Transcript FastFacts Feature Presentation

Slide 1
FastFacts
Feature Presentation
06/04/2014
To dial in, use this phone number and
participant code…
Phone number: 888-651-5908
Participant code: 182500
To participate via VoIP…
You must have a sound card
You must have headphones or
computer speakers
© 2012 The Johns Hopkins University. All rights reserved.
Slide 2
Today’s Topic
We’ll be taking a look at…
Revised Subrecipient Monitoring
Policies and Procedures
Slide 3
Today’s Presenters
Jim Jarrell
Director of Research and Operational Audits
Office of Hopkins Internal Audits
Contact: [email protected]
443-997-6393
Slide 4
Today’s Presenters
Rick Inglis
Director of Financial Research Compliance
JHU Office of Finance
Contact:
Slide 5
Session Segments
Presentation
Jim Jarrell and Rick Inglis will discuss the revised subrecipient
monitoring policies and procedures, which includes the new
subrecipient vs. contractor classification, and the steps used to
classify, assess risk, and closely monitor subrecipient
claims/spending.
During the 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.
The presenters will answer as many of your questions as time
allows.
Slide 6
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]
You can also send us an instant message!
GoogleTalk – [email protected]
AOL Instant Messenger – HopkinsFastFacts
MSN – [email protected]
Slide 7
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.
Slide 8
How To View Full Screen
Slide 9
Revised Subrecipient Monitoring
Policies and Procedures
Slide 10
Agenda
After today’s presentation you will be able to:
Describe, with regard to subrecipients, what makes JHU different
from our peers and why it requires changes to our procedures
Recognize the risks associated with subrecipients and what can
go wrong
Describe the process for risk assessing subrecipients and how
that will drive additional monitoring procedures
Distinguish the difference between a subrecipient and a
contractor
Perform effective monitoring of high-risk subrecipients in order
to mitigate risks associated with non-compliance and fraud
Champion the revised subrecipient monitoring procedures in
your department with faculty and staff
Slide 11
Who Are We and What Do We Do?
Financial Research Compliance
Central compliance for financial aspects of sponsored funding
A133 compliance audit liaison
Effort Reporting, cost transfers and administrative cost reviews
Office of Hopkins Internal Audit
Shared service organization
Independent
Assess the effectiveness of procedures in place to manage risk
Investigate fraud
Champion of best practices related to internal control
Slide 12
Subrecipient Monitoring: The Need for Change
Historically, risk management has been based on University-toUniversity Sub-award Model
For FY13, JHU had over:
800 subrecipients
$300 million in subrecipient payments
JHU has unique risk profile compared to peers
Only 25% of JHU’s subs are domestic universities
$117 million or 37% of subrecipient activity is to foreign organizations
JHU FY13 Expenditure Amount
Percentage
(federal and non-federal)
Domestic University
$78,115,409.19
25%
Domestic Non-University
$117,390,412.57
38%
Foreign
$116,955,814.98
37%
Total
$312,461,636.74
Classification
12
Slide 13
FY 10 - 13 Subrecipient Expenditure Growth
FY 13 subrecipient expenditures have increased 30% from FY 12
13
Slide 14
FY 13 Subrecipient Expenditures by Sponsor
84% of subrecipient activity is federally supported
14
Slide 15
Subrecipient Landscape
Average individual payments to subs is approximately $28k
Largest payment was over $2m
Prior policy only required invoice for payment
Increased scrutiny from KPMG in A-133 Audit
Increased International Capacity Building Efforts (e.g., USAID Forward
Initiative)
OMB Uniform Guidance
As exemplified by recent issues – financial impact could be significant
Peer organizations have begun requesting support from JHU
Funding challenges
15
Slide 16
JHU’s Responsibility Under Federal Regulation
Per OMB Circular A-133, a prime recipient of federal funding who passesthrough a portion of that funding to another entity shall:
Advise subrecipients of requirements imposed by Federal laws,
regulations, and the provisions of contracts or grant agreements
Monitor to ensure that Federal awards are used for authorized purposes
in compliance with laws, regulations, and grant terms
Ensure that subrecipients meet A-133 audit requirements
16
Slide 17
