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Dirty Deeds
What Can We Learn from National Audits and Investigations?
Pamela Webb
02.17.2009
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2008
2007
2006
2005
2004
2003
2002
2001
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9
19
13
7
2
2
0
UC San Diego, UIUC, UCSF, Georgia Tech
CalTech, Vanderbilt, Georgia State, UMBC
Yale, Chicago, Columbia, Berkeley, Penn
Dartmouth, Cornell, Mayo Clinic, U Mass
Harvard, Johns Hopkins, U Washington
Northwestern
NSF in the midst of
30 “effort” audits
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2008
$7.6M
Yale – Effort Reporting
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2006
$2.5M
U Connecticut – Service Center Billing Rates
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2005
$4.4M
Cornell – Grant Money Paid to Non-Research Staff
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2005
$6.5M
Mayo Clinic – Improper Cost Transfers
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2005
$11.5M Florida International – Improper Cost Transfers
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2004
$2.4M
Harvard – Grants Billed for Unrelated Salaries
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2004
$2.6M
Johns Hopkins – Faculty Effort Reporting
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2003
$5.5M
Northwestern – Faculty Effort Reporting
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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
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Investigation between Jun 06 and Dec 08
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$7.6M settlement is $3.8M in actual damages
and $3.8M in penalties
Big signal!!
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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 …
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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)
Altered
Email!
 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
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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”
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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
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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)
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“Significant change” requiring HSA not defined
No definition of “a suitable means of verification of
effort”
No minimum percentage of effort required
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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
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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
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No evidence in proposals or award documents that
admin/clerical support would be needed
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Duke charged office supplies on routine projects
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“The Office of Sponsored Research did not provide
adequate scrutiny to ensure that these charges fully
complied with Federal regulations”
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Late Effort Reports and Timeliness
 59% not submitted within due date
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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
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Effort – Certification did not include total employee
workload
 Non-sponsored information must be provided so that
total effort is known
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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’
On Direct Charging of Administrative and Clerical Costs!
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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”
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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”
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COST TRANSFERS
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PROPOSAL ACCURACY
 Costs transferred from overexpended federal award to an NSF grant
(Cal Tech)
 Cost transfers made without explanation or source documentation
(Georgia State)
 Current and Pending support information in NSF proposals missing
committed effort (Cal Tech)
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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
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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)
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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)
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ANIMAL SUBJECTS
 Request to return $65K in connection with non-compliance involving nonhuman primates on two grants (U of Connecticut)
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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
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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