SUMMARY OF UNIVERSITY AUDITS, SETTLEMENTS AND INVESTIGATIONS RELATED TO FEDERAL PROGRAMS

SUMMARY OF UNIVERSITY AUDITS, SETTLEMENTS AND INVESTIGATIONS RELATED TO FEDERAL PROGRAMS APRIL 13, 2015 CHARLENE BLEVENS, BLEVENSC@GMAIL.COM

Contents 2015... 13 University of Kentucky... 13 University of Alaska Fairbanks... 14 2014... 15 University of California Irvine... 15 HHS OIG Issues First Report on Pilot Payroll Certification System... 15 Reconciliation Methodology... 16 Columbia University... 17 The University admitted to Mischarging Federal Grants and agreed to pay more than $9M to resolve false claims lawsuit.... 17 University of Illinois Champaign... 17 Summer Salary... 17 Cost Transfers... 18 Travel... 18 Also question was no-show room fees.... 19 University of California, Los Angeles... 19 Performance... 19 ors Finding... 20 Memorial Sloan-Kettering... 22 Unallowable Extramural Construction Costs Related to a NIH Recovery Act Grant... 22 Virginia Polytechic Institute & State University... 22 Incurred Cost... 23 Costs Not Adequately Documented... 23 Foreign Housing and Subsistence... 23 Cost not Treated Consistently Laptop and Printer Cartridges... 24 University of California, San Diego... 24 Administrative and Clerical Payroll Costs... 24 Costs not Consistently Treated... 24 Award Was not a Major Project & Applicable Credits Not used to Offset Allowable Cost... 25 After the Fact Effort Report Not Certified... 25 A University Department Did not Follow Federal Guidelines and University Policy for Reporting Improper Governmental Activity... 25 University of California, Santa Barbara... 26 Review of Draft Report 12-1-005 - NSF Management Decision pertaining to 6 audit findings and administratively closed audit report... 26 New York University... 29 New York University Incurred Cost... 29 $75,494 of costs questioned related to unallowable indirect costs, unreasonable foreign travel and equipment purchases made at the end of a grant s period of performance and unallowable conference fees.... 29 University of Houston (Profesors)... 29 Houston Professors charged with making false statement and wire transfer fraud... 29 University of South Florida... 30 Claimed Cost... 30 University of Eastern Michigan University... 35 2013... 36 New: Shaw University... 37 Shaw University Employee Sentenced for Government Grant Theft Scheme... 37 Wayne State University... 37 Reprinted by permission of Charlene Blevens, blevensc@gmail.com Page 1

Wayne State University Claimed Allowable Costs Under National Institutes of Health Grant No. R01NS039860... 37 Cornell... 38 of Direct Costs, Recovery Act Funds, Pension Costs Associated with the National Astronomy & Ionoshphere Center (NAIC)... 38 Questioned costs totaled $794,221. The University disputed 60 of the 86 questioned transactions which were primarily associated with the allowability of office supplies and information technology expenses.... 38 Supplies - A large majority of the questioned costs related to computer or computer-related expenses.... 38 Recharge Centers - or s findings related to directly charged transactions for office supplies which should have been treated as F&A costs.... 39 General- The majority of the questioned costs related to documentation of participant support... 39 Foreign Travel - ors findings included costs that (1) exceeded the maximum allowable per diem rate; (2) were incurred outside the authorized travel dates; (3) were for unallowable expenses (e.g., alcohol and laundry); (4) were not reasonable; and (5) were not adequately documented.... 40 Clerical and Administrative - Less than 1% of the estimated questioned costs related to clerical and administrative in unlike circumstances.... 41 John Hopkins Bayview Medical Center... 41 Costs claimed under NIH Contract were Generally Allowable.... 41 Wayne State University... 42 Wayne State University Claimed Allowable Costs Under National Institutes of Health Grant No. R01NS064976... 42 Emory University... 43 Emory University to Pay $1.5 Million to Settle False Claims Act Investigation... 43 Allegation: University Overbilled Medicare and Medicaid for Patients Enrolled in Clinical Trial Research at Emory s Winship Cancer Institute... 43 Northwestern University... 43 Northwestern University to Pay Nearly $3 Million Settlement related to False Claims. Bennett... 43 Allegations: Federal grants billed for family trips, meals, hotels and consulting fees benefitting Dr. Bennett, his friends and family.... 43 SUSC Professor Accused of Grant Fraud at Previous Job... 44 A University of South Carolina research professor, who holds one of USC's endowed chairs, is accused of misusing federal grant money at his previous job.... 44 Morgan State University... 44 Morgan professor accused of grant money kickback scheme.manoj Kumar Jha... 44 Univeristy of Colorado Denver... 45 of Selected Costs... 45 Hourly Salary Costs Lack of Sufficient Support... 45 Indirect Costs Charged as Direct... 46 Lack of Documentation One Transaction... 46 Unallocable Costs... 46 Thomas Jefferson University... 47 objective-to determine whether selected costs that Jefferson charged HHS awards were allowable.... 47 Salary Costs-Documentation... 47 Office supplies and general use equipment that should have been charged as F&A.... 47 Transactions unallowable for the grants they were charged.... 47 Individual membership in a professional organization.... 47 University of Wisconsin -Madison... 47 NSF contracted with DCAA to perform an incurred cost audit of $218.8 million of interim incurred direct costs claimed on UW-M s IceCube project.... 47 Internal Control Findings... 47 Rebudgeting of Sub awards to Service Agreements without NSF Approval... 47 Improperly charging an employee s relocation cost as a direct cost.... 48 CAS 501 violation on treatment of Indirect Cost... 48 Lack of Segregation and Accounting for Contingency Funds... 49 Reprinted by permission of Charlene Blevens, blevensc@gmail.com Page 2

