Performance Audit of Incurred Costs –Oregon State University

Resolve the $169,950 in questioned consulting and subaward costs and direct OSU to repay or otherwise remove the sustained questioned costs from its NSF awards.

Direct OSU to strengthen its administrative and management procedures over awarding subawards to ensure that: a. Personnel who receive, or work for an organization that receives, a subaward contract are not involved in selecting or awarding it, or in performing administrative services for it. b. Cost-reimbursable subaward agreements do not include billing schedules. c. Subawardees submit budgets with accurate information on each employee’s salary, if the subawardees will submit invoices on a cost-reimbursable basis and OSU will charge these costs to a Federal award.

Direct OSU to strengthen its administrative and management procedures for obtaining NSF’s approval before making changes to an award’s scope. Procedures could include verifying that the sponsor approved the change in scope before allowing PIs to charge awards for expenses that are inconsistent with the scope of the original award.

Direct OSU to strengthen its administrative and management procedures for allocating travel expenses to sponsored projects. Procedures could include: a. Performing periodic reviews of expense reports that OSU personnel submit under NSF awards to ensure that all costs charged comply with Federal and NSF regulations and OSU policies and procedures. b. Conducting annual training for individuals responsible for reviewing and approving expense reports.

Direct OSU to strengthen its administrative and management procedures over the use of PSC funding under NSF awards. Processes could include requiring an annual review of all costs charged to PSC accounts to verify that the PI incurred the expenses for the purpose(s) outlined in the award budget.

Direct OSU to strengthen its administrative and management procedures for applying indirect costs to Federal awards. Processes could include: a. Requiring that personnel manually review materials/supplies and software purchases to evaluate whether OSU should account for the items as equipment. Specifically, OSU should consider whether the items purchased either cost more than $5,000 or are necessary for the use of an asset that would have a total value of more than $5,000. b. Implementing an annual review process for travel costs charged to awards that include funding for PSCs to ensure that OSU is appropriately segregating PSCs in accounts that OSU has excluded from the MTDC base. c. Updating its tuition remission policies and procedures to ensure that it does notcharge tuition expenses to a salary account that is included in the MTDC base.

Direct OSU to strengthen its administrative and management procedures for purchasing equipment and materials/supplies at the end of a project’s POP. Processes could include requiring OSRAA to review all equipment and materials/supplies purchased within the final 90 days of a sponsored award’s POP to evaluate whether the costs charged appear to be reasonable, allocable to, and allowable under the award charged.

Resolve the $10,574 in questioned unallocable costs and direct OSU to repay or otherwise remove the sustained questioned costs from its NSF awards.

Direct OSU to encourage PIs to identify all award participants and report all award-related travel in the annual reports submitted to NSF.

Direct OSU to strengthen its administrative and management procedures for honorarium payments. Procedures could include addressing specifically how to document honorarium payments.

Direct OSU to strengthen its administrative and management procedures for reimbursing M&IE expenses. Processes could include: a. Requiring employees to use the same meal reimbursement method throughout an entire trip, rather than determining the method on a meal-by-meal basis. b. Performing periodic reviews of M&IE per diem reimbursements to validate that the rates claimed correspond to the rates applicable to the traveler’s location.

Direct OSU to strengthen its administrative and management procedures for travel, procurement, PSCs, effort certifications, cost transfers, fellowship appointments, and currency conversions on sponsored awards. Procedures could include: a. Requiring periodic training for PIs and other personnel responsible for making travel arrangements, purchasing services, charging PSCs, certifying effort reports, processing cost transfers, and appointing fellows on sponsored awards. b. Implementing controls that would prevent OSU personnel from traveling or appointing fellows on sponsored projects without first obtaining OSRAA’s approval. c. Requiring award participants to provide cost comparisons for all travel requests that include personal or train travel before OSU approves travel related to federally sponsored projects. d. Implementing controls that would prevent OSU personnel from submitting travel reimbursement requests or advance reconciliations outside the allowable periods without justification and specific approval. e. Implementing controls that would prevent OSU personnel from processing service expenses without a purchase order or approved agreement. f. Implementing controls that would prevent OSU personnel from processing purchases at or above $25,000 on federally sponsored projects without documenting that the vendor was not suspended or debarred from receiving Federal funds. g. Implementing controls that would prevent OSU personnel from processing cost transfers more than 90 days after originally posting the expense without submitting a Cost Transfer Justification Form. h. Implementing controls that would prevent OSU personnel from processing transactions involving foreign currency without documenting the exchange rate.