Report on Research Compliance Volume 19, Number 6. In this month’s eNews: June 2022 | Healthcare Compliance Association (HCCA)
◆ Auditors from the Office of Inspector General (OIG) of the National Science Foundation (NSF) questioned $35,316 in costs claimed by the University of Idaho (UI) among $42.7 million spent on 50 awards, according to a new audit. The audit covered “the inception date of each award up to” September 2, 2021 and only conducted an “initial phase” as the auditors “did not identify any extraordinary circumstances justifying the need for a second audit phase”. According to the May 6 report, among six awards, “Auditors found $24,855 in ineligible expenses, $5,446 in improper cash management services charge (ACM$), and $5,015 in allocated publication expenses from inappropriate way”. The OIG also made two findings related to UI’s use of what it said were incorrect overhead rates—claims that UI rejected and which mimic other recent audits.
Among the unauthorized expenses was $9,552 in unemployment insurance charged to an award in June 2021 for “software related to a cybersecurity training program.” Although UI originally paid for this expense, because UI received reimbursement for the expense from the Idaho State Board of Education, UI should have removed these costs from this NSF award. . Additionally, in February 2018, UI charged an indemnity of “$9,100 in non-deductible overhead costs that it applied to the costs incurred for the purchase of a vehicle. Although UI indicated that the expense was related to a car rental, because UI did not rent the car, but rather paid a car rental agency to purchase the vehicle, UI should have considered this expense as the purchase of a fixed asset. Regarding publication expenses – which UI said were allowable – OIG said that in June 2019, UI charged a reward of $5,015 for the full cost of publishing an article, although the NSF “was only one of three funding sources identified in the publication.” According to the auditors, “UI has not documented or provided reasonable justification as to why it allocated 100% of the cost to this NSF award, [thus] we were unable to determine the percentage attributable to this price. In the draft report provided to UI for comment, the disputed amount was only $502, which the auditors revised to the higher amount. In its response, UI said the mention of three sources of funding was made “in recognition of the science developed as a foundation to support research done to [redacted].” Unemployment Insurance officials said they were “concerned about the precedent that may be set” by the finding. (05/12/22)
◆ The Office of Management and Budget (OMB) has released its 2022 update to the Uniform Guidance Rules that federal award recipients must follow. As announced in the Public inspection section of May 11 of the Federal Registerthe new compliance supplement applies to 2 CFR Part 200 Subpart F, which deals with “Administrative Requirements, Cost Principles and Regulations on Auditing Requirements” and “supersedes the 2021 Supplement (issued August 2020), its Addenda 1 and 2 (issued December 2021 and January 2022) and Technical Update (released April 2022).
As the notice states, the supplement “adds five new programs (which are funded by the American Rescue Plan Act) and provides updates on many other programs as needed. In total, the 2022 supplement contains audit guidelines for 235 individual programs and 48 groups of programs from 22 federal agencies The 2022 Supplement continues efforts to maximize the value of grant funding by applying a risk-based, risk-based framework data that balances compliance requirements with demonstrating positive results The agency has set a 60-day comment period for the supplement, which will be in effect for “exercise audits that cover any period beginning after June 30 2021”. (05/12/22)
◆ Gongda Xue, a former scientist at a Swiss research institute affiliated with pharmaceutical company Novartis, was found guilty of conspiring to steal trade secrets from GlaxoSmithKline (GKS) in Pennsylvaniawhere his sister Yu Xue worked, Jennifer Arbittier Williams, U.S. Attorney for the Eastern District of Pennsylvania, announced on May 2. research from Yu Xue”, while she “stole GSK’s research on cancer products and sent it to Gongda Xue”.