2012... 50 Morgan State University... 50 Morgan State University Professor, Manoj Kumar Jha, Indicted in Scheme to Defraud the NSF.... 50 University of California, Santa Barbara... 51 of Incurred Costs... 51 Finding 1: Overcharged Summary Salaries over $1.9M... 51 Finding 2: Over $2.8 Million of Excess Federal Cash Disbursements Resulted From Not Fulfilling Grant Cost Share Requirements... 51 Finding 3: Approximately $500,000 of Inappropriate Cost Transfers into NSF Awards... 52 Cost Transfer made 6 months after award expired... 52 Finding 4: Over $473,000 of Indirect Cost Overcharges to NSF Grants... 53 Finding 5: $440,000 of Unallowable Costs Charged to NSF Grants... 53 Finding 6: UCSB Used $180,000 of Remaining Fellowship Funds for Non-Award Purposes... 55 Awardee Response and OIG Comments... 55 State University of New York (Suny) Research Foundation... 55 of clerical, administrative and extra service compensation expenditures.... 55 Administration and Clerical Expenses as Direct... 55 Extra State Compensation Earned in Same Department as Regular Duties Performed... 56 Florida State University... 56 of select costs charged directly to HHS awards... 56 Administrative and Clerical Findings... 56 General Use Supplies-Lab Supplies Charged to Award... 57 Salary Costs-Researcher who Managed Zebra Fish Facility Direct Cost of Award... 57 Salary Costs Lack of Documentation... 58 Insufficient documentation for Student Registration Fees... 58 Graduate Student Compensation paid in Excess of NRSA Stipend Level and First Year Post Doc... 58 Questioned Service Center Costs... 59 Rate Charged not designed to Recover Cost of Services... 59 Unallowable Cost for Memberships and Office Supplies... 59 Use of Space Survey to Determine Activities in Lab... 59 Lack of Biennial Review... 60 Computer Purchases - Transactions not Reasonable... 60 University of Notre Dame... 60 of Costs Claimed and Cost Share on 5 Awards... 60 Finding 1 Incurred Costs not Supported by Adequate Documentation and Lack of Approval for Unmet Participant Support Costs--University of Notre Dame (UND)... 60 Finding 2 Lack of Documentation to Support Incurred Costs related to Subaward at the University of Chicago (UC)62 Finding 3 Lack of Documentation and Unallowable Costs for Participant Support and Travel Costs related to Subaward at Michigan State University (MU)... 62 San Diego State Research Foundation/El Centro School District... 62 FBI Press Release... 62 Michael P. Klentschy, pleaded guilty to mail fraud charges in two related cases alleging fraud in elementary school math and science grants.... 62 NEW: University of Pennsylvania... 63 Press Release, the United States Attorney s Office Middle District of Pennsylvania... 63 Former Penn State Professor Charged in $3 Million Federal Research Grant Fraud Sentenced 41 months... 63 John Hopkins University... 64 of NSF $32.8 M cooperative agreement... 64 Finding 1 - Post-Subaward Fiscal Monitoring of Sub grantees should be improved... 65 ors opinion on reliance on external audits for determining risk... 65 Finding 2 - Inadequate Supporting Documentation for Costs Charged to the Grant Internal Service Charges... 66 Finding 3 - Unsupported Sub grantee Costs (Record Retention)... 66 Reprinted by permission of Charlene Blevens, blevensc@gmail.com Page 3

Finding 4 - Improper Application and Recovery of Indirect Costs by the Sub grantee.... 66 2011... 67 NEW: Ohio State University... 67 of Administrative and Clerical Costs... 67 State University of New York Research Foundation... 67 review of administrative, clerical, and extra service compensation expenditures claimed as direct costs.... 67 Expenditures did not solely benefit sponsored agreement... 67 Computer Purchases at the End of the Project... 68 Purchase of a laptop computer... 68 Promotional giveaways... 68 Expenditures for office supplies... 68 Expenditures required no unusual degree of clerical support.... 68 Extra service performed on duties not related to sponsored agreement... 68 North Central Carolina University... 69 The former executive director of a minority program headquartered at NC Central University diverted $1 million to a checking account for payments to herself and others over a six-year period in a money skimming scheme.... 69 Boston University... 70 Cooperative Agreement with 13 Partners... 70 Finding 1: Did not have a formal plan for monitoring subawardees.... 70 Finding 2: BU does not have adequate internal controls to ensure that cost share is properly identified, recorded, reported and monitored. Deficiencies:... 71 Finding 3: System of internal controls over the personnel and payroll function not adequate:... 72 Ohio State University... 73 Cooperative Agreement -31 Sub awards... 73 Finding 1- In adequate Subawardee Monitoring... 73 Lack of policies and procedures over subawardee selection and monitoring... 73 Finding 2 Inadequate Controls for Meeting Cost Share Commitments- not adequately monitored... 74 Finding 3 Inadequate Controls for Meeting Participant Support Cost Commitments not identified, segregated and monitored.... 74 Finding 4 - Inadequate Effort Reporting System... 74 Finding 5 Inadequate Polices, Procedures and Training not adequate to ensure compliance... 75 North Carolina Central University... 75 Internal Control Review. North Carolina Central University, NCCU, selected for audit based on past internal control weakness and subsequent activities that NSF auditors became aware of.... 75 Lack of Adequate Internal Control for Budgeting and Accounting, including Participant Support Costs.... 75 University & Federal Travel Policies Not Followed.... 76 Lack of Adequate Control over Equipment Purchases.... 76 Global Positioning System (GPS) for robots purchased instead of computers outlined in the proposal.... 76 Laptops Purchased used in Department... 76 Payroll and Fringe Benefits Procedures Not Followed.... 77 Inadequate Accounting and Reporting of Indirect Costs.... 77 Fixed Assets Physical Inventory Deficiencies.... 77 Lack of Compliance with NCCU's Own IT General Controls.... 77 Inadequate Internal Controls over NSF Grant Compliance Requirements for Cost Share and Conflict of Interest.... 77 2010... 78 Wilberforce University... 78 Theft: Former University Official, Marshal, Sold Computer Items Bought with Federal Grant... 78 Cornell Weill Medical College... 78 Qui Tam Lawsuit Brought by Post Doc Fellow in NIH Training Grant for a career in research in the neuropsychology of HIV/AIDS... 78 Defendant Argument... 79 Cornell Appeal of Fraud... 79 Reprinted by permission of Charlene Blevens, blevensc@gmail.com Page 4

