Partners in Stewardship: NSF, Monitoring, Audit Resolution, and You

1. Partners in Stewardship:NSF, Monitoring, Audit Resolution, and You March 10, 2013 New Orleans, Louisiana

2. Ask Early, Ask Often Division of Institution & Award Support Office of Budget, Finance & Award Management • Mary Santonastasso, Director • Charles Zeigler, Senior Advisor, Cost Analysis and Audit Resolution Branch / DIAS

3. Agenda • NSF Fundamentals • Award Monitoring and Business Assistance Program (AMBAP) • Audit Resolution • Discussion

4. NSF Act of 1950 • To promote the progress of science…” • NSB (24) and 1 director, appointed by the president • Encourage & develop a national policy for the promotion of basic research and education in math, physical, medical, biological, engineering, and other sciences • Initiate & support basic scientific research • Evaluate scientific research programs undertaken by agencies of the Federal Government • Provide information for S&E policy formation

5. NSF Characteristics • Independent Agency • Supports basic research & education • Uses grant mechanism • Low overhead; highly automated • Discipline-based structure • Cross-disciplinary mechanisms • Use of Rotators/IPAs • National Science Board

6. NSF Organizational Chart Office of Diversity & Inclusion National Science Board (NSB) Director Deputy Director Office of the General Counsel Office of International & Integrative Activities Office of Legislative & Public Affairs Office of the Inspector General (OIG) Biological Sciences (BIO) Computer & Information Science & Engineering (CISE) Engineering (ENG) Geosciences (GEO) Mathematical & Physical Sciences (MPS) Social, Behavioral & Economic Sciences (SBE) Education & Human Resources (EHR) Budget, Finance & Award Management (BFA) Information & Resource Management (IRM)

7. Office of Budget, Finance & Award Management Chief Financial Officer & Director, BFA Large Facilities Office Budget Division Division of Acquisition & Cooperative Support Division of Institution & Award Support Division of Grants & Agreements Division of Financial Management Budget Operations & Systems Branch Cost Analysis & Audit Resolution Branch EHR/BIO/ OIA Branch Accounting Operations Branch Contracts Branch Policy Office MPS/GEO/SBE Branch Cash Management Branch Program Analysis Branch Cooperative Support Branch Systems Office ENG/CISE/OCI/OPP/OISE Branch Financial Systems Branch

8. FY 2013 Budget Request • $7.373 billion • Consistent with Administration’s commitment to doubling NSF and basic research agencies • Emphasizes ways that fundamental research contributes to addressing national challenges

9. FY 2013 Request: Total R&D by Agency Budget Authority in Billions of Dollars

10. NSF Award Portfolio • $27.8 billion in total award funding • 45,052 active awards • Standard and continuing grants • Cooperative agreements • Graduate research fellowships • Other awards • 3,157 awardee Institutions • Universities / 4-year colleges • Non-profit organizations • For-profit organizations • Community colleges • Other awardees Award information as of June 14, 2012

11. Oversight and Monitoring RiskAssessment MonitoringActivities Feedback

12. Evolution of NSF Post-Award Monitoring Processes 2002 2004 2010 2012 Created the Division of Institution and Award Support Adjusted risk assessment based on findings Piloted virtual site visits Formalized monitoring program piloted

13. Category A ~7% of Awardees Risk Points ≥ 32 Total Obligation > $500K Category B ~23% of Awardees 16-32 Risk Points Total Obligation > $500K 2 3 1 Category C ~70% of Awardees NSF not Cognizant Risk Points < 16 or Total Obligation < $500K Annual Risk Assessment Risk Adjustment Criteria Awardee Risk Categories NSF Award Portfolio Risk-Based Award Ranking Risk-based Awardee Ranking 1 3,197 Awardees Ranked by risk points 42,192 Awards Ranked by risk points • Risk Adjustment Screens • Institutional factors • Prior monitoring activities and results • Award administration and program feedback Prioritize monitoring on: - Highest risk points - Highest dollars - Number of awards From Awards To Awardees

14. BSRs Site Visits Desk Reviews Federal Financial Report (FFR) Transaction Testing Grants and Agreements Monitoring Automated Report Screening Oversight and Monitoring Advanced Monitoring Increasingly focused and targeted Baseline Monitoring Percentage of Portfolio Category A Category B * Category C * Category B selected for advanced monitoring on resource-available basis

