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A-133 Compliance Supplement Warns Auditors About Cost Transfers

OMB Circular A-133 establishes the principals for the conduct of A-133 audits, and the OMB A-133 Compliance Supplement, issued annually, provides suggested audit procedures for compliance and internal controls testing.

Part 5 of the supplement includes guidance for auditing for research and development cluster.  The supplement appeared to contain few changes; however, the language addressing cost transfers is much more ominous than in previous supplements, making it clear that they remain an audit target.

“Transfers of unallowable costs between cost centers or research projects are a common method used to circumvent the institution’s internal control over the spending of the R&D funds.  These transfers of unallowable costs are often made to use unexpended funds from a project, as a source of available funding for overspent projects, or as a source of funds to complete projects.”  (Part 5, Clusters of Programs, p. 5-2-3)

Common Errors
1. An excessive number of cost transfers within the institution.
2. Transfers made near or after the end of a project that result in additional charges to a federal project.
3. Transfers that give the appearance of moving deficits from one federal project to another.
4. Salary cost transfers that are made after effort has been certified.
5. Transfers that provide an inadequate explanation.
6. Transfers made more than 90 days after the discovery of the error.

Please see the attached PDF for the complete article published in the Federal Grants News for Colleges and Universities, September 2007.

Grantee Should be Wary of 10 Common “Red Flags”

Many grant recipients are fully award of the complexities of managing the details related to a grant.  While some tasks may be simple, others may be prone to errors or oversights that can lead to inaccuracies or noncompliance with federal regulations.

There are several common areas where grantees can make mistakes.  These errors, or “red flags,” can lead to greater scrutiny, monitoring and auditing from federal agencies officials, enforcement actions (mandated corrective action, special conditions, cost disallowances), and even grant suspension or termination.

10 Common Red Flags
  1. Inadequately documenting cost transfers between federal grants.
  2. Flunking the need for prior approval.
  3. Failure to justify absence of competition for contracts or grants.
  4. Late Reporting.
  5. Overvaluing third-party in-kind contributions.
  6. Generating “incredible” documentation.
  7. Not immediately communicating significant developments.
  8. Maintaining incomplete property records.
  9. Untimely or no periodic inventory.
10. Not applying “applicable credits” to allowable cost principals.

Please see the attached PDF for the complete article published in the Federal Grants Management Handbook, September 2007, Issue No. 07-09.
 

Reminders

 

New Limits on Appendix Materials for All NIH/AHRQ/NIOSH Grant Applications Beginning with Receipt Dates On or After January 3, 2007

Guidelines for Inclusion of Clinical Practice Compensation in Institutional Base Salary Charged to NIH Grants and Contracts  NOT-OD-05-061.

NIH Policy on Enhancing Public Access to Archived Publications Resulting from NIH-Funded Research 

Facilities and Administrative Costs on Grants to Academic Institutions for Research Conducted at Veteran Administration Sites

NIH Loan Repayment Programs

Resubmission of Unpaid RFA Applications and Resubmission of Applications with a Changed Grant Activity Mechanism (NOT-OD

Revised Policy on the Acceptance for Review of Unsolicited Applications that Request $500,000 or More in Direct Costs (NOT-OD-02-004)

This page last updated: May, 17, 2008