Case Study: Subrecipient X
Subrecipient X was a local community-based health organization
JHU entered into four federally-supported, cost-reimbursable subawards totaling $3.8 million
During A-133 reviews, JHU Finance identified financial irregularities:
Invoices did not tie to subrecipient general ledger detail
Indirect costs charged directly to the award
Unallowable costs noted in subrecipient ledger
Internal Audit asked to review
17
Slide 18
Case Study: Subrecipient X
Internal Audit review revealed significant deficiencies:
Lack of understanding about federal law
Unsophisticated accounting systems and personnel
No effort reporting or activity reports
Unsupported indirect cost and fringe benefit rates
Indirect costs charged directly
Insufficient supporting documentation
Invoices not based on actual costs incurred
Review concluded that there was over $1m cost disallowance
(not including related audit and legal fees)
JHU refunded federal government without reimbursement from Subrecipient
X
18
Slide 19
Case Study: Subrecipient X
Lessons Learned:
Treat subrecipients as business partners
Risk management begins prior to award
Ensure technical and financial capability
 Evaluation of technical capabilities and work history
 Review of financial status of organization
 Reference checking
Use risk assessment to drive post-award monitoring
Proper and thorough invoice review including obtaining supporting
documentation
19
Slide 20
JHU Subrecipient Taskforce Initiative
Established subrecipient taskforce
Goal was to develop new procedures to better manage the risks associated
with subrecipients
Subrecipient taskforce members included:
Chief Risk Officer
Internal Audit
Office of Finance
Divisional Representation (Business Office and Research Administration)
Established a working group within the subrecipient taskforce to do the
following:
Determine what makes an organization a subrecipient
Define a risk management matrix
Define additional monitoring procedures for higher risk subrecipients
20
Slide 21
Subrecipient Taskforce Update
Working group developed proposed changes and circulated amongst the
university for feedback
Changes are meant to protect both JHU and faculty interests
Changes are meant to enhance overall risk management, both regulatory
and financial
Proposed changes agreed upon:
Classification of subrecipient vs. contractor
Revised risk assessment procedures and risk ratings for all subrecipients
Monitoring procedures for high-risk subrecipients
New risk assessment complete and posted on Financial Research Compliance
website
New procedures are effective as of July 1, 2014
21
Slide 22
New Procedure 1: Contractor vs. Subrecipient
Classification
Classifying organizations as
subrecipients presents additional
compliance burden
Enhanced guidance on classification
developed
Sub vs. contractor Quick Guide
22
Slide 23
New Procedure 1: Contractor vs. Subrecipient Classification
Contractor vs. Subrecipient Detailed Guidance
Contractor if the entity:
Subrecipient if the entity:
•
•
•
•
•
•
Is engaged in substantive
programmatic work
Participates in designing or
conducting the work
Is granted some level of
programmatic control
May seek to publish or co-author
results
Provides cost sharing
Has key personnel
•
•
•
•
•
•
•
Is providing services in support of the
research program
Has not participated significantly in the
design of the work
Is not directly responsible for project results
Provides goods and services in the normal
operations and markets these to a variety
of customers
Has little or no independent decision
making in the design or conduct of the work
being completed
Performs work that involves routine or
repeated activities
Would not seek to publish or co-author
results
23
Slide 24
New Procedure 1: Contractor vs. Subrecipient Classification
OMB Uniform Guidance will
require classification decisions to
be documented
During proposal phase or as
prospective subrecipients are
identified, departments will
complete the Subrecipient
Determination Form
Form must be signed by Principal
Investigator
Form will be submitted to the
Office of Research Administration
(ORA) with the Proposal
ORA must explicitly approve
classification
24
Slide 25
New Procedure 2: Subrecipient Risk Rating
Subrecipients will now be classified as high or low risk
High-risk entities are defined as:
Foreign
Domestic subrecipients without formal compliance audit (A-133)
Entities with no prior JHU work history
