The principal investigator and departmental project team is responsible for keeping a file on each grant which should include a copy of the proposal, budget, award, and all supporting documentation gathered in the administration of the grant such as invoices, travel reimbursements, check requests, etc. The grant file will also need copies of grant agreements, amendments, and any correspondence related to the grant (including subrecipient and sub-award agreements) and a listing of all vendors used for the grant during the year.
All sponsored program contracts entitle audit rights to sponsors for at least three years after the program completion date. Projects are periodically audited by external agencies. Consequently, GHS must maintain a close working relationship with the University’s cognizant audit agency, the United States Department of Health and Human Services (DHHS).
Federal audits can be one of three types:
- Audit of direct costs under general expenditure systems (e.g., time and effort reporting, prior approval system, consulting system);
- Compliance audit with Office of Management and Budget Circular No. A-133; or
- Individual award audit for all award expenditures.
In addition to external audits, the GHS’s Office of Internal Auditing continuously audits sponsored programs. OSP coordinates each audit and arranges for any files, documentation or discussion with other campus personnel required by the audit team. All questions regarding allowability of expenditures, contract modifications, etc. are to be directed to OSP to ensure an accurate audit report.
Post-award grant management may find it necessary to contact departments or principal investigators to request information about a specific contract or grant during an audit. It is the responsibility of each department to keep accurate records supporting all sponsored program costs for a minimum of three years after the sponsoring agency accepts the final report. Departments must also maintain copies of progress reports, documentation of the selection process used to hire consultants and of time and effort expended for the same period. If a cost is disallowed on a specific grant or contract, a campus review will determine who is responsible for its repayment.
Ask for Help
The Office for Sponsored Programs should be contacted any time you are informed of an impending audit, especially if it seems to be a special external audit.
Charge Direct Costs Correctly
Remember the three criteria for charging items to sponsored projects: allowability, allocability, and reasonableness. If an expense is allowable and benefits more than one project, apportion it among the benefitting projects according to an equitable, pre-determined allocation scheme.
Avoid Cost Transfers
The best way to avoid cost transfers is to plan ahead. Expenses should not be posted to particular sponsored accounts unless they actually belong there. Communication between administrators and PIs is key in deciding the appropriate account(s) to charge for each expense. Allocation schemes should be set up in advance, if appropriate. Appointments for personnel should be planned as far in advance as is practical.
Manage Equipment Well
Individual pieces of equipment are referenced by “tag number,” and tags should be attached to equipment items in a timely fashion. Location information is particularly important—if a piece of equipment is moved, loaned out, or decommissioned, the equipment record would need to be updated.
Maximize Effort Reporting Accuracy and Timeliness
PIs are responsible for attesting, via quarterly reports for employees and stipendees and annual reports for themselves, that payments were appropriate to the effort expended on sponsored projects. Auditors look for timeliness, completeness, and assurance that the signer is either the PI or, (rarely) an approved designee who is even more directly involved in supervision of the research than the PI.
Submit Technical and Financial Reports on Time
Auditors look for timeliness and accuracy in submission of final financial reports for sponsored awards. Since resubmissions of reports are taken as evidence of poor grants management, it is important that all closing transactions for grant accounts be posted before or soon after the end of the award period.
OSP takes care of ensuring that subcontractors’ own federal annual audits have not returned results that affect subcontracts under our awards. PIs and their administrators are responsible for collecting progress reports from subcontractors; verifying that invoices from subcontractors are sufficiently detailed, reasonable, and in keeping with budgets; performing occasional visits to subcontractors’ sites; and (rarely) commissioning audits of subcontractors’ policies, procedures, and internal controls. Progress reports, approved-for-payment copies of invoices, and reports of site visits should be kept on file for examination by auditors.
Exert Internal Controls Over Payables
Traditionally, the control of payables is documented by demonstrating that requisition or purchase order, invoice, and packing slip all match for each purchase. In departments that use GMM for receiving and invoicing payment, this matching is accomplished electronically. In all departments, copies of these three items should be kept on file for audit purposes.