the cost transfers tested. However, the standard cost transfer form was not completed in accordance with University policy for a majority of the transfers tested. Upon further inquiry, we noted these transfers were initiated by the Grants and Contracts Office in closing out projects and that the standard cost transfer forms were not completed for any cost transfers prepared by the Grants and Contracts Office.
OMB Circular A-21, Cost Principles for Higher Education Institutions, establishes principles and standards for determining costs for federal awards carried out through grants, cost reimbursements contracts, and other agreements with higher education institutions. To be allowable under federal awards, costs must meet certain general criteria. Those criteria, among other things, require that the expenditures must be allocable, reasonable, and supported by adequate documentation. OMB Circular A-110, Uniform Administrative Requirements for Grant and Agreements with Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations (OMB Circular A-110) requires nonfederal entities receiving federal awards establish and maintain internal control designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure expenditures (including cost transfers) are adequately documented in accordance with federal regulations and University policy.
In discussing these conditions with University officials, they stated cost transfers are adequately documented and supported in accordance with University policy that meets the requirements of OMB Circular A-21 and OMB Circular A-110.
Failure to adequately document cost transfers may result in unallowable costs being charged to federal programs.
(Finding Code 09-14) Recommendation:
We recommend the University implement procedures to ensure costs transfers are adequately documented and supported in accordance with University policy.
University Response:
Accepted. The University believes cost transfers are adequately documented and supported in accordance with University policy and requirements of OMB Circular A-21 and OMB Circular A-110. The University has formal written policies for cost transfers for every campus. These policies are followed by Grants Office personnel during their review of cost transfers posted to sponsored project funds. However, the University will consider refinements to internal policies to make it clear that certain administrative transactions, especially those moving minor costs off grant accounts during the close out process, do not required supporting documentation.
The University’s cost transfer policies address the type of support and documentation that is to be provided by the departments and/or PIs to support cost transfers. In some circumstances, as outlined in the policies, a standard form GC-81 “Cost Transfer Justification for Sponsored Projects” must be completed and filed with the Grants Office. The GC-81 form is an administrative document developed by the Grants Office to obtain additional supporting information from units. The GC-81form was not designed for, nor is there a requirement for it to be completed for, transfers made by internal Grants Office personnel in the course of making an administrative adjustment or closing out an award.
The JV text form (FOATEXT) functionality in the University’s Banner system is used to attach a brief explanation of the cost transfer to the journal voucher document number. This purpose of FOATEXT is to provide Grants Office personnel basic, general information as outlined in the cost transfer policy and to provide a contact point for follow-up and investigative action if needed. Space in the FOATEXT form is limited to 50 characters per line. Comments provided in the FOATEXT form are not intended to provide an all-encompassing
grant file and other supporting documentation related to the transfer is often required in order to gain a more complete understanding of the reason for the cost transfer.
Federal Agency: US Department of Agriculture (USDA) US Department of Defense (USDOD)
US Department of Housing and Urban Development (USHUD) US Department of Commerce (USDOC)
US Department of the Interior (USDOI) US Department of Justice (USDOJ)
US Department of Transportation (USDOT) US Library of Congress (USLOC)
National Aeronautics and Space Administration (NASA) US Department of Veterans Affairs (USDVA)
National Science Foundation (NSF)
US Environmental Protection Agency (USEPA) US Department of Energy (USDOE)
US Department of Education (USDE)
US Department of Health and Human Services (USDHHS) Corporation for National and Community Service (CNCS) US Social Security Administration (USSSA)
US Department of Homeland Security (USDHS) US Agency for International Development (USAID) Program Name: Cooperative Extension Services
Research and Development Cluster
AIDS Education and Training Centers (AIDS)
CFDA # and Program Expenditures: Various ($495,076,709)
10.500 ($11,027,702)