Cornell was found to have violated three of five charges under the False Claims Act and ordered to pay $887,714 in total damages.... 79 South Carolina State University... 79 S.C. State University could not account for $25 million in federal earmarks... 79 California Institute of Technology... 80 Follow up to NSF Effort... 80 University of Delaware... 80 NSF Effort... 80 s found that Internal Controls over Effort Reporting System Need Improvement... 80 Finding: Salaries and Wages charged to the NSF did not always benefit grants or were incorrectly charged to NSF grants.... 80 Finding: Employees were not sufficiently educated on the salary distribution and effort reporting processes.... 81 Finding: System weaknesses were not identified and corrected in a timely manner... 81 University of Missouri - Columbia... 81 of internal control over financial reporting and monitoring of subawardees.... 81 Finding 1: Subawardee Monitoring Recommendations... 82 Finding 2: University does not have adequate internal controls and safeguards in place to adequately process all labor cost transfers to ensure that labor effort certifications are properly recertified.... 82 University of Buffalo... 83 A former University of Buffalo Researcher, William Fals-Stewart, was arrested Feb. 16 on multiple charges of attempted grand larceny, perjury, identity theft, offering a false instrument and falsifying business records.... 83 Washington University St. Louis... 84 NSF Effort... 84 The audit did not identify any specific deficiencies concerning labor effort reporting. The audit did identify areas of concern.... 84 The University did not require effort training for all campuses.... 84 Effort system not fully integrated for all personnel to include academic, administrative, and research effort.... 84 The need to provide cleaner guidance on how to process significant prospective changes to salary distribution.... 84 Lack of Comprehensive Internal Evaluation of Effort Reporting... 84 University of Nevada - Reno... 85 NSF Effort... 85 Salaries Exceed Two-Month Salary Limitation... 85 Cost Transfers without Adequate Justification... 85 Cost Transfers Processed during Last Month of Grant... 85 Salary Charges for Employees that did not benefit the Projects... 85 Tuition Remission Costs... 85 Cost Share Effort Not Reflected on Report... 85 Did not Perform Independent Internal Evaluation... 86 Employee Training for Key Officials Not Mandatory... 86 2009... 86 Stony Brook University Research Foundation... 86 NSF Effort... 86 Effort Reports Not Certified by Person with Suitable Means of Verification... 86 State funded activities were not ways included on an integrated basis as required by federal regulations... 86 Lack of Written Justifications and Explanations on Labor Cost Transfer... 87 Unallowable Costs Incorrectly Charged... 87 Lack of Independent Evaluation... 87 University of Wisconsin... 87 Improvements Needed in the Payroll Distribution and Effort Reporting System... 88 The University did not have a training policy until the implementation of the new ECRT effort reporting system... 88 Employee Training For Key Officials Was Not Mandatory... 89 Suitable Means of Verification Requires Definition... 89 Reprinted by permission of Charlene Blevens, blevensc@gmail.com Page 5

University of Michigan... 89 of large Center awards which continued over an extensive period of time and had significant cost sharing, and substantial subaward, consultant, equipment and participant support costs... 89 Lack of Effective Record Retention System for Maintaining Source Documentation.... 89 Lack of Adequate Centralized Monitoring Control.... 90 Lack of Procedures for Monitoring and Enforcing Labor Certification and Effort... 90 Lack of Written Job Description for a Key Position Related to an NSF Program... 91 Purdue University... 91 NSF Effort... 91 Internal Controls over Purdue University s Labor Effort Charging Can be strengthened... 91 Additional Concerns for the New On-line System... 92 Cornell University... 92 NSF Effort... 92 Labor Effort Certification System Not in Compliance with OMB Circular A-21... 92 Suitable Means of Verification.... 92 Group Certifications.... 93 ors Comment on Management Response to Internal on Effort... 93 No Documentation of Discussions with PI to Validate Effort Performed... 93 Some of the more significant improvements noted by the auditors:... 93 Other Matters to be reported... 94 Certification Frequency... 94 or Recommendations... 94 Georgia Institute of Technology... 95 NSF Effort... 95 Identified as Significant Internal Control Weakness.... 95 Prospective Changes... 95 Cost Transfers... 95 ors Recommendations... 96 Southern Illinois University Edwardsville (SIUE)... 96 Indictment of Assistant Program Director in Talent Search program for wire fraud, misapplication of funds from programs receiving federal funds, and obstructing justice.... 96 Southern Illinois University Edwardsville (SIUE)... 96 of use of TRIO program funds and participant eligibility... 96 Did not serve the required minimum number of Talent Search (TS) participants;... 96 Failed to provide adequate documentation for TRIO personnel costs;... 97 Unallowable Costs Field Trips... 97 Unallowable Costs Gift Cards or Other Gifts... 97 Other Unallowable Costs... 97 Inadequately Documented Costs... 97 Failed to maintain adequate TRIO participant records... 98 Cornell Weill Medical College... 98 $2.6 Million to Settle Civil Charges; Whistleblower... 98 Committed Effort PI failed to disclose full extent of various research projects... 98 UC San Francisco... 99 Review of Admn and Clerical Costs - Substantially complied. Minor clerical errors... 99 University of Maryland Baltimore... 99 Theft of $469,000 from University Visa Card... 99 University of Florida... 99 Federal Investigators Allege Fraudulent Submission of Invoices... 99 UCLA School of Medicine... 99 Theft - Former Head of Willed Body Program sentenced to jail.... 99 University of Central Florida... 99 Reprinted by permission of Charlene Blevens, blevensc@gmail.com Page 6

