Transcript Leveraging Technology - Research and development

Electronic Cost
Transfers
Risk-Based Assessment
NCURA April 25, 2007
University of California San Diego
Presenters:
Lyle Kafader & Rachel Mercado
Cost Transfer Environment
• Federal Regulations Governing Cost Transfers:
– OMB Circular A-21 Section C
– NIH Grants Policy Statement, part II, subpart A,
Cost Consideration, Cost
Transfers
• Growing volume of cost transfers due to increased
numbers of contracts & grants
• Increased audit scrutiny
• No additional administrative support
What to do?
• Keep a centralized process to assure adequate
controls?
• Decentralize the process to increase speed and
efficiency?
• No – CHANGE THE PROCESS and USE
TECHNOLOGY
Goals for the New Process
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Improve compliance
Improve accuracy and timeliness
Improve integrity of process
Increase credibility with auditors
Avoid risk of audit disallowances
Eliminate duplication of key entry
Manage volume
Reduce paper documentation
Improve cost effectiveness
Leveraging Technology
• Easy “Quicken/TurboTax” user interface
• Use existing system information – don’t make folks retype things
• Prompt users to put the relevant information in the
explanation
• Automated risk evaluation – only have staff review
transactions that are high risk
• Sampling to assure quality on low risk transactions
The New Electronic
Cost Transfer System
• Web-based
• Easy selection of transactions to transfer
• Email notification in lieu of signature
• Streamlined process
How do we do it?
Decision Tree – The Heart of
Electronic Cost Transfers
• Simple version of an “Expert System”
• Binary Tree – Each Decision is a “Yes or No” – there
are no maybes.
• Each “Decision Node” is a separate program.
• The database defines the order that the decisions are
made and the result of the outcome.
Decision Tree Sample
Low Risks Cost Transfers
• No central office review prior to posting
• Post to the ledgers after department approval
• Subject to Post Transaction Audit Program
(PTAP)
Examples of Low Risks
Cost Transfers
• Moving cost from one cost center to another within the
same fund
• Moving cost from one expense account to another
within the same fund
• Moving applicable cost from an old fund to a competing
renewal fund
High Risk Cost Transfers
• All are subject to Central Office Review for:
Allowability; Reasonability;
Allocability; Consistent treatment
• May need additional justification
• May need additional supporting documentation
• May require email notification to PI
• May not be processed due to non-compliance
Examples of High Risk
Cost Transfers
• Moving costs from an overdrafted fund to a federal
fund
• Moving costs from a departmental fund to a federal
fund that is ending with a good balance
• Moving costs that are over 90 days old to NIH funds
• Moving costs outside the project period of the fund
receiving the costs
Post Transaction Audit Program
– A.K.A. Transaction Sampling
• Verify that departments are following procedures on
low risk Cost Transfers
• Random Sample of Low Risk Transactions every
month
• Percentage determined by Extramural Accounting and
Office of Internal Audit
• Review Process
What is involved with PTAP?
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Random sampling by system
Samples (2% - 10% depending upon transaction
amount) reviewed by Extramural Accounting for
Allowability
Reasonability
Allocability
Consistent treatment
May require additional justification or documentation
Results
• From 2003 – 2006 there has been an average
increase of 10% per year in the number of cost
transfers processed with no increase in
administrative staff to process them
• Decrease in the % of High Risk Transactions
despite tightening of timeliness rules (in 2002 25%
were high risk now the average is 12%)
• Federal audits with no significant findings in the cost
transfer area since 2002
URL’s for Decision Trees
• http://wwwact.ucsd.edu/spear/EPET_decision_tree_V3.pdf
• http://wwwact.ucsd.edu/spear/ENPET_decision_tree_V7.pdf