Audit News

This is the tenth in a series of newsletter abstracts of audits to bring you up to date with what is happening in the Federal audit arena. Please note there is a considerable lag between when an audit occurred and when the audit report is published.

University of Utah Audit – November 15, 2007

Audit Agency: NSF-OIG

Title: Audit of Payroll Distribution system.

Objective: To evaluate whether the University’s internal controls were adequate to properly manage, account for, and monitor salary to CTF in accordance with Federal cost principals and NSF grant terms and conditions.

Awards: A statistical sample of 30 of 684 employees representing 807,416$ out of $8.3 million in salary charges to NSF awards was selected. However, due to the small sample size, the NSF did not many any projections to the total U of Utah’s population.

Findings: 51% of the total FY2006 salary charges tested were certified late. They ranged from 2 to 284 days late. 25% of the salary charges to the NSF were improperly allocated because significant changes in estimated labor effort were not appropriately recorded when worn. The University certified 2% of the salaries without a “suitable means of verification to validate the actual labor effort expended. The University did not have an independent internal evaluation of the effort reporting system.

Significance of Audit: While the auditors did not make any projections to the total population, they did say the statistical tools and methodology used will be used to enable the NSF to include them in their planned reviews of payroll distribution systems nationwide. As a result, this statistical testing trend is continuing. The lateness of the effort certifications and the improper allocations call into question the accuracy of the effort reports. Findings of this type may indicate a lack of clear, concise, and well documented policies and procedures; In particular what constitutes “significant changes” in estimated labor, what is an acceptable “tolerance” limit for certifying the effort, and what is acceptable as a “suitable means of verification” of labor charges.

Lessons for Emory: The longer between the effort and the certification, the more difficult it may be for the certifier to recall what actually occurred. Emory’s recent change to quarterly certification assists in addressing this issue. Timely effort reporting is an area of high focus for federal auditors and must be for Emory as well.

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