Theft using Purchasing Card... 99 Duke University... 99 Review of Administrative Costs Pilot... 99 Salary Costs - University had not adequately documented that the grants, contracts, or other agreements met the definition of major projects.... 100 Examples of other administrative costs from the sample that ors considered unallowable.... 100 OIG Comment on Use of Extrapolation... 101 2008... 101 Yale University... 101 $7.6 Million Settlement, False Claims & Common Law Allegations in Management of Federally Funded Research Grants (3.8 Actual and 3.8 Punitive)... 101 Cost Transfers not adequately explained and documented... 101 Time & Effort Summer Salary... 101 University of Louisville... 102 Former U. of Louisville Dean Is Sentenced to More Than 5 Years... 102 Indictment U of L Education Dean Felner... 102 Vanderbilt... 103 NSF Effort... 103 Significant Internal Control Finding... 103 Effort Certified... 103 Approval Time... 103 Certification Date... 103 Tolerance Range... 103 Salary Charges to NSF... 103 Summer Salary, amounts charged did not match effort... 104 Hold Senior Management Accountable.... 104 St. Louis University... 104 St. Louis University Agrees to pay $1 Million to Settle Federal False Claims Act Allegations... 104 Florida Agricultural and Mechanical University (FAMU)... 105 Former FAMU Director McGill pleads guilty to conspiracy and theft from federal programs charges.... 105 Former FAMU Director Sentenced to 46 months in federal prison.... 105 University of California, San Diego (UCSD)... 105 NSF Effort... 105 1) Late Effort Reports and Timeliness... 105 2) Lack of Formal Written Timeliness Standards & Accountability by Senior Managers... 105 3) Independent Internal Evaluations... 105 4) Administrative Time Charged to NSF Awards... 105 5) Salary Exceeding NSF Faculty Salary Limitations or UCSD s Incentive Award Policies... 106 6) Incentive Award not pro-rated to all funding sources... 106 7) Voluntary Committed Labor Effort... 106 University of Illinois Urbana... 106 NSF Effort... 106 Certification does not include total employee workload.... 106 Late Effort Reports and Timeliness... 106 Lack of Formal Written Timeliness Standards & Accountability by Senior Managers... 107 Independent Internal Evaluations... 107 Establish a Level of Tolerance... 107 University of California, San Francisco... 107 of Administrative and clerical expenses as direct costs to National Institutes of Health grants. No Recommendations.... 107 North Central Carolina University... 107 Reprinted by permission of Charlene Blevens, blevensc@gmail.com Page 7

A North Carolina Central University administrator has been reassigned after a state audit revealed he had skimmed about $15,000 from federal research grants to pay his credit card bills.... 107 Georgia Tech... 108 $316,000 Personal Pro-Card Expenditures on Grant... 108 2007... 108 University of Utah... 108 1) Lack of Formal Written Timeliness Standards & Accountability by Senior Managers... 108 2) Establish a Level of Tolerance... 108 3) Suitable Means of Verification... 109 4) Independent Internal Evaluation... 109 5) Policies & Procedures... 109 University of Maryland Baltimore County... 109 of Cost Claimed on 4 NSF Awards... 109 Lack of Monthly Review of Expenditures... 109 Lack of Monitor Subaward Costs... 109 Lack of Monitor Indirect Costs Claimed... 110 Brandeis University... 110 of Administrative & Clerical Expense... 110 The University misclassified a total of $31,303 to NIH.... 110 Select Grants Review of Graduate Student Compensation... 110 Review conducted at the request of two Members of Congress. No finding.... 110 University of Iowa Hospitals & Clinics... 110 Review of Vendor Rebate Paid to Hospitals... 110 Thomas Jefferson University... 111 of Cost Transfers to Federal Grants... 111 University generally documented cost transfers to federally funded grants in accordance with Federal requirements... 111 California Institute of Technology (Caltech)... 111 NSF Effort... 111 Voluntary Committed Labor Effort... 111 Late Effort Reports and Timeliness... 112 Committed PI Effort Reported on Grant Proposals not in Current and Pending Support... 112 Need to establish a formal requirement for Independent Internal Evaluation... 112 Cost Transferred to NSF Grant from an Overspent Federal Award... 112 Georgia State University Research Foundation... 113 Cooperative Agreement with 8 Partners... 113 Inadequate Subawardee Monitoring-... 113 Inadequate Documentation... 113 Inadequate Documentation Cost Sharing... 113 New Mexico Title IV-E Contracted University Training Costs (A-06-06-0004)... 113 of Training Contacts with New Mexico Highland University, Western New Mexico University, and New Mexico State University... 113 In compliance with contract language, Highlands University applied its indirect cost to a cost base, which included equipment and stipends (determined incorrect by the OIG).... 114 Reimbursement to the Universities for Unallowable Costs.... 114 2006... 114 Report to Congress... 114 An accounting assistant at a grantee institution responsible for processing payments for federal and non-federal awards was debarred from NSF after conviction of embezzling non-federal funds.... 114 Boston University... 115 Review of Subaward Costs on NIH Grant Awarded to the prime grantee, Harvard University Medical School... 115 Cost Transfer Policy not followed.... 115 Reprinted by permission of Charlene Blevens, blevensc@gmail.com Page 8

