| By Kathleen
Hall & Marilyn Surbey (July/Aug 2005 NCURA Newsletter)
Many
universities undergo audits beyond the usual A-133 audit. When the
sponsor conducts an audit of specific projects, the experience can
be very different from what we are accustomed to in the usual A-133
audit. In addition to a thorough examination of effort reporting,
non-salary costs are being reviewed in a new way. University research
administrators tend to focus on the propriety of the expense. Is
the expense allowable and allocable? Does
it belong to the grant to which it was charged? If
the answer to both of these questions is yes, we assure the principal
investigator and university administration that everything will
turn out fine. However, that reassurance
may be premature.
Auditors
are increasingly reviewing the detail behind the institutional forms
or signature requirements and requesting proof of award-specific
approvals and procedures that show knowledge of and compliance with
the grant terms and condition. Auditors are going beyond the normal,
general financial system requirements and are wanting to validate
in-depth understanding and compliance with award terms, on a transaction-by-transaction
basis.
The
auditor will review the internal control structure that provides
the authority to spend, the documentation for the expense, and the
adequacy of the post-review. How will your institution answer the
following questions?
Supplies:
Who made the request
and who approved the purchase? Are they different people? Are
they familiar with the grant program terms and needs? Who gave
them the authority? How is this documented? Prove it.
How
do you document “receipt” when there is no receiving report? Are
packing slips or other such documentation reviewed, noted and
retained? If not, how can you prove the goods were received?
When
costs are split, how is the allocation methodology explained and
documented? (“The PI said so” is not an acceptable answer.) Are
there written, internal departmental procedures (i.e., in addition
to university procedures, detailed procedures for the local unit)
for purchasing supplies on sponsored projects?
Travel:
Who authorized the
trip? Can you prove the trip was authorized prior to the trip
being taken? Is the approver familiar with the program needs and
the financial terms and conditions? Do they have the authority?
How is this authority documented?
Does
backup documentation to the travel expense justify how the trip
was related to the grant rather than just justify the expenditures?
Is there an agenda, meeting notice or other information that substantiates
the purpose of the trip?
Are
all prepaid expenses included on the voucher? If there is only
prepaid airfare, how is the trip authorized, justified,
etc.? Do you maintain the boarding passes or other evidence that
the traveler actually took the trip?
If
all of the above has been done properly by an authorized individual,
familiar with the purpose of the trip, why would a cost transfer
be necessary after the cost has been posted to the ledger?
Kathleen Hall is Associate
Director, Office of Grants and Contracts Accounting, Emory University
and Marilyn Surbey is Associate Vice President for Finance and Research,
Emory University. (Marilyn Surbey was previously Assistant
Vice President for Research here at the University of Minnesota.) |