Entities who received less than $1M in Federal funding in either of the
last two years
The Office of Research Administration will be responsible for risk rating
A subrecipient committee has been established to consider changes to risk
rating
25
Slide 26
New Procedure 2: Subrecipient Risk Rating
A risk rating database of all JHU subrecipients has been established here:
http://finance.jhu.edu/depts/frc/data_files_frc/subrecipientriskrating.xls
Risk ratings are consistent across JHU
Excerpt from the database:
Subrecipient Number
Subrecipient Name
Risk
Country Name Classification
Primary
Division
Secondary
Division
Total Expense
Non Federal Total Federal
1009428 SAVE THE CHILDREN
USA
Low
235
160
16,965,234.39
-
16,965,234.39
1016996 JOHN SNOW INC
High
235
None
7,942,550.72
-
7,942,550.72
1012576 MALARIA CONSORTIUM
USA
United
Kingdom
High
160
None
6,510,395.75
-
6,510,395.75
1017654 CITY YEAR INC
USA
High
125
115
3,441,219.00
268,369.00
3,172,850.00
1011133 UNIVERSITY OF NORTH CAROLINA
USA
Low
160
170
3,115,319.47
262,398.30
2,852,921.17
1022268 BLANTYRE HEALTH RESEARCH
Malawi
High
160
170
3,031,639.63
-
3,031,639.63
1013802 UGANDA HEALTH MARKETING GROUP
Uganda
High
160
None
2,650,166.77
-
2,650,166.77
1011658 WESTAT CORP
USA
High
160
170
2,325,331.23
-
2,325,331.23
2046718 MAKERERE UNIVERSITY
Uganda
High
170
160
2,115,126.50
356,114.31
1,759,012.19
1005269 ICDDR B
Bangladesh
High
160
170
2,068,572.00
1,744,479.00 324,093.00
26
Slide 27
New Procedure 2: Subrecipient Risk Rating
Once a subrecipient classification has been approved by the Office of Research
Administration (ORA), ORA will perform a risk rating
In doing so, Research Administration may do the following:
For current subs, consult the initial Subaward Risk Assessment Database
For new subs, require completion of the "Subrecipient Financial Information
Questionnaire” including submission of recent A-133 reports
ORA will document and communicate the subrecipient's risk rating to FRC
Using the risk rating, ORA will negotiate specific terms and conditions into the
agreement consistent with the revised post-award monitoring procedures
ORA will notify the department and Principal Investigator of the risk rating
27
Slide 28
New Procedure 2: Changes to Subrecipient Risk Rating
Changes to subrecipient risk rating will be considered by an Institutional Subrecipient
Committee who will meet on a quarterly basis to discuss current subrecipient issues
Members of the Committee include:
JHU Finance
Internal Audit
Chief Risk Officer
Divisional Research Administration and Business Office Personnel
Divisional Departmental Representation
A form will be developed for requests to change subrecipient risk ratings
The form must accompany copies of the most recent subrecipient A-133 report and
the latest summary and detailed invoice reviews, and must be presented in person to
the Subrecipient Committee
The Committee will base their decision on the information provided, taking into
account:
Nature and size of subrecipient
Recent work history
Recent A-133 Audit results
Results of last summary and detailed invoice reviews
28
Slide 29
New Procedure 3: Enhanced Invoice Review Guidance
Enhanced Invoice Review Guidance
All invoices (high and low risk)
Review for standard invoice elements as required by current policy (e.g.,
cumulative costs, certification etc.)
Review for financial accuracy
Expense in line with budget category amounts
Amounts aren’t round dollars solely based on a percentage of budget
Previous expense + Current expense = Cumulative expense for each budget
category
Column totals equal the amount of individual column amounts in total
Fringe cost are in line with salary expense for the agreed upon fringe rate
Facilities and Administrative (F&A) costs are in line with applicable costs for
the agreed upon F&A rate
Certification for Payment and Performance form required for all invoices
Slide 30
New Procedure 3: Enhanced Invoice Review Guidance
Review for Standard Invoice
Elements
Name of the subrecipient
JHU purchase order number
Date of the invoice
Invoice number and project title
Period of performance covered by
the invoice
6. Breakdown of costs in accordance
with expenditure categories
7. Current period costs and
cumulative project costs
8. Cost sharing (if applicable)
9. Program income (if generated)
10. Contact person for invoice
questions
11. Certification as to the truth and
accuracy of the invoice
1
1.