Late submission of final invoice to prime.... 115 University of Hawaii... 115 Cooperative Agreement with Required Cost Share... 115 Unrealistic Percentages for Allocating Labor Costs Related to Cost Sharing Contributions... 116 Inadequate Supporting Documentation for Subcontract Costs... 116 Questioned $305,706 of cost sharing and $265,449 of direct NSF funded costs claimed by the subcontractor, UCAL, Berkeley, because of inadequate supporting documentation.... 116 New Mexico Highlands University... 116 Review of Cooperative Agreement with Sub awards & Cost Share... 116 Lack of System to Identify, Account for, Monitor and Report Cost Sharing... 116 Lack of Adequate Fiscal Monitoring of Subawardee Costs. Questioned of $81,787 due to lack of supporting documentation.... 116 Inaccurate and Unallowable Expenditure Reporting... 116 Tennessee State University... 116 Professor Indicted on Wire Fraud. Dr. Nye... 116 Former Tennessee State Professor enters guilty Plea.... 117 15 Universities... 117 Select Agent... 117 University of Chicago... 117 of Cost Transfers... 117 NSF Effort... 118 Finding: Suitable Means of Verification... 118 Finding: Timeliness & Accountability by Senior Managers... 118 Finding: Independent Internal Evaluations... 118 University of Arizona... 118 Review of Cooperative agreement of $16.992M with 12 Sub awards... 118 Lack of controls over Subawardee Cost sharing expenditures.... 118 Lack of controls over Subawardee costs funded by NSF.... 118 Inadequate review of consulting expenses.... 119 Overcharging of Publication Costs -2% administrative fee... 119 North Shore University... 119 Review of Wage data in Medicare cost report.... 119 OIG: While we agree that the hospital computed these costs in accordance with GAAP, the costs were not reported in accordance with Medicare requirements.... 119 University of Maryland... 119 Review of Maryland Medical Center's Organ Acquisition Costs... 119 Kentucky Cabinet for Health & Family Services/Eastern Kentucky University... 119 Review to determine the allow ability of Title IV-E training costs the State agency claimed... 119 Howard University... 120 Review of Adequacy of Internal Controls and costs charged on NSF grants.... 120 Lack of comprehensive policies, procedures, techniques, and mechanisms to effectively manage, account for, and monitor NSF grant funds.... 120 Steven Raper, M.D. University of Pennsylvania... 120 Raper.Civil Complaint Filed Against University of Pennsylvania regarding gene therapy trial.... 120 Massachusetts HHS/ University of Massachusetts... 121 Review of University of Massachusetts Medical School... 121 Administrative Cost Claims... 121 Administrative Costs Unallowable... 121 Columbia University... 122 Review of Cost Sharing No Finding... 122 Roger Williams Hospital Subawardee University of Massachusetts Medical School... 122 of Roger Williams Hospital a Subawardee of the University of Massachusetts Medical School... 122 Reprinted by permission of Charlene Blevens, blevensc@gmail.com Page 9

**Recommended that UMMS reimburse NIH for unallowable costs of Subawardee... 122 Yale University Subawardee University of Massachusetts Medical School... 122 of Yale University a Subawardee of the University of Massachusetts Medical School... 122 Yale University... 123 Three federal agencies served subpoenas on Yale University... 123 Yale University... 123 Yale University... 123 Theft: Departmental Administrator embezzled funds which included allocated research grant money.... 124 $2.5 Million Whistleblower; False Claims Investigation Settlement... 124 Finding: Specialized Service Centers... 124 Finding: Excessive Compensation Summer Salary... 124 Finding: Cost Sharing/Matching... 124 Indiana State University... 124 of McNair Postbaccalaureate Program... 124 Finding No. 1 ISU provided McNair Project Services and Equipment to Ineligible Students... 124 Did not maintain documentation... 125 Inappropriately paid McNair funds to individual not enrolled at ISU.... 125 Allowed non-mcnair participants to use project laptops.... 125 Finding No. 2 - A McNair Official Received a Double Reimbursement... 125 A McNair official received travel reimbursements for attendance at a TRIO training conference from two sources: ISU s McNair grant and from a TRIO Training grant awarded to another university.... 125 2005... 125 University of Nevada Reno... 125 Review of Cooperative Agreement based on Anonymous Compliant... 125 Recipient did not allocate expenses to the appropriate Federal grant or cooperative agreement... 125 The University, in its fiduciary role, did not make sure the Center followed established policies and practices.... 126 Dartmouth College... 126 Review of Cost Claimed... 126 Overstated Salaries (Labor Distribution)... 126 Proposal Costs Charged to NIH Grants... 126 Inadequate Monitoring of Sub recipient Costs... 126 University of Rochester... 126 Review of Cost Sharing and Cost Transfers at the University of Rochester (No Findings)... 126 Developed and implemented written cost transfer procedures and controls in accordance with OMB Circular No A-110.... 127 University of Massachusetts Medical School... 127 Review of NIH Grant... 127 Recharge & Laboratory Supply Center Charges-Record Retention... 127 Cost Transfers made without Detailed Explanation... 127 UC Berkley... 127 of Schedule of Award Costs, Compliance and Subcontracts... 127 Inadequate Monitoring of Subcontract Costs... 127 Cost Sharing Reporting Deficiencies... 127 Inadequate Travel Documentation & Use of Non-Flag Carrier... 128 Lack of supporting documentation.... 128 Cornell s Weill Medical College... 128 $4.4 Million Settlement; DOJ (US Attorney in Manhattan) Whistleblower Physician Allegations... 128 Over billing NIH grant... 128 Grant money diverted to pay salaries of employees not associated with grant research.... 128 Cornell s Weill Medical College... 128 Prosecutor Allegations:... 128 Florida Agricultural & Mechanical University (FAMU)... 128 Reprinted by permission of Charlene Blevens, blevensc@gmail.com Page 10

