Research Funding & Monitoring Compliance: An Essential Risk Mitigation Strategy THE CURRENT SITUATION

Transcription

1 Research Funding & Monitoring Compliance: An Essential Risk Mitigation Strategy Gracy Pardillo Director, Controls and Compliance Financial Services McGill University John Cornwell Associate University Auditor Division of Audit Services University of Saskatchewan THE CURRENT SITUATION Tri council funding provided through parliamentary appropriations Periodic visits from Tri Council financial officers Internal monitoring is a necessary evil 2

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3 TODAY S AGENDA 1. U of S Financial Highlights 2. The Catalyst 3. Historical Relationship 4. Compliance Project 5. Outcomes 6. Current Environment 7. Future Directions 1. McGill Financial Highlights 2. The Catalysts 3. Historical Structure 4. Financial Integration Project 5. Financial Service Teams (FST) 6. New Integrated Controls 7. Future Directions 5 OBJECTIVES To demonstrate how: 1. U of S created a Compliance Committee to meet Tri Council s regulations with cost effective approach 2. McGill deployed new FSTs to researchers while increasing faculty level accountability and controls 3. Both institutions increased effectiveness of internal control environment 6

4 FINANCIAL HIGHLIGHTS ,000 students 1,000 faculty $40.8 million of Tri council grants $ 8.1 million of Indirect Costs of Research 7 FINANCIAL HIGHLIGHTS Total: $204.8 million 8

5 THE CATALYST Tri Council Monitoring Visit Objective to conduct a review of the administrative and financial controls framework in place at the university Conclusion the university generally had adequate financial controls in place to ensure that the agencies regulations are followed and that research funds are well managed 9 THE CATALYST Tri Council s Recommendations serious problem areas requiring improvement Procedures for compliance with agency guidelines Delegation of signing authority Certification monitoring Supporting documentation for expenditures 10

6 Action Plan Required THE CATALYST External pressure for increased accountability Develop a strategy to continually improve our processes Move the U of S towards a best practices institution (note for John strategic plan) 11 HISTORICAL RELATIONSHIP Disconnect between the functional areas responsible for Tri Council: Administration Monitoring Compliance 12

7 Lack of Collaboration HISTORICAL RELATIONSHIP Research Services Financial Reporting Audit Services Pre-Audit of All Transactions Principal Investigator Agency Audits 13 FINANCIAL HIGHLIGHTS ,200 students 1650 faculty $ 153 million of Tri council grants $ 24.7 million of Indirect Costs of Research 14

8 FINANCIAL HIGHLIGHTS Total: $332.5 million 15 The Researchers Administration The Sponsors THE CATALYSTS 16

9 THE CATALYSTS The Researchers increased services Administration increased accountability The Sponsors increased controls & compliance 17 HISTORICAL STRUCTURE Consists of both Decentralized and Centralized control structure All transactions originate locally and are subject to local procedures All transactions require Central Office approval prior to payment and / or posting to books. Inherent control risks in local units influences the existence of central controls. 18

10 Transaction HISTORICAL STRUCTURE Responsible Initiation Validate Review GL transaction Prepare agency F/S Oversight Researcher or delegate Financial Services, Procurement Services, HR Financial Fund Manager or Unit Head Financial Services Internal Audit, External Audit, Sponsors LOCAL CENTRAL LOCAL CENTRAL / LOCAL CENTRAL / EXTERNAL 19 HISTORICAL STRUCTURE RESULTS IN: 1. Duplication of efforts / costly 2. Delays 3. Unclear responsibilities 4. Insufficient accountability 20

11 U of S Approach COMPLIANCE PROJECT Collaborative and integrated approach for ensuring compliance with agency guidelines 21 Tri Council Compliance Committee Post-award & financial issues Research Services Financial Reporting Audit Services Pre-award & non-financial issues Monitoring, compliance testing & internal controls Best Administrative Practices 22

12 Committee s Goals: Provide exceptional levels of support to PI Enhance compliance through education and knowledge sharing Ensure no ineligible expenditures are charged to Tri Council funds Eliminate instances of compliance errors 23 Committee s Strategy: Establish lines of accountability Create a process for monitoring Improve training and education Improve management of grants in academic units 24