2.
3.
4.
5.
4
3
2
4
5
6
7
11
10
30
Slide 31
New Procedure 3: Enhanced Invoice Review Guidance
Review for Financial Accuracy
Recalculate
fringe
Previous +
Current =
Cumulative
Review period
of performance
Recalculate
totals
Matching
expenditure
categories
Recalculate
F&A
No round
dollars
31
Slide 32
New Procedure 3: Enhanced Invoice Review Guidance
Certification for Payment and
Performance must be completed
for all invoices
Approval by both Financial
Analyst and Principal
Investigator is required
Form must be included with
invoice in order to process
payment in SAP
Form is located on JHU Finance
website. Here is the link:
https://apps.finance.jhu.edu/pol
icy_procedures/policy/sub/cert_
pymt_perf.docx
32
Slide 33
New Procedure 4: Additional Monitoring for High-Risk
Subrecipients
High-risk subrecipients will be required to submit general ledger summary
and detailed financial reports along with all invoices
Departmental personnel will be responsible for completing a summary
comparison of the invoice to the financial reports
Every six months, departmental personnel will complete a more detailed
review of a subrecipient financial report supporting one invoice, including
obtaining supporting documentation for a selection of charges
The Certification for Payment and Performance form has been revised to
evidence these reviews
Problems identified with billings must be resolved and the resolution
documented
33
Slide 34
New Procedure 4: Additional Monitoring for High-Risk
Subrecipients
Invoice Summary Review
(every invoice)
eUM Financial System
Project
Start Date
End Date
G/L Account
Salary & Wages
10011338
11/1/2013
12/31/2013
Posting Date
contractor
11/15/2013 Jacque Ravel
11/30/2013 Jacque Ravel
12/15/2013 Jacque Ravel
12/31/2013 Jacque Ravel
Pay
Pay
Pay
Pay
Description
Period 11/1 - 11/15
Period 11/16 - 11/30
Period 12/1 - 12/15
Period 12/16 - 12/31
Total Salary & Wages
Payment
2775.37
2775.36
2775.37
2775.36
11101.46
Employee Benefits
11/15/2013
11/30/2013
12/15/2013
12/31/2013
NA
NA
NA
NA
Employee
Employee
Employee
Employee
Benefits
Benefits
Benefits
Benefits
Total Employee Benefits
Ensure
totals
match
933.85
933.84
933.85
933.84
3735.38
Professional Services
Total Professional Servicies
0
0
Travel
Total Travel
0
0
Equipment
Total Equipment
0
0
Supplies
11/13/2013 Fedex
11/21/2013 Carolina
12/5/2013 Carolina
12/7/2013 Thermo Scientific
12/13/2013 Grainger
12/17/2013 Airgas
Postage
Plastic Pippets
Glass Screw-Cap Vials
Phusion RT PCR Kits
Chemical Buffer Solution
Oxygen 20 CU FT
43.7
535
526.25
1545
155.8
1069.44
3875.19
11/13/2013 Fisher Scientific
Standard Mini-Centrifuge
1445.15
1445.15
11/30/2013
12/31/2013
Indirect Cost
Indirect Cost
Total Supplies
Other Direct Cost
Total Other Direct Cost
Indirect Cost
Total Indirect Cost
4721.17
5357.48
10078.65
Total Costs - 10011338
30235.83
34
Slide 35
New Procedure 4: Enhanced Invoice Review Guidance
Certification for Payment and
Performance must be completed
for all invoices
Form must be uploaded with
invoice and subrecipient ledger in
order to process payment in SAP
If high-risk subrecipient:
A summary review is required
to be performed and must be
documented on the
Certification for Payment and
Performance
Date of last detailed review
must also be documented
35
Slide 36
New Procedure 4: Additional Monitoring for High-Risk
