Transcript FastFacts Feature Presentation

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FastFacts
Feature Presentation
12/04/2013
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© 2012 The Johns Hopkins University. All rights reserved.
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Today’s Topic
We’ll be taking a look at…
Research Audits: The Inside
Scoop
Common Research-Related Audit Findings and Tips for
Avoiding Them
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Today’s Presenter
Jim Jarrell
Director of Research and Operational Audits
Office of Hopkins Internal Audits
Contact: [email protected]
443-997-6393
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Session Segments
Presentation
Jim Jarrell will discuss the role of Internal Audit at Johns
Hopkins, what auditors look at when conducting an audit, the
high risk areas, and the best practice approach to these areas.
During Jim’s presentation, your phone will be muted.
Q&A
After the presentation, we’ll hold a Q&A session.
We’ll open up the phone lines, and you’ll be able to ask
questions.
Jim will answer as many of your questions as time allows.
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Contact Us
If you would like to submit a question during the presentation or if
you’re having technical difficulties, you can email us at:
[email protected]
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Survey
Survey
At the end of this FastFacts session, we’ll ask you to complete a
short survey.
Your honest comments will help us to enhance and improve
future FastFacts sessions.
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How To View Full Screen
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Research Audits: The Inside
Scoop
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Agenda
After today’s presentation you will be able to:
• Describe the role of Internal Audit at Johns Hopkins and the
services they provide
• Identify the highest areas of risk in research compliance.
• Develop effective internal controls to protect the institution from
adverse risk
• Champion best practices for research compliance in your
department.
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Who are we
..and what do we do?
OHIA – Office of Hopkins Internal Audit
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Shared-Service Organization
Independent
Assess the effectiveness of procedures in place to manage risk
Investigate fraud
Champion of best practices related to internal control
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Preventing Fraud
Characteristics of Fraud
Knowing who to call:
Internal Audit
Fraud Hotline – 1-877-WE-COMPLY
Establish Effective Control Procedures
Proper approval
Independent and timely reconciliation
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Research Compliance Roles
A-133 Audit
Internal Audit Activity
Management Monitoring
Research Administration – Office of Research
Compliance (Controller’s Office) – Institutional
Committees – Divisional Business Offices
Departmental Administration
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Lessons Learned from Recent
Audits
Utilization of Research Compliance Dashboard
Separation of Pre- and Post-Award Duties
Removes competing priorities
Proficiency in SAP and BW Reporting Tools
The data is available, use it
Financial expertise of staff
Accountability
Include post-award responsibilities in performance evaluations of
staff
Makes post-award duties a priority
Pro-active approach to Service Centers – don’t simply rely on them
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High Research Compliance Risk Areas
Effort Reporting
Cost Transfers
Account Reconciliation
Sub-recipient Monitoring
Other High-Risk Areas Not Included in this Presentation
Human Subjects
Animal Care and Use
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Effort Reporting
Effort Reporting
Largest expense charged to Federal awards
High-risk transaction - 2003 settlement - $2.3m
Not limited to 40 hours per week, but includes all time
Should be certified as soon as possible
Managing committed effort
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Effort Reporting – What We Look At
Effort Reporting
Timely and proper certification
Allowability of Effort Charged to the Awards
Salary CAP Compliance
Administrative Salaries
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Effort Reporting Best Practices
Ways to Avoid Effort Related Findings
Ensure certification by individual with first-hand knowledge
Review/Reconcile salaries charged to awards each pay period
Be knowledgeable of individual’s activities
Engage and train faculty on effort requirements
Escalate when necessary
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Cost Transfers
Cost Transfers
Consistent area of federal enforcement
Indicator of account reconciliation process
– No cost transfers could mean no reconciliation
– Late cost transfers indicate untimely reconciliation
– Too many cost transfers could mean ineffective front end
controls
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Cost Transfers – What We Look At
Cost Transfers
Allowability of cost transfers
Documentation to support costs
Rationale for making transfer
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Cost Transfer Best Practices
Ways to Avoid Transfer Related Findings
Document the why’s and how’s
Carefully scrutinize transfers onto the award near the project
end
Validate supporting documentation
Don’t transfer unallowable costs to spend down available
funding
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Account Reconciliation - Project
Procurement
No one should control of all aspects of a transaction
A-21 governs grants
All purchases must relate to the award being charged
Competitive bidding to ensure costs are reasonable
Documentation should be maintained
Administrative and clerical costs can only be charged if:
Required by project’s scope of work
Specifically identified in approved budget
Can be identified with a high-degree of accuracy
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Account Reconciliation – What We Look
At
Account Reconciliation
Detective Control
Documented evidence of monthly reconciliations
Corroborating Evidence
Allowability of charges
Timeliness of cost transfers
