Pamela Webb02.17.2009

Dirty DeedsWhat Can We Learn from National Audits and

Investigations?

Many Major Audits 2008 ? UC San Diego, UIUC, UCSF, Georgia Tech

2007 9 CalTech, Vanderbilt, Georgia State, UMBC

2006 19 Yale, Chicago, Columbia, Berkeley, Penn

2005 13 Dartmouth, Cornell, Mayo Clinic, U Mass

20047 Harvard, Johns Hopkins, U Washington

20032 Northwestern

20022 20010

NSF in the midst of30 “effort” audits

NSF in the midst of30 “effort” audits

Recent Major Settlements 2008 $7.6M Yale – Effort Reporting

2006 $2.5M U Connecticut – Service Center Billing Rates

2005 $4.4M Cornell – Grant Money Paid to Non-Research Staff

2005 $6.5M Mayo Clinic – Improper Cost Transfers

2005 $11.5M Florida International – Improper Cost Transfers

2004 $2.4M Harvard – Grants Billed for Unrelated Salaries

2004 $2.6M Johns Hopkins – Faculty Effort Reporting

2003 $5.5M Northwestern – Faculty Effort Reporting

Yale - $7.6M Settlement Investigation cover 6,000 federal grants

received between Jan 2000 and Dec 2006

More than one million pages of documentation had to be submitted to investigators

Investigation between Jun 06 and Dec 08

$7.6M settlement is $3.8M in actual damages and $3.8M in penalties

Big signal!!

HHS Audits Yale HHS Audit of Yale subaward to U Mass

Medical School Major signal about the responsibility to monitor

subrecipients Disallowed $194K of a $572K award Disallowed cost transfers, effort, cost allocation

methodology

But then …

NIH, DOD, and NSF Audit of Yale

FBI agents visit faculty and staff at home and on vacation to question them

Subpoenas served on 47 grants from 13 departments (many closed)

Sample of Issues found: Allocation of expense not found to be reasonable

no written documentation describing basis for allocation allocation done differently for supplies than equipment)

Unsigned effort reports (costs disallowed) Emails saying things like: “Just zero out the grant” PI committed more effort than was charged (failure to

request prior approval for effort change) No procedures in place to monitor effort expended versus

committed

AlteredEmail!

AlteredEmail!

Yale (continued) Unallocable Cost Transfers

“Researchers allegedly were motivated to carry out these wrongful transfers when the federal grant was near its expiration date and they needed to spend down the grant funds”

Summer Salary Charges did not equate to Effort Devoted 100% summer salary changed but non-grant

activities (proposal preparation, vacation, other departmental duties) were conducted as well as grant activities

NSF - Vanderbilt Effort certifications were not required to be dated Effort reporting periods weren’t established Institutional base salary not defined

(e.g., unclear whether grant proposal writing and university committee meetings included in institutional base salary)

“Significant change” requiring HSA not defined No definition of “a suitable means of verification of

effort” No minimum percentage of effort required

HHS – Duke University Inappropriate charging of administrative

and clerical costs 210 transactions tested, 81 were unallowable

Actual costs determined to be unallowable were $17,829 in admin and clerical salaries and $10,657 in other admin costs

HHS has requested a $1.7M refund based on extrapolating the error rate for the entire federal award population

Duke is duking it out … stay tuned

Duke (continued) No evidence that admin and clerical costs were

related to “major projects or activities”

No evidence that the amount of admin and clerical work needed on the projects justified any unusual amount of admin support

No evidence in proposals or award documents that admin/clerical support would be needed

Duke charged office supplies on routine projects

“The Office of Sponsored Research did not provide adequate scrutiny to ensure that these charges fully complied with Federal regulations”

NSF Audits UC San Diego (2008) Late Effort Reports and Timeliness

59% not submitted within due date Lack of Formal Written Timeliness Standards and

Enforcement re: Effort Certification Proposals Written on Grant-Funded Time Violations of NSF 2 Summer months rule Incentive award violation Unpaid contributed committed effort not accounted

for in University organized research base Effort Certification Process not Independently

Evaluated

NSF Audit – University of Illinois Effort – Certification did not include total employee

workload Non-sponsored information must be provided so that

total effort is known Late Effort Reports Lack of Formal Written Timeliness Standards and

Enforcement Effort Certification Process not Independently

Evaluated Need to Establish Effort Tolerance policy (how much

actual effort can vary from planned effort without doing an HSA) 5% cited as an example ‘at other Universities’

On Direct Charging of Administrative and Clerical Costs!

NIH – UC San Francisco

NSF – UC Berkeley Some salary rates charged exceeded

appointment letters 2% of salaries were for activities not

benefitting the NSF project 40% of effort reports certified late 21% of effort reports were missing dates or

were dated prior to the effort report distribution date

25 certifiers didn’t have “suitable means of verification”

EFFORT,EFFORT

AND MORE

EFFORT

NSF -Utah 51% of effort reports certified late

25% of salaries charged to NSF were improperly allocated because significant changes in effort weren’t updated timely

2% did not have “suitable means of verification”

Other Audit Findings COST TRANSFERS

Costs transferred from overexpended federal award to an NSF grant (Cal Tech)

Cost transfers made without explanation or source documentation (Georgia State)

PROPOSAL ACCURACY Current and Pending support information in NSF proposals missing

committed effort (Cal Tech)

SALARY CHARGES Personnel action forms not able to be located (Georgia State) Payroll sheets not found in 18 out of 1132 transactions (Arizona) Awards charged for work done on another grant (Georgia State, New

Mexico Highland U) $1.7M of Unsupported cost-sharing (Hawaii) Scholarship costs paid for students not eligible (New Mexico Highland0

Other Audit Findings

ADMINISTRATIVE AND CLERICAL COSTS Inappropriately charged reference books and trade journals (Brandeis) Charged office supplies (Brandeis) Purchase of supplies near the end of a grant (New Mexico Highland)

SUBRECIPIENT MONITORING Lack of adequate fiscal monitoring (Yale, New Mexico Highland U, U of

Maryland Baltimore) Failure to monitor subrecipient cost-sharing (U of Maryland Baltimore)

ANIMAL SUBJECTS Request to return $65K in connection with non-compliance involving

non-human primates on two grants (U of Connecticut)

Criminal Penalties??

Recent Criminal Case DOJ/U of Tennessee (April 2008)

Director of Plasma Research at Atmospheric Glow Technologies and U researcher assigned a Chinese grad student to an Air Force contract without advising the Air Force or obtaining an export license Work being done for the for-profit was proprietary

Director of Plasma Research enters a guilty plea for conspiring to violate the Arms Export Control Act

Recent Criminal Cases(continued)

DOJ/NSF – U of Tennessee former faculty member indicted and pled guilty on one count of wire fraud and one count of mail fraud Employees supported on a U of Tennessee Center NSF grant

were knowingly re-directed by the PI to work on a U of Alabama Huntsville grant (same PI on both) but their costs charged to the Tennessee grant

U of Vermont Scientist sentenced to 1 year and 1 day in jail and paid $180,000 fine for fabricating more than a decade’s worth of scientific data, and using it to obtain millions of dollars of NIH grantshttp://www.nytimes.com/2006/10/22/magazine/22sciencefraud.html