Performance Audit of Subaward Costs – Northeastern University

Resolve the $421,495 in questioned subaward and salary expenses for which Northeastern has not agreed to reimburse NSF and direct Northeastern to repay or otherwise remove the sustained questioned costs from its NSF awards.

Direct Northeastern to strengthen its procedures and internal controls around invoice processing to ensure that it allocates subaward payments to the correct award.

Direct Northeastern to strengthen its policies, procedures, and internal controls around subrecipient monitoring to ensure that subawardees comply with federal and NSF requirements when incurring expenses under NSF awards. This could include:
• Implementing additional procedures that require Northeastern to verify that subawardees submit invoices based on actual expenses incurred, rather than on the award budget.
• Developing additional resources for subawardees that provide guidance for charging allowable expenses—including salary, fringe benefit, and travel expenses—consistent with federal and NSF regulations.

Resolve the $8,080 in questioned inadequately supported salary, consultant, and material and supply expenses for which Northeastern has not agreed to reimburse NSF and direct Northeastern to repay or otherwise remove the sustained questioned costs from its NSF awards.

Direct Northeastern to implement additional procedures that require it—or its subawardees—to perform periodic reconciliations to ensure expenses paid to its subawardees are supported by the subawardees’ financial records.

Resolve the $2,812 in questioned indirect costs for which Northeastern has not agreed to reimburse NSF and direct Northeastern to repay or otherwise remove the sustained questioned costs from its NSF awards.

Direct Northeastern to strengthen its policies, procedures, and internal control processes for ensuring its subawardees appropriately apply either their federally negotiated indirect cost rates or the de minimis rate to NSF awards. These updated procedures could include:
• Requiring personnel responsible for approving invoices to perform a calculation to determine whether the indirect costs invoiced are appropriate based on the direct costs invoiced and the rate identified in the subawardee’s Negotiated Indirect Cost Rate Agreement (or the de minimis rate when the subawardee does not have a federally negotiated rate).
• Developing resources that provide guidance on appropriately applying indirect cost rates to all direct costs that should be included in the Modified Total Direct Cost base, per the subawardee’s negotiated indirect cost rate agreements and federal regulations.
• Developing resources that provide guidance on accurately classifying all costs for accounts included within the Modified Total Direct Cost base and on applying the indirect cost rate to those accounts.

Direct Northeastern to strengthen its subaward monitoring procedures to ensure it verifies that its subawardees either apply the appropriate fringe benefit rates included in their negotiated agreements or document their election to use the proposed fringe benefit rates. These procedures should address how Northeastern will ensure the subawardee’s decision to use proposed fringe benefit rates will not cause the subawardee to overcharge NSF for fringe benefits in cases where fringe benefit rates decrease between the date the subaward is proposed and the date the subaward is awarded.

Direct Northeastern to implement internal controls to ensure that Principal Investigators review and approve invoices—and document this approval—within the time limit defined in its policy.

Direct Northeastern to update its invoice review procedures to ensure that subawardee invoices include all of the data elements required per the subaward terms and conditions.