Settlement and Compliance Agreement $1.4 Million Settlement Cost Share, Financial Administration... 128 Mayo Clinic... 128 $6.5 Million DOJ Settlement;... 128 Whistleblower from Research Accounting... 128 Allegations: Government was charged for research unrelated to the NIH grants it received... 128 Improper Transfers from Overspent Grants... 128 UTMB Galveston... 129 Institutional Compliance Agreement- Calculation of Salary above Cap... 129 University of Alabama-Birmingham... 129 $3.4 Million DOJ Settlement... 129 Allegations: Research work overstated; Medicare billed for research funded elsewhere... 129 George Washington University... 129 Settlement $1,828,000 with University False Claims... 129 GWU internal investigation... 129 Allegation: Theft of Federal Funds; 3 year Prison Sentence for PI... 129 George Washington University... 130 George Washington University Adjust Professor Pleads Guilty... 130 Oklahoma Department of Human Services (Finding related to Contracts with State Universities only)... 130 Training Contract with State and State Universities... 130 The state agency claimed indirect costs that it did not incur as Medicaid administrative costs.... 130 State of Oklahoma Response ( portion pertaining to University Indirect Cost)... 130 OIG disagree with the State agency s position... 131 One of the most expansive cases of Scientific Fraud and first PI to service jail time for fabricating data.... 131 University of South Dakota... 131 of Grants Management and Expenditures on Selected NSF Awards... 131 Unallowable costs Claimed... 131 Finding 1: USD needs to improve its Annual Reporting Process and Management of Sub awards and Subcontracts.. 131 ors Noted Growth in Grant Workload Outpaced Resources for Grants Administration... 132 Finding 2. Unallowable Costs Claimed... 132 Consultant s fee to write a grant proposal and related travel expenses incorrectly charged as direct costs.... 132 USD augmented the salaries of two faculty members using grant funds without NSF approval... 132 of Grants Management and Expenditures... 132 Subcontract Management Needs Improvement... 132 Inadequate Grants Management... 132 Florida International University... 132 $11.5 Million Settlement on Allegations of mischarged costs and overbilling... 132 Cost Transfers incomplete documentation, grants used as a clearing account, cost transfers after grant had closed.... 132 Northeastern University... 132 Review of Claimed Costs... 132 Consultant Agreements not Adequately Documented... 132 Internal control weaknesses relating to the monitoring of sub-recipient costs,... 133 Submission of untimely financial status reports that were not reconciled to financial records.... 133 2004... 133 State of Maine & University of Maine... 133 Training Contracts with University... 133 East Carolina University... 133 of Cost Claimed under National Library of Medicine Contract... 133 $1.7 Million of costs set aside for adjudication due inadequate documentation & $565,000 Cost Adjustment... 133 Clerical and Administrative Costs, Time & Effort... 133 Time and Effort Reports based on inconsistent methods,... 133 Harvard Medical School & Beth Israel... 134 $2.4 Million Settlement... 134 Reprinted by permission of Charlene Blevens, blevensc@gmail.com Page 11

Allegation: Government was billed for salaries and expenses unrelated to federal grants.... 134 Northeastern University... 134 Review of Cost Claimed for Reimbursement on Grant awarded by NIH, National Eye Institute... 134 Summary salary of PI Costs claimed for salaries were not adequately supported and should be disallowed. Point to University Guidelines for Managing Grants... 134 San Diego State Foundation... 134 to evaluate Additional Employment Policy allowing overload Compensation... 134 Finding: Overload compensation charged without required specific agency approval.... 134 CSU had obtained a ruling from their cognizant federal awarding agency,... 134 University of Washington... 135 $35 million settlement for Medicare and Medicaid over billing allegations by UW billing-compliance officer... 135 John Hopkins University... 135 $2.6 DOJ Million Settlement... 135 Allegation: Faculty time and effort devoted to NIH grants was overstated.... 135 2003... 135 University of South Florida... 135 $4 million to the federal government for inappropriately spending research grants and failing to properly record purchases.... 135 Northeastern University... 136 Unsupported direct labor and fringe benefits... 136 Use of Incorrect Indirect Cost Rate... 136 Procard Purchases Purchases not supported by source documents (receipts)... 136 UC Berkeley... 136 Research Management Services... 136 The audit objective was to determine whether the RMS costs were allowable as direct charges to NSF awards.... 136 Northwestern University... 137 $5.5 million, DOJ Settlement-False Claims Act... 137 Whistleblower from Office of Research Sponsored Programs... 137 2002... 137 Review of 10 large research Universities... 137 Review of Indirect Cost Rates at ten large research universities based in part, on an oral request from Congressman Dingell before subcommittee... 137 40 Hospitals; Stanford, Emory University, Northwestern Memorial, University of Pennsylvania, Baylor University... 137 $42 Million, DOJ Settlement with 31 hospitals; Whistleblower False Claims... 137 2000-1993... 138 Carnegie Institute of Washington... 138 Program Income, Cost Bases... 138 Did not exclude unallowable costs... 138 University of Minnesota... 138 $32 Million Settlement; Qui Tam Case False Claims... 138 The University agreed to pay 32 million to settle allegations of selling an unlicensed drug and mishandling of NIH Grant Funds.... 138 Program Income Issue... 138 Human Subjects Issue... 138 *Largest settlement recorded for NIH Grants... 138 Washington State Department of Social and Health Services (DSHS)... 138 of Training Contract Costs - primarily concerned the contract with Western Washington University (WWU).. 138 Use of Funds Donated From Private Sources for Matching... 138 Use of Market Value of Training Services as Federal Participation Instead of Actual Costs Paid... 139 Claimed Costs Associated with Classroom Space Provided in State-Owned Buildings as State Contribution... 139 Administrative Costs Claimed by University Covered under HHS Division of Cost Allocation indirect cost agreement unallowable as direct charge.... 139 Reprinted by permission of Charlene Blevens, blevensc@gmail.com Page 12