15. Advanced Monitoring • Desk Reviews – Assess general management environment, review selected accounting and financial management policies and procedures, and obtain financial information submitted by awardees • Site Visits - Conduct onsite review of selected higher risk award administration areas and follow up on desk review results as needed • BSRs – Combine desk and onsite reviews of large facility business systems to determine whether the operation of those facilities meets NSF’s expectations for business and administrative management

16. Site Visits and Business System Reviews

17. Keys to Success for Awardees • Know requirements • Good Accounting Practices • Know the Scope of the Project • Document approvals and conversations between the awardee and NSF • Ask Early and Ask Often!

18. The Future of AMBAP • Maintain comprehensive coverage • Further integrate post-award monitoring activities • Enhance management systems to better track monitoring data • Develop knowledge base of lessons learned • Share best practices with other agencies • Virtual Site Visits through collaborative technologies

19. Virtual Site Visit Approach • Use the risk assessment outputs to prioritize the pool of awardees eligible for advanced monitoring activities • Develop target number of virtual site visits based upon staff and resource availability • Select specific awardees for virtual site visits based upon the following criteria: • Geographic Proximity • Awardee Amenability • Perceived Capability • Prior Monitoring Results • Implement the virtual site visit using a multi-phased approach: Logistics and Document Collection (Pre-Virtual Site Visit) Virtual Site Visit Analyses and Resolution (Post-Virtual Site Visit) Virtual Site Visit Close-Out

20. VSV Benefits • Resource Savings • Travel and per diem costs • Personnel time • Focused Interaction • Clear agenda; more targeted discussion • Document review in advance of meetings • Access to Resources • Reach back capability at NSF • Awardee access to internal information and experts • WebEx to look directly at awardee systems/documents real time • Flexibility in Process • Delaying the exit interview • On the fly meeting date and time adjustments

21. VSV Challenges • Determining the Right Organization for a VSV • It’s not for everyone • Technology capability, straightforward issues, willingness • NSF and Awardee Relations • Lack of onsite touch and feel, no hallway conversations • Harder for NSF team to get close to the science • Cannot put a name to a face as easily as onsite visit • NSF Team Bonding • Lost opportunity for cross-division bonding

22. Pyramid of Monitoring

23. Audit Resolution

24. Overview • How Audits Originate • Complementary Roles of NSF Management and the NSF OIG • Types of Audits • Audit Resolution Flow Chart • Questioned vs. Sustained Costs FY 2012 • Audit Resolution Time Frame

25. How Audits Originate • NSF Office of Inspector General Annual Audit Plan • NSF Office of Inspector General Staff • NSF Office of Inspector General contract audit firms • A-133 Audits – Independent Auditors hired by the awardee

26. How NSF and the Inspector General Work Together • Office of the Inspector General = Independent Audit Function • NSF Management Resolves Audit Reports • NSF Management coordinates resolution with the auditee and the Office of the Inspector General • Agency Follow-up Official makes the final agency determination

27. Types of Audits Internal • Performance and Programmatic Reviews • NSF Financial and Administrative Operations • NSF Financial Statement (Annually) External • Pre-award • Incurred Costs • Compliance • Internal Controls

28. Audit Resolution Flowchart

29. Questioned vs. Sustained Costs FY 2012 • Why the Difference? • Awardee provides additional/secondary documentation to NSF that was not available to auditors • NSF makes equity determination based on demonstration that the project goals have been accomplished • Professional judgment

30. Audit Resolution Time Frame • Resolution must occur within six months of issuance to NSF Management • Audit reports unresolved after six months are reported in the OIG Semi-annual Report to Congress • Complex • Large Amount of questioned costs • Circumstances beyond an institution’s control

31. Questions and Discussion

32. Background Materials

33. Online Resources • Cost Analysis & Audit Resolution Branch: http://www.nsf.gov/bfa/dias/caar/index.jsp • Division of Institution & Award Support: http://www.nsf.gov/bfa/dias/index.jsp • General: http://www.nsf.gov • Policy Office: http://www.nsf.gov/bfa/dias/policy/index.jsp

34. Current Advanced Monitoring Activities

35. Technology Considerations