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<p class=MsoNormal><font size=2 color=blue face="Times New Roman"><span
style='font-size:10.0pt;color:blue'>ON Behalf of the Sponsored Projects Office”</span></font><o:p></o:p></p>
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<p class=MsoNormal><b><font size=2 face=Tahoma><span style='font-size:10.0pt;
font-family:Tahoma;font-weight:bold'>Sent:</span></font></b><font size=2
face=Tahoma><span style='font-size:10.0pt;font-family:Tahoma'> Thursday,
February 05, 2009 2:11 PM<br>
<b><span style='font-weight:bold'>Subject:</span></b> HHS OIG recommended Duke
refund $1.7 million to Federal Government</span></font><o:p></o:p></p>
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<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'><o:p> </o:p></span></font></p>
<p class=MsoNormal><font size=3 face=Arial><span style='font-size:12.0pt;
font-family:Arial'>Dear colleagues,</span></font><o:p></o:p></p>
<p class=MsoNormal><font size=3 face=Arial><span style='font-size:12.0pt;
font-family:Arial'> </span></font><o:p></o:p></p>
<p class=MsoNormal><font size=3 face=Arial><span style='font-size:12.0pt;
font-family:Arial'>I want to call your attention to this newly published audit
report titled “<i><span style='font-style:italic'>Review of
Administrative and Clerical Costs at Duke University for the Period October 1,
2002 through September 30, 2004</span></i>”.</span></font><o:p></o:p></p>
<p class=MsoNormal><font size=3 face=Arial><span style='font-size:12.0pt;
font-family:Arial'> </span></font><o:p></o:p></p>
<p class=MsoNormal><font size=3 face=Arial><span style='font-size:12.0pt;
font-family:Arial'>You can find the audit report on line at: <a
href="http://www.oig.hhs.gov/oas/reports/region4/40501014.pdf">http://www.oig.hhs.gov/oas/reports/region4/40501014.pdf</a></span></font><o:p></o:p></p>
<p class=MsoNormal><font size=3 face=Arial><span style='font-size:12.0pt;
font-family:Arial'> </span></font><o:p></o:p></p>
<p class=MsoNormal><font size=3 face=Arial><span style='font-size:12.0pt;
font-family:Arial'>This audit was conducted by the Department of Health and
Human Services’ Office of Inspector General. The auditors, after
reviewing over 200 charges for administrative costs, recommended that Duke
University refund $1.7 million to the Federal Government. Duke University
disagreed with most of the findings and the recommendations. See
Duke’s response from page 32 to page 50 of the audit report.</span></font><o:p></o:p></p>
<p class=MsoNormal><font size=3 face=Arial><span style='font-size:12.0pt;
font-family:Arial'> </span></font><o:p></o:p></p>
<p class=MsoNormal><font size=3 face=Arial><span style='font-size:12.0pt;
font-family:Arial'>To learn what types of administrative costs may be
disallowed by the Federal auditors, read page 17 to page 19 of the audit report
carefully. Here is an excerpt from the report:</span></font><o:p></o:p></p>
<p class=MsoNormal><font size=3 face=Arial><span style='font-size:12.0pt;
font-family:Arial'> </span></font><o:p></o:p></p>
<p class=MsoNormal><font size=3 face=Arial><span style='font-size:12.0pt;
font-family:Arial'>“The principal investigator for the “Targeting BETAARK
1 in Heart Failure” project, for example, stated that he considered
clerical salaries “. . . specific to creating, copying, and assembling
the annual progress report . . .” to be allowable. However, he provided
no explanation why the production of an annual report, which is required of
almost every sponsored project awarded to the University, might be interpreted
as requiring an “extensive amount of administrative or clerical
support” as required for reimbursement under section F.6.b.2 of the
Circular. </span></font><o:p></o:p></p>
<p class=MsoNormal><font size=3 face=Arial><span style='font-size:12.0pt;
font-family:Arial'> </span></font><o:p></o:p></p>
<p class=MsoNormal><font size=3 face=Arial><span style='font-size:12.0pt;
font-family:Arial'>The principal investigator for “Genetic Epidemiology
of Alzheimer’s Disease in Twins” also cited “. . .