New York University Medical Center... 139 $15.5 M Settlement, Qui Tam Largest Settlement Amount Involving Research Overhead... 139 Illinois Department of Children and Family Services... 140 included contracts primarily with Governors State, Sangamon State and Northern Illinois Universities.... 140 Administrative Expense Included in Indirect Cost Billed as Direct Costs... 140 University of Colorado... 140 A Review of Recharge Centers... 140 Washington University- St Louis... 140 Review of University Recharge Centers... 140 University of Utah... 140 A Review of Recharge Centers... 140 University of Iowa... 141 A Review of University Recharge Centers... 141 Selected Universities... 141 objective to determine whether graduate student compensation charged to federally sponsored research was reasonable.... 141 Finding Universities were not acting prudently considering their responsibilities to the Government and the public at large.... 141 Review of service centers at 12 Universities... 141 Summary Report of s of Recharge Centers at 12 Universities - Findings... 141 261 Schools... 141 Internal Indirect Cost Reviews Performed by Colleges & Universities Self Scrubs... 141 Appendix A Table... 142 Issue Date University/ Gov t 2015 02/05/15 University of Kentucky Funding Various FBI Press Release In an FBI Press Release issued February 5, 2015 a former mining engineering professor at the University of Kentucky, admitted in federal court that he defrauded the University out of tens of thousands of dollars, in items and services. Tao, 54, pleaded guilty to one count of wire fraud. In August of 2014 the Lexington Herald-Leader reported that the university completed two investigations of Tao that made several allegations: From 2008 to 2013, Tao allegedly created fake invoices totaling more than $62,000 for travel, hotels and meals. He allegedly billed the university and consulting clients for the same expenses. Tao allegedly fabricated or changed invoices related to consulting work totaling more than $31,000. Tao allegedly routinely required visiting scholars and graduate students to work on his private consulting Reprinted by permission of Charlene Blevens, blevensc@gmail.com Page 13

Date Gov t activities. In violation of university policy, students received no compensation for those activities. Tao allegedly paid research assistants more than $312,000 from university grants and contracts for work that was done for Tao's private consulting clients. Tao allegedly used grant research funds to buy about $9,000 worth of equipment that was then transported to an unnamed consulting client. He also allegedly billed the client for the equipment. Tao also admitted that he fabricated and altered invoices, to show fictitious costs, and submitted those invoices to the University and Georgia-Pacific for payment. Tao then received payment for these fraudulent expenses. According to his plea agreement, between 2010 and 2013, Tao fraudulently obtained $59,411.86 from the University and $2,280.00 from Georgia-Pacific. 01/09/15 University of Alaska Fairbanks NSF NSF OIG 15-1-002 In January the National Science Foundation, NSF, released an audit report of one of the audits listed on its 2015 audit work plan, the R/V Sikuliaq Construction Project. In 2007, the NSF entered into an agreement for construction and operation of a ship expected to provide a larger platform for complex multidisciplinary research. The project consisted of four phases with a total awarded cost of $199.5 million. The $148 million construction phase predominantly consisted of a firm fixed-price contract to construct the ship which included $31.7 million in contingency funds. The auditors were only able to review expenditures from other phases of the project for allowability, allocability and reasonableness. A database of transactions relating to the remaining $22.1 million that was not included in the firm fixed price contract was requested for all transactions through September 30, 2012. The audit report stated that, In light of previous audit findings of unallowable contingency at other NSF awardees and a lack of visibility over contingency expenditures, our audit also included reviewing oversight of change order requests for contingency funds as well as other project funds to determine if such requests were executed properly and were supported by required documentation. The examination of the financial transactions found nothing Reprinted by permission of Charlene Blevens, blevensc@gmail.com Page 14

Date Gov t material to indicate costs claimed on the project were unallowable. The report did contain one finding and one recommendation related to the University s record retention policies. With respect to oversight of contingency expenditures, the auditors found that the University did not have the required documentation to support approval for ten change order requests totaling nearly $4.8 million. NSF approval was required for change orders valued at $50,000 or higher. Circular A-110 requires awardees to retain records pertinent to an award for three years. NSF s internal policy also requires awardees to maintain certain documentation including change requests and approvals. The University s Project Officer stated that the approval documentation had been deleted when the University moved its email system to a different provider and that he could not retrieve the documents from the backup system. The NSF Program Officer overseeing the project was able to provide the documentation for all but one change order request. 2014 12/11/14 University of California Irvine HHS A-04-13-01027 HHS OIG Issues First Report on Pilot Payroll Certification System The Office of Management and Budget, OMB, requested that NSF and HHS OIG perform audits to assess the payroll certification system pilot (pilot PCS) developed by the Federal Demonstration Partnership (FDP). Four Universities participated in the pilot program, the University of California Irvine and the University of California Riverside, Michigan Technical University and George Mason University. The first audit report was issued in December 2014. In their report, the HHS OIG stated that the auditors could not express an opinion due to the University s inability to reconcile its accounting records to its FFR s. According to the auditors the reconciliation showed a total variance of approximately $3.8 million for 666 Federal awards, totaling $491 million. The auditors concluded that they could not determine if the University had a valid list of labor transactions to select a statistical sample for review. In the University s view the inability to express an opinion was not the result of faulty processes and systems associated with the payroll certification process. Reprinted by permission of Charlene Blevens, blevensc@gmail.com Page 15

Date Gov t Instead, it reflected the failure to meet an agreed-upon deadline and a misunderstanding that led the audit team to inaccurately imply that their reconciliation showed a variance of $3.8 million. The University did not concur with the recommendations in the report. Reconciliation Methodology HHS and NSF OIGs met with the University and other pilot schools on January 29, 2013, to discuss the audit approach, including data and supporting information needed for the audit. On June 6, 2013, the OIG sent the University an engagement letter requesting a list of information to submit by June 14, 2013. The list included a request that the University provide a reconciliation of its accounting records to its FFRs for the audit period. The University reconciled their FFRs to the general ledger (accounting records) quarterly using an inception-to-date methodology which the University stated was consistent with generally accepted accounting practice and required by the HHS Payment Management System (PMS) for certification of FFRs. The University was informed that NSF wanted to use the FFR-to-general ledger reconciliation process as a means of validating the completeness of general ledger data submitted to NSF. After a discussion of various alternative approaches to completing the reconciliation, the audit team decided that all of the reconciliations be re-created using a quarter-by-quarter methodology. On October 24, 2013, OIG presented the University with another deadline of November 1, 2013. The University expressed concern about the heavy manual workload associated with this approach, but agreed to provide the requested data by the deadline date. In its response the University acknowledged that it had failed to meet the deadline stating that they had underestimated the complexity of the quarter-by-quarter and did not commit enough resources to meet the deadline. The University submitted its reconciliation on November 8, 2013. or and University Response HHS OIG expressed that because the University could not provide what should have been readily available information by the November 1, deadline, they discontinued fieldwork on the audit. They stated that this is the same reconciliation information that the Reprinted by permission of Charlene Blevens, blevensc@gmail.com Page 16

