GRANT AND CONTRACT ACCOUNTING REFERENCE NUMBER 3

From time to time, the DGCA may disseminate audit findings when the issues are generally applicable to the University community. Recently, an audit of a State of New Jersey, Department of Education award had the following findings:

Audit Findings:

JUNE 2000

FINDING: Salary Transfer - Transfer was not processed within the allowable time frame per University Policy and without adequate justification for the transfer.

DISCUSSION: Recently the Federal Auditors audited a contract administered by the Office of Naval Research. Their major finding resulted in a disallowance of over $30,000 charged to the award. The auditors disallowed a cost transfer of salary and fringe benefits and the associated F&A charges beacause the transfer was completed after the normal time for completing a salary transfer and there was no documentation available to explain or justify the propriety of the transfer. They also noted that just prior to the transfer the exact amount of the transfer was unexpended. In discussing their finding with us, they felt certain that the PI made the charge just to use up all the funds in the award and not because of any justifiable award purpose. The department was charged with this disallowance.

MARCH 1994

A. FINDING: Consultant - There was no evidence of solicitation of quotations.

DISCUSSION: In accordance with the University policy, the project director is responsible for providing "...evidence that a selection process has been used to secure the most qualified individual available, considering the nature and extent of the services required." It is incumbent upon project directors to keep records on the individuals or organizations considered for these assignments. As a public institution, we are required to make attempts to reach out to a broad spectrum of qualified applicants who are capable of providing the required service and for keeping records on the selection process. (This agency also requires completion of THEIR FORM requesting approval to hire a consultant or subcontractor prior to engagement.)

B. FINDING: Consultant Travel and Telephone - The consultant travel and telephone expense was disallowed.

DISCUSSION: Project directors should make sure consultants or subcontractors understand that their expenses should be coming out of the fee negotiated-not in addition to it. This method reinforces independent contractor treatment rather than employee treatment, and avoids other potential problems.

C. FINDING: Commuting - Travel expense by a part-time employee for commuting was disallowed.

DISCUSSION: Commuting expense is not allowable for employees.