administrative support to assist in report preparation . . .” and added
that support was justified by the need to “. . . arrange travel and process
paperwork for travel expenses for the study assessment teams who traveled
biweekly . . . .” However, the detailed project budget included only
$10,811 of total staff travel costs over the year, or less than $416 per
biweekly period, and neither the University nor the principal investigator
provided any evidence that the effort involved in arranging that $416 of travel
was significantly greater than the routine level of such services provided by
academic departments.”</span></font><o:p></o:p></p>
<p class=MsoNormal><font size=3 face=Arial><span style='font-size:12.0pt;
font-family:Arial'> </span></font><o:p></o:p></p>
<p class=MsoNormal><font size=3 face=Arial><span style='font-size:12.0pt;
font-family:Arial'>The auditors also gave these examples of unallowable costs:</span></font><o:p></o:p></p>
<p class=MsoNormal><font size=3 face=Arial><span style='font-size:12.0pt;
font-family:Arial'> </span></font><o:p></o:p></p>
<p class=default><font size=3 color=black face=Arial><span style='font-size:
12.0pt;font-family:Arial;color:windowtext'>“The University charged an
NIH-funded project $3,364 for a laptop computer and asserted that the computer
was used solely for project data and allowed the employee “the
opportunity to work from home or wherever she may be located at anytime of the
day.” We noted, however, that the involved employee was budgeted to
devote only 5 percent of her University time to the project charged for her
computer. </span></font><o:p></o:p></p>
<p class=default><font size=3 color=black face=Arial><span style='font-size:
12.0pt;font-family:Arial;color:windowtext'> </span></font><o:p></o:p></p>
<p class=default><font size=3 color=black face=Arial><span style='font-size:
12.0pt;font-family:Arial;color:windowtext'>The University charged an NIH
project $193 for a swivel chair. In response to our request for justification,
the University did not address the chair itself but pointed out that they had
requested grant funding for miscellaneous office supplies. </span></font><o:p></o:p></p>
<p class=default><font size=3 color=black face=Arial><span style='font-size:
12.0pt;font-family:Arial;color:windowtext'> </span></font><o:p></o:p></p>
<p class=default><font size=3 color=black face=Arial><span style='font-size:
12.0pt;font-family:Arial;color:windowtext'>The University charged an NIH grant
$47 for two letter trays. When asked to explain circumstances related to the
expense, the University asserted this was a major project that required
“separate files for patient and site information in accordance with the
scope of work.”” </span></font><o:p></o:p></p>
<p class=default><font size=3 color=black face=Arial><span style='font-size:
12.0pt;font-family:Arial;color:windowtext'> </span></font><o:p></o:p></p>
<p class=default><font size=3 color=black face=Arial><span style='font-size:
12.0pt;font-family:Arial;color:windowtext'>So, the lesson learnt is: we need to
budget and justify administrative salaries and other administrative costs
carefully. What you think allowable may be disallowed by Federal
auditors. </span></font><o:p></o:p></p>
<p class=default><font size=3 color=black face=Arial><span style='font-size:
12.0pt;font-family:Arial;color:windowtext'> </span></font><o:p></o:p></p>
<p class=default><font size=3 color=black face=Arial><span style='font-size:
12.0pt;font-family:Arial;color:windowtext'>Please refer to our Direct and
Indirect Cost Policy at: </span></font><font face=Arial><span style='font-family:
Arial'><a
href="http://www.sps.arizona.edu/postaward/directindirectcostpolicy.htm">http://www.sps.arizona.edu/postaward/directindirectcostpolicy.htm</a></span></font><o:p></o:p></p>
<p class=default><font size=3 color=black face=Arial><span style='font-size:
12.0pt;font-family:Arial;color:windowtext'> </span></font><o:p></o:p></p>
<p class=default><font size=3 color=black face=Arial><span style='font-size:
12.0pt;font-family:Arial;color:windowtext'>If you have questions or concerns,
contact me at 626-6442 or via email at </span></font><font face=Arial><span
style='font-family:Arial'><a href="mailto:jingliu@email.arizona.edu">jingliu@email.arizona.edu</a></span></font><font
color=black face=Arial><span style='font-family:Arial;color:windowtext'>
. </span></font><o:p></o:p></p>
<p class=default><font size=3 color=black face=Arial><span style='font-size:
12.0pt;font-family:Arial;color:windowtext'> </span></font><o:p></o:p></p>
<p class=MsoNormal><font size=3 face=Arial><span style='font-size:12.0pt;
font-family:Arial'>Thank you,</span></font><o:p></o:p></p>
<p class=MsoNormal><font size=3 face=Arial><span style='font-size:12.0pt;
font-family:Arial'> </span></font><o:p></o:p></p>
<p class=MsoNormal><font size=3 face=Arial><span style='font-size:12.0pt;
font-family:Arial'> </span></font><o:p></o:p></p>
<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'>Jing Liu, CPA<br>
Manager, Sponsored Projects Quality Assurance<br>
Sponsored Projects Services<br>
The University of Arizona<br>
PO Box 3308<br>
Tucson, AZ 85722-3308<br>
(520) 626-6442<br>
Fax: (520) 626-4137<o:p></o:p></span></font></p>
<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'> <o:p></o:p></span></font></p>
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