Date Gov t 10/28/14 Columbia University HHS DOJ Press Release University would have used to prepare its FFRs and the University should have anticipated that both NSF and HHS OIGs would request a quarterly reconciliation because the University reports its Federal grant expenditures to PMS on a quarterly basis. The University admitted to Mischarging Federal Grants and agreed to pay more than $9M to resolve false claims lawsuit. 09/25/14 University of Illinois Champaign NSF NSF OIG 14-1-006 (Cotton & Cotton LLP) Whistleblower Lawsuit brought by Former Director of Finance for ICAP, Craig Love Lawsuit alleged that for several years the Mailman School of Public Health wrongly charged many grants awarded to the center for work that did not relate to the funded projects. Effort reports for nearly 200 individuals were not created and verified by the individuals. The Finance Department provided information for the reports and the PI s certified large batches of reports, without inquiring whether the allocation of work among the grants was accurate. ICAP also charged for an individual s time spent writing grant proposals. The university admitted that it faked cost reports for a federal grant that was supposed to fund work at ICAP, International Center for AIDS Care and Treatment Programs. Simultaneous with the filing of the lawsuit, the US settled claims against Columbia pursuant to a settlement stipulation in which Columbia admitted failure to use a suitable means of verification on whether salary charged were based on actual effort. Other Sources: By Bob Grant The Scientist The audit questioned $173,290 of the $435M of costs reviewed. Summer Salary. Salary cost for senior personnel who exceeded two months of their academic-year salaries was questioned because it was not disclosed in the proposal budgets, justified in the budget support, nor specifically approved by NSF. The University did not agree citing the FAQ s on Proposal Preparation and Award Administration available on NSF s website which indicated that grantees are not required to obtain NSF s approval to exceed the two-month salary limitation. The auditor s responded that the FAQ responses do not represent authoritative guidance and therefore do not overrule NSF s Award and Administration Guidelines. Questioned costs incurred at the end of the award included a camera purchased in the last 30 days of a 4 Reprinted by permission of Charlene Blevens, blevensc@gmail.com Page 17

Date Gov t year award, charged at the full amount with a justification that it would be used on other projects and a stipend received by five students in the final month of the award in which the summer period on the payment request was outside of the performance period and when questioned the response was that the payments were actually for work during the academic year. However, the award stated that students would work without pay during the academic year. The auditors view was that they may have been attempting to spend the remaining unobligated funds at the end of the award. Cost Transfers Findings related to cost transfers included a cost transfer on a 6 year grant made 21 days after the award ended. The transfer was for expenses incurred to install a rack system which was not completed until approximately 11 days before the award period expired. Other instances included a charge for an internal billing in which the University could not provide support for how the billing rate was determined because the rate was not approved yet and a one-time $500 annual user fee transferred to the Award that lacked documentation to support the fee. Travel The auditors had several questioned costs on travel related expenses. One included a Tip expense incurred for a daily per diem for a field assistant which lacked support for what days the assistance was provided, the location in which it was provided, when or if the payments were made, or to whom the tip expenses were provided. Other questioned travel costs included an expense report reimbursement where the PI requested lodging, meals and incidentals at two different per diem rates without documentation to support the higher rate, airfare for a participant which included an invoice total with no itinerary or details related to the flight such as who took the flight, the arrival and departure destinations and whether it was economy; travel related expenses for additional nights beyond the conference without a reasonable business purpose for the expenses and a room upgrade fee to accommodate a participant who had their son with them which the auditors stated should not have been allocated to the award and hotel no show fees that were charged to the award. Additionally questioned Reprinted by permission of Charlene Blevens, blevensc@gmail.com Page 18

Date Gov t due to lack of documentation was a cost differential for an airfare in which the PI included a portion of the trip as personal. The personal portion added another flight onto the trip but the PI maintained that the three flights were less expensive than the direct flight without the additional personal leg. Documentation for the cost comparison of the trips was not maintained. Extra days stay beyond the conference was questioned on several awards. In one instance a participant flew in before the conference, with family members, and charged the hotel stay to the NSF grant without a business purpose for the additional night. This employee also claimed parking expenses each night of the hotel stay, but did not request reimbursement for the car rental; indicating that the parking fees were not incurred for a business purposes. Also considered unreasonable were expenses claimed for additional days before and after an international conference. The justification provided was to prepare for the conference, the traveler had to take an earlier flight and the flight home after the conference was delayed so the traveler had to stay an extra night to wait for the delayed flight time. The auditor s position was that since the PI was not presenting at the conference, needing two days to prepare for it was not reasonable. The auditors also pointed out that the PI reserved his flight several months in advance with the same return date indicating it was planned in advance and not related to flight delays. The auditor s disallowed the cost on the basis that the expenses appeared to have been incurred for personal travel. Also question was no-show room fees. Late registration and a late hotel reservation which caused the hotel rate to be above the conference rate were questioned. The department stated that this because the PI was trying to make sure that someone could cover his teaching responsibilities. The auditors noted that since the PI had reserved his flight in advance he had sufficient time to reserve a room at the discounted rate and that an e-mail confirmed that the PI s classes would be covered by a TA it appeared unreasonable that the PI was unable to register for the conference early. The NSF award should not have been charged the additional cost because the PI failed to sign up for the conference in a timely manner. 08/14/14 University of NSF NSF OIG 14- Performance Reprinted by permission of Charlene Blevens, blevensc@gmail.com Page 19