13 Committee s Strategy: Improve internal reports provided to PIs Identify training needs for PIs Identify resource material needs for PIs 25 COMPLIANCE PROJECT Committee s Strategy: Conduct annual audit of Tri Council awards Establish a level of compliance Incorporate non financial items into audit Identify processes in need of improvement 26

14 Audit Approach COMPLIANCE PROJECT Mirror agency monitoring program Select transactions to test for compliance Follow up on non compliant issues Identify the root cause Soft control issues are identified 27 U of S OUTCOMES Monitoring visits are a useful tool Internal Audit monitoring Eliminated financial transaction review as part of Monitoring Visit Reduced site visit from 5 days to 3 days 28

15 U of S OUTCOMES Increased collaboration Enhanced understanding of agency guidelines Opportunities to share knowledge Responsibilities are better defined 29 HISTORICAL RELATIONSHIP Increased Collaboration Research Services Audit Services Principal Investigator Financial Reporting Shared Knowledge & Responsibility Internal Controls 30

16 FINANCIAL INTEGRATION PROJECT LONG TERM VISION LOCAL EXPERTISE 31 FINANCIAL INTEGRATION PROJECT OBJECTIVES: 1.Financial Administrative Support for PIs 2.Liaison between PIs & Central Admin Offices 3.Review & validation of specific financial transactions 4.Increased accountability and reduced bureaucracy 32

17 Faculty Office Before FST Research & Restricted Funds Research Grants Office Payroll / HR Researcher Procurement Services PCard ADMIN Travel Desk International Research Office 33 VP Research & International Relations Pre-award After FST Payroll / HR Researcher FINANCIAL SERVICE TEAM Procurement Services Research & Restricted Funds P card Admin Travel Desk Faculty Office 34

18 FINANCIAL SERVICE TEAMS FOCUS: 1. Research Administration 2. Travel Claims 3. PCard Reconciliation RESULTS IN: 1. Improved Service Levels 2. Increased Controls 35 FST: IMPROVED SERVICES CENTRAL Gatekeeper role Teams divided by agencies specialists University authority to interpret and issue final ruling on grey areas Main Post Award contact for PIs and FST Financial Statement / Invoicing LOCAL On Site and primarily mandated to support PIs Key liaison for Financial Services and other central offices Research & Restricted Funds will aim to liaise with FST vs. PIs Periodic and regular review of spending to ensure compliance. Transaction validation ** 36

19 FST: INCREASED CONTROLS Research Administration Expense Reports PCards Local review and accountability for compliance with granting agencies policies A phased in approach 37 Transaction NEW INTEGRATED CONTROLS Responsible Initiation Validate Review GL transactions Prepare agency F/S Oversight Researcher or delegate Financial Service Team Financial Service Team & PI Financial Services Controls & Compliance, Internal & External Audit, Sponsors LOCAL LOCAL LOCAL CENTRAL / LOCAL LOCAL / EXTERNAL 38

20 FUTURE DIRECTIONS SERVICE LEVELS 39 FUTURE DIRECTIONS Controls and Compliance Team new function within Financial Services GOALS: Monitoring controls within central operations Identify processes in need of improvement Monitoring effectiveness and efficiencies of faculty FST Identify faculty FST in need of improvement 40

21 FUTURE DIRECTIONS Controls and Compliance Team continued GOALS: Establish a FEEDBACK cycle to contribute to future training and education Liaise with Internal Audit Continuous Audit PCard transactions Expense Reports sample by FST Various other Monitoring Reports 41 CURRENT ENVIRONMENT Research Services Department Head Principal Investigator Financial Reporting 42

22 FUTURE DIRECTIONS Achieve best practice in administration of Tri Council awards More reliance on PI and controls in place Continue validating the control environment through internal audits Communicate and educate PIs and administrators 43 ULTIMATE GOAL SUCCESS IN RESEARCH! 44

23 45 QUESTIONS? 46

24 Thank you!/ Merci! Contact Information: Gracy Pardillo (514) John Cornwell (306)