Audit Resolution
Overview/Purpose
The Cost Analysis and Audit Resolution Branch (CAAR) is responsible for resolving compliance, internal control, and questioned cost findings identified in audits of NSF awardees. Findings related to NSF-funded awards may be contained in mandated Office of Management and Budget (OMB) A-133 (Single Audit) Circular or NSF Office of the Inspector General (OIG) audit reports. Because audit findings have the potential to jeopardize current and future funding, and can result in cost disallowances that require organizations to make repayments to NSF, organizations should cooperate with NSF to promptly resolve all audit findings.
The audit resolution process begins with assignment of an audit report to a CAAR staff member to review and develop management decisions. The CAAR staff member communicates with the audited institution in order to achieve acceptable resolution of the findings and questioned costs identified in the audit report, and to agree upon acceptable corrective actions in response to the audit recommendations. When audit findings are particularly egregious, auditee may be required to prepare a detailed corrective action plan describing the steps it will take and outlining the associated timeframes to resolve the audit findings satisfactorily.
To resolve audit report findings, CAAR may also seek input from other relevant NSF offices to assure appropriate and thorough resolution. Resolution activities may also be coordinated with other Federal agencies in cases where NSF is not the cognizant or OMB-specified oversight agency, especially when systemic issues (audit findings affecting awards from more than one agency) are identified in the audit report.
Resolution is considered complete once NSF and the awardee agree upon the corrective actions to be taken to resolve all findings. Once resolution is complete, CAAR will issue NSFs official management decision(s) to the audited organization. In some cases, NSF may issue a unilateral decision if the audit finding is straightforward or if the audited institution is uncooperative or unresponsive.
Although resolution may be considered complete, final actions often may be required of the awardee (e.g., repayment or implementation of revised policies and procedures) and/or NSF (e.g., amendment of an active award) to close out/resolve findings and questioned costs.
Roles
CAAR leads the audit resolution effort on behalf of NSF, and often will work closely with other NSF divisions and the OIG, as needed. Within NSF, several staff members may play important roles in the process:
- CAAR Designated Audit Resolution Staff (DARS) completes the initial review of the audit report, formulates management decision recommendations, and communicates directly with the awardee to resolve findings;
- NSF Audit Resolution Official (ARO) reviews and approves the draft management decisions recommended by the DARS and issues official management decisions;
- Division of Institution and Award Support (DIAS) senior management and the NSF OIG provide guidance to the DARS and ARO regarding more serious or complex findings;
- NSF Programmatic Staff/Program Officials provide technical guidance and award background as requested by the DARS or ARO;
- NSF Grants Official provides input to the DARS and/or ARO on historical award issues and terms and conditions, as well as processes any administrative actions needed to address audit recommendations, as needed.
CAAR communicates with the audited organization throughout the audit resolution process. This communication is usually coordinated through the audited entitys Authorized Organizational Representative. The awardee organization is responsible for submitting responses, documentation, and, in some cases, corrective action plans to satisfactorily resolve audit findings.
Timeframe
Audit findings are typically resolved within 6 months of audit report issuance. CAAR is required to report the status of audit findings that remain unresolved after 6 months to NSF senior management and the NSF OIG.
Topics Covered
CAAR resolves audit findings that cover a wide variety of topics related to financial and administrative regulatory compliance, internal control/systemic deficiencies, and questioned costs. The following are some examples of common issues that may result in questioned costs and subsequent cost disallowances:
CAAR is responsible for resolving compliance, internal control, and questioned costs findings contained in audits of NSF awards. Since audits with questioned cost findings can result in cost disallowances and require organizations to make repayments to NSF, organizations should understand what is required of the organization in accounting for Federal expenditures. Audit findings resulting in questioned costs which are related to "accounting" for federal funds are generally due to the following:
- Lack of time records to support labor costs charged to awards (view timekeeping reviews);
- Lack of consulting agreements and invoices to demonstrate allocability to the NSF award and that the charges were reasonable;
- Indirect cost recovery charges in excess of the amount allowed by the type of indirect cost rate and base reflected in the award or Negotiated Indirect Cost Rate Agreement in effect for the period of the award (view budget and indirect cost reviews);
- Costs that are unallowable in accordance with applicable cost principles, and, therefore, cannot be charged to Federal awards; (view Federal Requirements);
- Proposed participant support costs that were re-budgeted to other cost categories without the required prior NSF written approval; alternatively, awardee staff-related costs charge against amounts allocated for participant support costs;
- Adequate supporting documentation for expenditures claimed as cost sharing (view cost sharing reviews).
Resources and References