Academic Research & Grants

A Few Thoughts on Compliance

Compliance means meeting obligations associated with accepting government support. Compliance demonstrates stewardship of public funds. Compliance is a commitment.

You need to understand compliance to prevent and detect issues with laws, as well as contract and grant provisions.

Working to meet compliance teaches and encourages employees to conform to ethical and legal standards.

Successful compliance is an organized and ongoing effort amongst university financial staff and project staff.

Compliance results in sound scientific and administrative judgments, and adherence with applicable laws, regulations and grant requirements.

By accepting a federal grant the recipient agrees to comply with the applicable federal requirements and to the prudent management of all expenditure and actions affecting the award.

Key Points About Working With Grants

Every submission (e.g., grant application, performance and financial reports, periodic certifications, etc.) is a statement to a government official or the official funding agency.

Every request for payment is viewed as a certification that the awardee is complying with all material requirements and terms outlined by the funding agency.

Only Actual Authority will normally bind the government – beware of "guidance" from unauthorized government representatives. Always document any guidance from the agency.

Areas at risk for non-compliance

There are certain areas of a research project that may be at higher risk for non-compliance than others.

• Information security - systems integrity/continuity/availabilty, security regulations and external access
• Research activities - research not conducted in accordance with approved protocol or federal regulations
• Privacy (HIPAA, FERPA, Graham-Leach-Bliley) - improper disclosure of private/sensitive/protected information
• Conflicts of interest - remuneration impairing impartial recommendations (perceived or real)
• Environmental health and safety - improper use and handling of hazardous materials, improper lab safety and fire safety
• Inadequate program and/or travel documentation
• Cost-sharing
• Records retention
• Separate financial administration for each award
• Violations of institutional conflict of interest rules
• Subrecipient monitoring
• Residual funds – accounting and disposition

Most frequent adverse audit findings

A National Science Foundation study found the most frequent reasons for non-compliance that are discovered by audits.

• Policies and procedures inadequate or absent: 24%
• Lack of source documentation to support costs: 18%
• Inadequate system to track, manage or account for costs/assets: 14%
• Unallowable costs: 7%
• Lack of proper approval, certification or authorization: 6%
• Lack of subrecipient monitoring: 6%
• Inadequate or absent project or technical report: 6%
• Reconciliations inadequate or not performed: 4%
• Inadequate or absent financial report or proposal: 4%
• Costs claimed are greater than amounts or rates allowed by award provisions or federal regulations: 4%
• Lack of segregation of duties: 4%

Common Sources of Compliance Problems

• Overly ambitious objectives in grant application; so don’t stretch or embellish the truth
• Failing to ensure that subrecipient and subcontractor agreements include all required terms
• Creating subcontracts without university oversight and approval
• Failing to ensure that required reports are accurate and submitted on time
• Failing to obtain required agency approvals of changes in grant program or budget
• Failing to timely report problems affecting program or financial performance

Common consequences of non-compliance

• Special oversight/review status
• Administrative sanctions
• Reduction in payments
• Termination of grant
• Suspension or debarment
• Corrective action plans
• Damage to the institution’s reputation
• Risk of fines and penalties imposed by oversight agencies
• Loss of successive funding

Elements of Compliance Success

An effective compliance program has the following elements:

• Existence of written standards
• Effective oversight
• Due care in delegation of authority
• Training
• Monitoring
• Discipline
• Corrective action
• Periodic assessment of risks

Create a Culture of Compliance

It is paramount that each member of the Regis University community understands his or her role in making research compliance a part of their everyday routine. University administration must familiarize the community with the compliance infrastructure in place or, in some instances, in development. Employees, faculty and students need to be aware of their responsibilities in fostering a compliance-conscious environment.

While standards are nothing new at Regis, a compliance infrastructure increases adherence to the research policies and procedures, as well as local, state and federal laws. Conduct risk assessments, monitor operational activities, deliver training sessions and administer quality assurance reviews to effectively address compliance concerns.

Financial, operational, strategic and reputation-related risks can come from any number of sources. By creating a culture of compliance, the University, its students, employees and the entire Regis community will be better served.

Strategies for Supporting Grant Compliance

• Organizational policies and procedures
• Accounting/purchasing/code of conduct policies tailored to grant requirements and organization
• Training for key managers and grant management personnel
• Grant closeout and records retention
• Subawards and subcontracts
• Flow-down required and desired requirements
• Actively manage and monitor performance
• Regular review of above items

Advise subrecipients of requirements imposed on them by federal laws, regulations, and provisions of contracts or grant agreements and any supplemental requirements imposed by the pass-through entity.

Monitor subrecipients’ activities as necessary to ensure that federal awards are used for authorized purposes in compliance with laws, regulations, and the provisions of contracts or grant agreements and that performance goals are achieved.

Ensure that subrecipients have met the audit requirements of Circular A-133.

Subrecipient v. Contractor

A subrecipient:

• Determines who is eligible to receive what federal financial assistance
• Has performance measured against whether the objectives of the federal program are met
• Has responsibility for programmatic decision-making
• Has responsibility for adherence to applicable federal program compliance requirements
• Uses federal programs to carry out the program of the organization as compared to providing goods or services for a program of the pass-through entity

On the other hand, a Contractor

• Provides the goods and services within normal business operations
• Provides similar goods or services to many different purchasers
• Operates in a competitive environment
• Provides goods or services that are ancillary to operations of the federal program
• Is not subject to the compliance requirements of the federal program

AARA Audit Risk Considerations

• Funding decreases/fully expended
• Increased risk due to possibility that program or organizational responsibilities are not being completed
• Understaffing
• Work not fully redistributed
• Major program determination
• Due to inherent risk, programs with ARRA funds would not qualify as low risk Type-A programs
• Even the minimum amount of ARRA expenditures would not support identifying the program as low risk
• Data collection form
• Recovery Act funds should be listed separately from other types of funds in the SEFA
• Recovery Act funds should be listed on a separate row under Item 9 on page 3 of the Form SF-SAC

Time and Effort Reporting (OMB A-87 Guidelines)

Charges to federal awards for salaries and wages, whether treated as direct or indirect costs, will be based on payrolls documented in accordance with generally accepted practice of the governmental unit and approved by a responsible official.

Where employees work solely on a single federal award or cost objective, charges for their salaries and wages will be supported by periodic certifications that the employees worked solely on that program for the period covered by the certification. These certifications will be prepared at least semi annually and will be signed by the employee or supervisory official having first-hand knowledge of the work performed by the employee.

Where employees work on multiple activities or cost objectives, a distribution of their salaries will be supported by personnel activity reports (or equivalent) unless a statistical sampling system or other substitute system has been approved by the cognizant federal agency.

Personnel activity reports or equivalent documentation must meet the following standards:

• They must reflect an after-the-fact distribution of the actual activity of each employee
• They must account for the total activity for which each employee is compensated
• They must be prepared at least monthly and must coincide with one or more pay periods
• They must be signed by the employee
• Time and effort reporting
• Supervisor review
• Actual vs. budget
• Handling “overtime” for salaried employees
• Substitute systems for allocating salaries

• U.S. Department of Justice (DOJ)
• Environmental Protection Agency (EPA)
• National Institutes of Health (NIH)
• Office for Human Research Protections (OHRP)
• Occupational Safety and Health Administration (OSHA)
• Office of the Inspector General(OIG)
• AICPA
• Governmental Audit Quality Center
• Catalog of Federal Domestic Assistance
• Financial Accounting Standards Board
• Government Accountability Office
• Governmental Accounting Standards Board
• Office of Management and Budget