Yu Xue and his “associates” founded a company in China called Renopharma; his brother established Abba Therapeutics AG in Switzerland. “Renopharma then attempted to rebrand the GSK products under development as Renopharma products and attempted to sell them for billions of dollars. Renopharma’s own internal projections showed the company could be worth up to $10 billion based on stolen GSK data,” the announcement reads. Yu Xue was arrested in 2016 and Gongda Xue was extradited from Switzerland in 2019. Yu Xue pleaded guilty in 2018 (along with three others) and, on May 26, 2021, was sentenced to eight months in prison, according to documents. Courts examined by CRR. The government previously said Gongda faced 20 years in prison if convicted. GSK was unable to collect restitution related to the case, as a judge ruled the government failed to prove that GSK suffered actual financial loss. (05/05/22)
◆ The NSF accepted OIG recommendations to seek reimbursement from the University of Utah for $15,417 in costs surveyed by auditors reported in a report covering the period July 1, 2013 through June 30, 2016.. But it allows $21,262 for what the OIG called “unsupported stipend costs” and $5,478 for “unattributable and/or unreasonable expenses nearing the expiration of the award.” . The NSF “does not agree that Participant Support Costs (PSC) “budgeted as stipend disbursements limits the fact that funding is only disbursed as stipend.” rebudgeting of funds awarded to participants in the Participant Support Budget category is a long-standing permitted practice under NSF grants,” the April 7 audit resolution states. “However, the conditions for awarding the NSF have been revised with the implementation of [2 C.F.R. § 200] and now requires pre-approval for all additional categories of attendee support costs, such as “incentives, gifts, souvenirs, t-shirts and/or souvenirs”. NSF determined that the only unauthorized rebudgeting was $24 for an urgent payment fee. It is NSF management’s decision to deny $24 and allow $21,262.
The OIG also disagrees with the auditors’ conclusion that the university applied an incorrect negotiated indirect cost rate agreement, or NICRA, a finding common among recent audits – stating that “the policy of the NSF requires recipients to budget for indirect costs using current indirect cost rates in accordance with PAPPG [Proposal & Award Policy & Procedures Guide] Chapter II, Section C.2.g(viii), Indirect Costs. However, during the period of award performance, recipients may provide voluntary cost-sharing without obligation at any time, in accordance with OMB clarification Q-132, 2 CFR Frequently Asked Questions dated 05/03/2021 and PAPPG Chapter II, Section C.2.g(xii ), Cost Sharing.” NSF’s “Cost Sharing Policy at https://www.nsf.gov/bfa/dias/policy/. Accordingly, the NSF disagrees with the recommendation that Utah should strengthen administrative and management controls and processes over the establishment of indirect cost rates for federal grants to ensure that it applies costs at the rates in effect at the time of the initial award,” the NSF said. . (05/05/22)
◆ Perhaps a year or more after the then-director of the HHS Office of Research Integrity (ORI) joined the agency’s leadership, HHS posted the job posting online at usajobs.gov. The central office that investigates fabrication, tampering and plagiarism in billions of dollars of research funded by the Public Health Service has been without a leader since Elisabeth Handley became the principal deputy assistant secretary of HHS last year. . Appointed director of ORI in March 2020, Handley first served as interim director beginning in August 2019. HHS announced Handley’s new position in June of last year, but a finding of misconduct in January 2021 was signed by Wanda Jones, who was on the roster of acting directors.
Prior to Handley’s appointment, the position had been vacant for two years following the reassignment of Kathryn Partin, who had a difficult two-year term before being transferred out of HHS. His predecessor, David Wright, who served as ORI’s director from 2012 to 2014, also stepped in after a two-year vacancy. All of the previous administrators had a doctorate. However, the new job application, which was posted on April 21, has no education requirements. The job is based in Rockville, Maryland, and pays $135,468 to $203,700 per year. Applications will be accepted until May 23. (04/28/22)
◆ University of California, Merced (UCM) Should Reimburse NSF $226,652, According to a Recent Report by NSF’s OIG Auditors. Auditors tested $724,833 out of $22.3 million in costs claimed from September 1, 2017 to August 31, 2020, questioning a total of $226,652. Specifically, auditors questioned “$116,151 in unauthorized expenses; $71,463 in improperly allocated expenses; $21,064 in ACM$ levies that exceeded expenses; $17,492 for insufficiently justified expenses; and $482 in indirect costs applied inappropriately,” the audit showed. It should be noted that the auditors recommended that the NSF disallow – with UCM’s agreement – $6,471 in publication expenses for two awards because “the published articles did not recognize the NSF prices charged”.
The report also found “sub-payroll expenses that exceeded general ledger payroll expenses, improperly budgeted participant support costs, and non-compliance with UCM policies.” The auditors made 33 recommendations. As the auditors said, “UCM expressed varying levels of agreement and disagreement with the findings throughout the audit report, agreeing to reimburse NSF for $156,775 of disputed costs, but not being disagree with the remaining $69,877”. (04/28/22)