Subrecipients
eUM Financial System
Project
Start Date
End Date
Step 1: Invoice Detailed
Review (every six months)
G/L Account
Salary & Wages
10011338
11/1/2013
12/31/2013
Posting Date
contractor
11/15/2013 Jacque Ravel
11/30/2013 Jacque Ravel
12/15/2013 Jacque Ravel
12/31/2013 Jacque Ravel
Pay
Pay
Pay
Pay
Description
Period 11/1 - 11/15
Period 11/16 - 11/30
Period 12/1 - 12/15
Period 12/16 - 12/31
Total Salary & Wages
Payment
2775.37
2775.36
2775.37
2775.36
11101.46
Employee Benefits
11/15/2013
11/30/2013
12/15/2013
12/31/2013
NA
NA
NA
NA
Employee
Employee
Employee
Employee
Benefits
Benefits
Benefits
Benefits
Total Employee Benefits
Ensure
totals
match
933.85
933.84
933.85
933.84
3735.38
Professional Services
Total Professional Servicies
0
0
Travel
Total Travel
0
0
Equipment
Total Equipment
0
0
Supplies
11/13/2013 Fedex
11/21/2013 Carolina
12/5/2013 Carolina
12/7/2013 Thermo Scientific
12/13/2013 Grainger
12/17/2013 Airgas
Postage
Plastic Pippets
Glass Screw-Cap Vials
Phusion RT PCR Kits
Chemical Buffer Solution
Oxygen 20 CU FT
43.7
535
526.25
1545
155.8
1069.44
3875.19
11/13/2013 Fisher Scientific
Standard Mini-Centrifuge
1445.15
1445.15
11/30/2013
12/31/2013
Indirect Cost
Indirect Cost
Total Supplies
Other Direct Cost
Total Other Direct Cost
Indirect Cost
Total Indirect Cost
4721.17
5357.48
10078.65
Total Costs - 10011338
30235.83
36
Slide 37
New Procedure 4: Additional Monitoring for High-Risk
Subrecipients
Step 2: Invoice Detailed
Review (every six
months)
eUM Financial System
Project
Start Date
End Date
G/L Account
Salary & Wages
10011338
11/1/2013
12/31/2013
Posting Date
contractor
11/15/2013 Jacque Ravel
11/30/2013 Jacque Ravel
12/15/2013 Jacque Ravel
12/31/2013 Jacque Ravel
Pay
Pay
Pay
Pay
Description
Period 11/1 - 11/15
Period 11/16 - 11/30
Period 12/1 - 12/15
Period 12/16 - 12/31
Total Salary & Wages
Payment
2775.37
2775.36
2775.37
2775.36
11101.46
Employee Benefits
Review all transactions
for allowability against
subaward agreement
and relevant OMB
Circular
11/15/2013
11/30/2013
12/15/2013
12/31/2013
NA
NA
NA
NA
Employee
Employee
Employee
Employee
Benefits
Benefits
Benefits
Benefits
Total Employee Benefits
933.85
933.84
933.85
933.84
3735.38
Professional Services
Total Professional Servicies
0
0
Travel
Total Travel
0
0
Equipment
Total Equipment
0
0
Supplies
11/13/2013 Fedex
11/21/2013 Carolina
12/5/2013 Carolina
12/7/2013 Thermo Scientific
12/13/2013 Grainger
12/17/2013 Airgas
Postage
Plastic Pippets
Glass Screw-Cap Vials
Phusion RT PCR Kits
Chemical Buffer Solution
Oxygen 20 CU FT
43.7
535
526.25
1545
155.8
1069.44
3875.19
11/13/2013 Fisher Scientific
Standard Mini-Centrifuge
1445.15
1445.15
11/30/2013
12/31/2013
Indirect Cost
Indirect Cost
Total Supplies
Other Direct Cost
Total Other Direct Cost
Indirect Cost
Total Indirect Cost
4721.17
5357.48
10078.65
Total Costs - 10011338
30235.83
37
Slide 38
New Procedure 4: Additional Monitoring for High-Risk
Subrecipients
Step 2: Invoice Detailed
Review (every six months)
Sample transactions from ledger and
obtain supporting documentation from
subrecipient
eUM Financial System
Project
Start Date
End Date
G/L Account
Salary & Wages
10011338
11/1/2013
12/31/2013
Posting Date
contractor
11/15/2013 Jacque Ravel
11/30/2013 Jacque Ravel
12/15/2013 Jacque Ravel
12/31/2013 Jacque Ravel
Pay
Pay
Pay
Pay
Description
Period 11/1 - 11/15
