Performance Audit of Incurred Costs – Montana State University

Resolve the $72,578 in questioned indirect costs for which MSU has not agreed to reimburse NSF and direct MSU to repay or otherwise remove the sustained questioned costs from its NSF awards.

Direct MSU to strengthen its policies and procedures related to the capitalization of constructed equipment. Updated policies should require MSU to capitalize any constructed items that meet its definition of equipment and exclude the cost of these items from its modified total direct cost base.

Direct MSU to strengthen its procedures for booking and approving travel expenses. Updated procedures could include: • Requiring travelers to perform a cost comparison when booking flights that include any unallowable upgrades so the travelers are able to document the difference in cost between the standard economy airfare and the airfare including the upgrades. • Requiring personnel approving expense reports to verify that travelers actually performed the scheduled travel and that the travelers did not claim expenses for any unused, credited, or refunded expenses prior to approving expense reports.

Direct MSU to strengthen its procedures surrounding GRFP stipend payments. Updated procedures should ensure that MSU pays GRFP stipends using the stipend rate identified in the relevant NSF GRFP solicitation.

Direct MSU to provide documentation supporting that it has repaid or otherwise credited the $12,313 in questioned airfare and internal service expenses for which it has agreed to reimburse NSF.

Direct MSU to develop formal policies and procedures for establishing internal service provider rate agreements and for verifying that MSU has appropriately reviewed and approved the rate agreements before charging those rates to NSF awards.

Direct MSU to strengthen its policies and procedures and internal controls for allocating expenses to sponsored projects. Updated procedures could require: • Individuals incurring publication expenses to document and justify the allocation methodology used when publishing research that identifies multiple sponsoring funding sources. • MSU to remove all costs charged to NSF awards for tuition that relates to time period(s) after the award’s period of performance has expired as part of the award close-out activities and verify that it allocates tuition consistent with student effort.

Direct MSU to strengthen the administrative and management internal controls and procedures surrounding its Award Cash Management $ervice reconciliation process. Updated controls could include: • Requiring MSU to develop a formal procedure regarding how to calculate the appropriate amount of funding to draw down on NSF awards with expiring appropriations. This procedure should ensure that MSU documents how it determined the appropriate amount to draw down and returns any unused funds to NSF in a timely manner. • Requiring an individual who is independent from the standard Award Cash Management $ervice drawdown process to perform periodic reconciliations of Award Cash Management $ervice drawdowns to MSU general ledger expenses for each NSF award, as well as to conduct a final review and reconciliation at award close-out.

Direct MSU to implement internal controls that require personnel to create contract service agreements to support all consultant services and maintain the agreements throughout the contract’s period of performance and after its expiration date in accordance with its record retention policies.