IU Audit Process & Tips

1. IU Audit Process & Tips

2. Who Audits IU? • Federal Agencies • Other Agencies (FSSA, Commercial, Foundations, Other Universities, etc.) • State Board of Accounts • IU Internal Audit

3. AUDIT STARTS Desk Audit for Financial • When does an Audit Start? • Proposal Stage • Award Stage • Closeout

4. AUDIT PROCESS

5. Receive Audit Notice • All notices go to the University Liaison (UL) • Departments -Do not respond to the notice • UL will respond to the Audit agency • Establish a point person • ORA will facilitate the audit

6. Clarify Audit Scope • Verify • Time period of audit • Scope of the audit • Schedule fieldwork • Review the Award • Understand the purpose of the award

7. Create an Audit Team

8. IU Roles of Audit Team

9. Desk Audit • Award Set up • Project Period • Budget Categories • Revised Budget • Indirect Cost Rate

10. Desk Audit • Financial Info • Report setup • Invoice charges • Documentation • Revised Budget • Online submissions • Subcontracts • Allowable items

11. Desk Audit • Close Out • Final Report completed • Inc=bdgt=exp • No Encumb • No Cash • No Account Rec • Close Account

12. Internal Meeting • Meet with members of the Audit team • Review Roles • Clarify Priorities • Review Desk audit results • Resolve potential problems • Answer questions

13. Auditor Relationships Desk Audit for Financial • Establish an open line of Communication • Non-communication = Audit Findings • Build Rapport • Don’t Badger • Don’t Neglect • Be Professional - courteous

14. Communicate, Communicate, Communicate . . . Correctly • Ask questions to verify the question asked • Transparency • Answer questions completely • Don’t under answer the question • Don’t over answer the question

15. Entrance Meeting w/auditors • Introductions & Roles • Background of Award • Audit Timeline • Fieldwork • Update meetings • Audit Process • Issue Notification

16. Auditor’s Fieldwork • Provide adequate workspace • Preferably close to University Liaison • Direct all questions to University Liaison • Team members clear calendars during fieldwork. • Answer questions in a timely manner

17. DRAFT AUDIT REPORT • NO Unresolved issues • NOadditional information that could have been provided • Knowwhat will be in the draft report

18. FINAL REPORT • Report should be addressed to UL or to the agency • No new items in final report • Your responses should be included in final report

19. AUDIT TIPS • Audit Do’s & Don’ts • Document Register • Unallowable expenditure sample • Prevention is the best cure • Record Retention

20. Audit To Do’s • Audit is the highest priority • Secure the highest level of University support • Keep everyone in the know • Be over-prepared • Provide the answers within 24 hours • Investigate any department issue(s) before the audit • Understand agency & department’s relationship

21. More To Do’s • Be Collaborative • Seek clarity of question(s) • Be specific with responses • Cite sources eg. Agency guidelines, Circulars • Establish regular update meetings with Auditors • Review all samples before giving to Auditors

22. More To Do’s Create a document that includes all relevant weblinks: • A133 Audit • IU policies • F & A agreements • Fringe Benefit rates • Etc

23. Do Not’s for an Audit • Don’t Procrastinate • Don’t Be argumentative • Don’t Be the Lone Ranger • Don’t Embellish • Don’t Offer unrelated examples • Don’t Over explain your response

24. Document Register Create a listing of all documents given to auditors • Unique identifier • Date given • Brief description of sample • Auditors must sign for the documents

25. Prevention is the Best Cure • Perform detailed review (Desk Audit) • If something appears suspect: • Document the details of unlike circumstance • Verifiable evidence of why it is allowable • Verify Effort during the life of the project • Not during Certification process

26. Unallowable Expenditure in Sample • Self-disclose that it is not allowable • Explain why it is on the grant • Provide explanation on how this will be caught in the future • Ask auditor how they want to handle the cost

27. Potential Unallowable costs • Office Supplies • Hospitality expenses • Cell phone charges • Transfer of funds • Memberships • Postage • Fellowships • Administrative wages • Non-certified effort • Promotions

28. Common Compliance Issues • Fly America Act • Excluded Party List System (EPLS) • Audits of Subs • > $500,000 • On time Financial Reporting • On time Progress Reports

29. Record Retention Documentation • Maintain Effort Certification records • Justifications for purchases • Financial reports • Copy of or evidence of completion of final technical or progress report (final payment may depend on this!) • Keep project notes with documentation

30. Record Retention • Keep three to seven years after the final report is filed, depending on the agency • Be aware of multi-year awards • Keep documentation centrally located • No documentation = disallowance

32. Only you can prevent Audit findings. .

33. Contact Information Jim Engel Director of Grants Administration, Finance and Operations Office of Research Administration Telephone (812) 855-0165 Fax (812) 855-9943 E-mail njengel@iu.edu