Period 11/16 - 11/30
Period 12/1 - 12/15
Period 12/16 - 12/31
Total Salary & Wages
Payment
2775.37
2775.36
2775.37
2775.36
11101.46
Employee Benefits
Jacque Rival
Appointment Letter
Labor Distribution
Effort reporting (if
available)
Timesheets (if applicable)
11/15/2013
11/30/2013
12/15/2013
12/31/2013
NA
NA
NA
NA
Employee
Employee
Employee
Employee
Benefits
Benefits
Benefits
Benefits
Total Employee Benefits
933.85
933.84
933.85
933.84
3735.38
Professional Services
Total Professional Servicies
0
0
Travel
Total Travel
0
0
Equipment
Total Equipment
0
0
Supplies
Fedex Invoice
Airgas Invoice
11/13/2013 Fedex
11/21/2013 Carolina
12/5/2013 Carolina
12/7/2013 Thermo Scientific
12/13/2013 Grainger
12/17/2013 Airgas
Postage
Plastic Pippets
Glass Screw-Cap Vials
Phusion RT PCR Kits
Chemical Buffer Solution
Oxygen 20 CU FT
43.7
535
526.25
1545
155.8
1069.44
3875.19
11/13/2013 Fisher Scientific
Standard Mini-Centrifuge
1445.15
1445.15
11/30/2013
12/31/2013
Indirect Cost
Indirect Cost
Total Supplies
Other Direct Cost
Total Other Direct Cost
Indirect Cost
Ensure all amounts agree
between ledger and invoices
Total Indirect Cost
4721.17
5357.48
10078.65
Total Costs - 10011338
30235.83
38
Slide 39
New Procedure 4: Additional Monitoring for High-Risk
Subrecipients
How to handle discrepancies identified during invoice reviews:
Must be resolved prior to payment
Partial payments of invoices are allowable (e.g., withholding questioned
costs)
Significant discrepancies may indicate the need for a 100% desk audit of
the specific invoice or all invoices depending on the nature of the
concern
Resolutions must be formally documented on the invoice or payment
certification form
At discretion of departments, results may dictate future invoicing
requirements (e.g., submission of timesheets with every invoice)
39
Slide 40
New Procedure 4: Additional Monitoring for High-Risk
Subrecipients
Certification for Payment and
Performance must be completed
for all invoices
This should not be completed
until all questions about costs
have been resolved
If high-risk subrecipient:
Document the summary
review
Document that the detailed
review has taken place on the
Certification for Payment and
Performance including the
date performed
Upload all support into SAP
40
Slide 41
Conclusion
JHU has a different subrecipient risk-profile than our peers
JHU is required to advise subrecipients of their responsibilities under federal
regulations and then to monitor to ensure they are being met
Subrecipients’ issues could have a significant financial impact on JHU and
the reputations of its faculty members
New procedures around subrecipient classification, risk rating, and invoice
review will go into effect on July 1, 2014
More documentation will be required to validate expenditures from high-risk
subrecipients
41
Slide 42
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.
contractor Vs. Subrecipient Guide:
JHU Subrecipient Policies and Procedures
http://finance.jhu.edu/policyapp/displayGuideContents.do?guideId=SUB
JHU Subrecipients Risk Rating Database:
http://finance.jhu.edu/depts/frc/data_files_frc/subrecipientriskrating.xls
Slide 43
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.
Slide 44
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]
Slide 45
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!