Pamela Webb 02.17.2009

1. Dirty Deeds What Can We Learn from National Audits and Investigations? Pamela Webb 02.17.2009

2. Many Major Audits • 2008 ? UC San Diego, UIUC, UCSF, Georgia Tech • 2007 9 CalTech, Vanderbilt, Georgia State, UMBC • 2006 19Yale, Chicago, Columbia, Berkeley, Penn • 2005 13Dartmouth, Cornell, Mayo Clinic, U Mass • 2004 7Harvard, Johns Hopkins, U Washington • 2003 2Northwestern • 2002 2 • 2001 0 NSF in the midst of 30 “effort” audits

3. Recent Major Settlements • 2008 $7.6M Yale – Effort Reporting • 2006 $2.5M U Connecticut – Service Center Billing Rates • 2005 $4.4M Cornell – Grant Money Paid to Non-Research Staff • 2005 $6.5M Mayo Clinic – Improper Cost Transfers • 2005 $11.5M Florida International – Improper Cost Transfers • 2004 $2.4M Harvard – Grants Billed for Unrelated Salaries • 2004 $2.6M Johns Hopkins – Faculty Effort Reporting • 2003 $5.5M Northwestern – Faculty Effort Reporting

4. Yale - $7.6M Settlement • Investigation cover 6,000 federal grants received between Jan 2000 and Dec 2006 • More than one million pages of documentation had to be submitted to investigators • Investigation between Jun 06 and Dec 08 • $7.6M settlement is $3.8M in actual damages and $3.8M in penalties Big signal!!

5. HHS Audits Yale • HHS Audit of Yale subaward to U Mass Medical School • Major signal about the responsibility to monitor subrecipients • Disallowed $194K of a $572K award • Disallowed cost transfers, effort, cost allocation methodology But then …

6. NIH, DOD, and NSF Audit of Yale • FBI agents visit faculty and staff at home and on vacation to question them • Subpoenas served on 47 grants from 13 departments (many closed) • Sample of Issues found: • Allocation of expense not found to be reasonable • no written documentation describing basis for allocation • allocation done differently for supplies than equipment) • Unsigned effort reports (costs disallowed) • Emails saying things like: “Just zero out the grant” • PI committed more effort than was charged (failure to request prior approval for effort change) • No procedures in place to monitor effort expended versus committed Altered Email!

7. Yale (continued) • Unallocable Cost Transfers • “Researchers allegedly were motivated to carry out these wrongful transfers when the federal grant was near its expiration date and they needed to spend down the grant funds” • Summer Salary Charges did not equate to Effort Devoted • 100% summer salary changed but non-grant activities (proposal preparation, vacation, other departmental duties) were conducted as well as grant activities

8. NSF - Vanderbilt • Effort certifications were not required to be dated • Effort reporting periods weren’t established • Institutional base salary not defined • (e.g., unclear whether grant proposal writing and university committee meetings included in institutional base salary) • “Significant change” requiring HSA not defined • No definition of “a suitable means of verification of effort” • No minimum percentage of effort required

9. HHS – Duke University • Inappropriate charging of administrative and clerical costs • 210 transactions tested, 81 were unallowable • Actual costs determined to be unallowable were $17,829 in admin and clerical salaries and $10,657 in other admin costs • HHS has requested a $1.7M refund based on extrapolating the error rate for the entire federal award population Duke is duking it out … stay tuned

10. Duke (continued) • No evidence that admin and clerical costs were related to “major projects or activities” • No evidence that the amount of admin and clerical work needed on the projects justified any unusual amount of admin support • No evidence in proposals or award documents that admin/clerical support would be needed • Duke charged office supplies on routine projects • “The Office of Sponsored Research did not provide adequate scrutiny to ensure that these charges fully complied with Federal regulations”

11. NSF Audits UC San Diego (2008) • Late Effort Reports and Timeliness • 59% not submitted within due date • Lack of Formal Written Timeliness Standards and Enforcement re: Effort Certification • Proposals Written on Grant-Funded Time • Violations of NSF 2 Summer months rule • Incentive award violation • Unpaid contributed committed effort not accounted for in University organized research base • Effort Certification Process not Independently Evaluated

12. NSF Audit – University of Illinois • Effort – Certification did not include total employee workload • Non-sponsored information must be provided so that total effort is known • Late Effort Reports • Lack of Formal Written Timeliness Standards and Enforcement • Effort Certification Process not Independently Evaluated • Need to Establish Effort Tolerance policy (how much actual effort can vary from planned effort without doing an HSA) • 5% cited as an example ‘at other Universities’

13. NIH – UC San Francisco Clean! On Direct Charging of Administrative and Clerical Costs!

14. NSF – UC Berkeley EFFORT, EFFORT AND MORE EFFORT • Some salary rates charged exceeded appointment letters • 2% of salaries were for activities not benefitting the NSF project • 40% of effort reports certified late • 21% of effort reports were missing dates or were dated prior to the effort report distribution date • 25 certifiers didn’t have “suitable means of verification”

15. NSF -Utah • 51% of effort reports certified late • 25% of salaries charged to NSF were improperly allocated because significant changes in effort weren’t updated timely • 2% did not have “suitable means of verification”

16. Other Audit Findings • COST TRANSFERS • Costs transferred from overexpended federal award to an NSF grant (Cal Tech) • Cost transfers made without explanation or source documentation (Georgia State) • PROPOSAL ACCURACY • Current and Pending support information in NSF proposals missing committed effort (Cal Tech) • SALARY CHARGES • Personnel action forms not able to be located (Georgia State) • Payroll sheets not found in 18 out of 1132 transactions (Arizona) • Awards charged for work done on another grant (Georgia State, New Mexico Highland U) • $1.7M of Unsupported cost-sharing (Hawaii) • Scholarship costs paid for students not eligible (New Mexico Highland0

17. Other Audit Findings • ADMINISTRATIVE AND CLERICAL COSTS • Inappropriately charged reference books and trade journals (Brandeis) • Charged office supplies (Brandeis) • Purchase of supplies near the end of a grant (New Mexico Highland) • SUBRECIPIENT MONITORING • Lack of adequate fiscal monitoring (Yale, New Mexico Highland U, U of Maryland Baltimore) • Failure to monitor subrecipient cost-sharing (U of Maryland Baltimore) • ANIMAL SUBJECTS • Request to return $65K in connection with non-compliance involving non-human primates on two grants (U of Connecticut)

18. Criminal Penalties??

19. Recent Criminal Case • DOJ/U of Tennessee (April 2008) • Director of Plasma Research at Atmospheric Glow Technologies and U researcher assigned a Chinese grad student to an Air Force contract without advising the Air Force or obtaining an export license • Work being done for the for-profit was proprietary • Director of Plasma Research enters a guilty plea for conspiring to violate the Arms Export Control Act

20. Recent Criminal Cases(continued) • DOJ/NSF – U of Tennessee former faculty member indicted and pled guilty on one count of wire fraud and one count of mail fraud • Employees supported on a U of Tennessee Center NSF grant were knowingly re-directed by the PI to work on a U of Alabama Huntsville grant (same PI on both) but their costs charged to the Tennessee grant U of Vermont Scientist sentenced to 1 year and 1 day in jail and paid $180,000 fine for fabricating more than a decade’s worth of scientific data, and using it to obtain millions of dollars of NIH grants http://www.nytimes.com/2006/10/22/magazine/22sciencefraud.html