Effort Reporting
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Account Reconciliation – Best Practices
Working knowledge of A-21
Maintain award documentation and sponsor terms/conditions
Ensure proposed budget is complete
Pre-approval from agency when necessary
Timely reconciliation to avoid late transfers
Reach out – Office of Sponsored Research Compliance or Internal
Audit
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Account Reconciliation – Best
Practices
Risk-based Reconciliation
Reliance on front-end approval controls
Prioritizing transactions reviewed
Access to Oculus
Electronic Reconciliation
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Account Reconciliation – Best
Practices
Real-time Reconciliation
Utilizing SAP and Business Warehouse allows personnel to
reconcile more frequently
Advantages:
Becomes part of regular routine – more structured
Easier to keep up with reconciliation, less to reconcile
Reduces end of month workload
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Sub-recipient Monitoring
Sub-recipient Monitoring
Significant area of risk
JHU ultimately accountable to the sponsor for sub-recipient
funding
Principal Investigator (PI) is ultimately responsible
Risk mitigation needs to begin prior to contracting
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Sub-recipient Monitoring – What We
Audit
Sub-recipient Monitoring
Allowability of subrecipient costs
Classification as subrecipient or vendor
Financial and Technical Monitoring Procedures
Invoice approval by PI – Payment Certification Form
Compliance with JHU Policies and Procedures
– Invoices
– Advance Payments
– Approval
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Sub-recipient Monitoring – Best
Practices
Sub-recipient Monitoring
Institute stronger financial monitoring controls for higher-risk
subrecipients
When approving invoice payments:
– Detailed invoice
– Scientific and technical progress validated
– No advance payments (unless immediate cash need
documented and approved by DBO)
– No round numbers
– Certification for Payment and Performance
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Sub-recipient Monitoring Case Study
Case Study
Domestic sub-recipient
Unsophisticated accounting systems
Poor knowledge of sponsored requirements
Significant overbilling to JHU identified during routine A-133 audit
review
Investigation revealed
Invoices were based on budget, not actual costs
IDC and Fringe rates were not based on actual costs
Significant amounts of unallowable expenses charged to the award
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Sub-recipient Monitoring
Case Study – Lessons Learned
Proper risk management starts prior to engaging the subrecipient
Due diligence! Do they have proper capabilities to perform
programmatically and manage funding
Vendor/Sub-recipient Classification
Risk assess to drive monitoring procedures – require additional
documentation when necessary
Thorough invoice review
Training subrecipient and Principal Investigators on proper oversight
responsibilities
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Sub-recipient Monitoring
Subrecipient Monitoring Task Force
A taskforce has been appointed to make recommendations for improving
JHU subrecipient monitoring policies and procedures
Scope will review:
Classification of subrecipients
Risk rating of subrecipients
Monitoring requirements for high-risk subrecipients
Training of Principal Investigators and Subrecipients
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Document Retention
Accounts Payable Shared Services is central document holder
Departments should maintain:
all proposal and award information (including correspondence with
sponsor)
P-Card, Executive Card, supply/core store orders and goods receipt
documentation
7 years past the project end date
Scanning documentation is acceptable alternative
For Federal contracts, documentation must be maintained for 1 year
after scanning
Grant Document Search
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Conclusion
Internal Audit is a shared service organization championing the
value of internal control throughout institution
There are a number of high risk audit areas in the research
compliance world that departmental personnel must be aware of
Departments must remain vigilant and put procedures in place to
reduce the potential for adverse risk events
In doing so, departments not only protect themselves, but protect
the reputation of the Institution
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Q&A
We’re going to open the phone lines now!
There will be a slight pause, and then a recorded voice will provide
instructions on how to ask questions over this conference call line.
We’ll be answering questions in the order that we receive them.
We’ll also be answering the questions that were emailed to us
during the presentation.
If there’s a question that we can’t answer, we’ll do some research
after this session, and then email the answer to all participants.
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Thank You!
Thank you for participating!
We would love to hear from you.
Are there certain topics that you would like us to cover in future
FastFacts sessions?
Would you like to be a FastFacts presenter?
Please email us at: [email protected]
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Survey
Before we close, please take the time to complete a short survey.
Your feedback will help us as we plan future FastFacts sessions.
Click this link to access the survey…
http://connect.johnshopkins.edu/fastfactssurvey/
Thanks again!
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Resources
This page contains links to the various resources mentioned throughout this presentation.
You can click on the links or copy and paste the links into your web browser.
Account Reconciliation Guide:
http://finance.jhu.edu/reports_guides/acct_recon/acct_reconciliation_guide/Acct_Reconci
liation_Guide.pdf
Dashboards Sponsored Research: (for access contact [email protected])
https://metrics.finance.jhu.edu/frac/runJasperDashboard.do
Learning Solutions Program Sequence:
http://tmod.jhu.edu/prof_dev/ProgramSequence.pdf
Document Management System: (for access contact [email protected])
http://dms.controller.jhu.edu:8989/Oculus/servlet/login