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Institutional Compliance Institutional Compliance PlansPlans
Why before is better than afterWhy before is better than after
Scott J. Moore, Ph.D., J.D.Investigative Scientist
Offices of Inspectors General
• Provide leadership and coordination to implement policies to:• Prevent and detect fraud, waste, abuse• Promote economy, efficiency, effectiveness• Conduct investigations, audits, inspections, reviews of agency programs (funded activities), operations
• Features:• Independent of agency management • Jurisdiction (NSF activities, programs, operations)• Staff of experts: administrators, attorneys, auditors,
criminal investigators, and scientists
The BasicsThe Basics
A system of responsible administrative, financial, and A system of responsible administrative, financial, and research management and oversight, creating an research management and oversight, creating an environment in which employees can operate with integrity. environment in which employees can operate with integrity.
May be implemented voluntarilyMay be implemented voluntarily
oror
mandated as part of negotiated resolutionmandated as part of negotiated resolution
Does your organization have what Does your organization have what it takes?it takes?
LeadershipLeadership - commitment to do the right thing - commitment to do the right thing
Management Management - ethical environment - ethical environment Focus on high risk areasFocus on high risk areas Provide systematic monitoring, auditing, oversight Provide systematic monitoring, auditing, oversight
TrainingTraining - Communicate facts and expectations - Communicate facts and expectations
ActionAction - Early detection and correction of problems - Early detection and correction of problems
ReportingReporting – Relay information regarding wrongdoing – Relay information regarding wrongdoing
Effective Compliance Program Elements*Effective Compliance Program Elements*
a/k/a 7 Habits of Highly Effective Organizations a/k/a 7 Habits of Highly Effective Organizations
Reasonable Compliance Standards and ProceduresReasonable Compliance Standards and Procedures Specific High-level Personnel ResponsibleSpecific High-level Personnel Responsible Due Care in Assignments with Discretionary AuthorityDue Care in Assignments with Discretionary Authority Effective Communication of Standards and ProceduresEffective Communication of Standards and Procedures Establish Monitoring and Auditing Systems and Reporting System Establish Monitoring and Auditing Systems and Reporting System
(whistleblowing without fear of retaliation)(whistleblowing without fear of retaliation) Consistent Enforcement of Standards through Appropriate Mechanisms Consistent Enforcement of Standards through Appropriate Mechanisms
(including failure to detect)(including failure to detect) Respond Appropriately to the Offense (reporting to law enforcement, modify Respond Appropriately to the Offense (reporting to law enforcement, modify
program, prevention)program, prevention)
*Federal Sentencing Guidelines*Federal Sentencing Guidelines
U.S.S.G. §§ 8B2.1, 8C2.5(f), & 8D1.4(c)(1) (11/1/04)U.S.S.G. §§ 8B2.1, 8C2.5(f), & 8D1.4(c)(1) (11/1/04)
Risk Risk
Auditors Auditors
Squeaky WheelsSqueaky Wheels
WhistleblowersWhistleblowers
InvestigatorsInvestigators
AREARE your friends your friends
(and how to find it)(and how to find it)
One University’s Risk AssessmentOne University’s Risk AssessmentHeat MapHeat Map
IMPACT
High
Moderate
Low
Moderate HighLow
Auxiliary Services
Deferred Maintenance
Technology Licensing
Off-Campus Facilities
Privacy of Information
Human Resource Management
Construction Management
Endowment
Contracts & Grants Management
Property Management
Financial Reporting
PR
OB
AB
ILIT
Y
Acquisition
Environmental, Health & Safety
Immigration & Visa Processing
Executive Benefits
Security
Human Subjects
Student Affairs
Animal Subjects
Gifts & Restricted Funds
Finding RiskFinding Risk
What needs more review?What needs more review?
Where’s your itch? Where’s your itch?
What’s autonomous?What’s autonomous?
Where’s the black hole?Where’s the black hole?
Are your warning bells ringing when you Are your warning bells ringing when you
hear someone else’s problems?hear someone else’s problems?
What gives you that What gives you that
“ “Gosh, gotta check Gosh, gotta check thatthat right away” feeling? right away” feeling?
Risk AreasRisk AreasAllowable activities supportedAllowable activities supported
Allowable costs and cost principlesAllowable costs and cost principles
Cash managementCash management
Eligibility for awardsEligibility for awards
Equipment and real property managementEquipment and real property management
Period of availability of fundsPeriod of availability of funds
Procurement suspension and debarmentProcurement suspension and debarment
Program incomeProgram income
Participant supportParticipant support
Timely required reportingTimely required reporting
Special tests and provisions Special tests and provisions
Holding accountsHolding accounts
Summer salariesSummer salaries
Other Risk AreasOther Risk AreasLack of adequate documentation Lack of adequate documentation
travel documentation travel documentation cost-sharingcost-sharing records retentionrecords retention credit card receipts do not constitute adequate documentation credit card receipts do not constitute adequate documentation
Time and effort reporting and procedures Time and effort reporting and procedures
Separate financial administration for each award, no poolingSeparate financial administration for each award, no pooling
Abuse or violations of institutional conflict of interest disclosure Abuse or violations of institutional conflict of interest disclosure policies and procedures.policies and procedures.
Updated/adequate RM policies and proceduresUpdated/adequate RM policies and procedures
Subawardee monitoring (and A-133s)Subawardee monitoring (and A-133s)
Residual funds Residual funds
Oversight activities (Conflict of Interest, Humans, Animals)Oversight activities (Conflict of Interest, Humans, Animals)
What do you look like?What do you look like?Funding CharacteristicsFunding Characteristics
Grants, contracts and with what entityGrants, contracts and with what entity
Organizational ProfileOrganizational ProfileDecentralizedDecentralized
Control ProfileControl ProfileRainmakers, President, staffRainmakers, President, staff
Audit ProfileAudit ProfileHow easily can you get down into the weeds?How easily can you get down into the weeds?
Activities LocationActivities LocationOn-site, off-site, another country, LTER, SBIR, SGEROn-site, off-site, another country, LTER, SBIR, SGER
Activity DescriptionActivity DescriptionAnimals, humans, collection, collaboration, toxins, radiation; staffing characteristicsAnimals, humans, collection, collaboration, toxins, radiation; staffing characteristics
““Junior, independent” or “senior and wise”Junior, independent” or “senior and wise”
Training ProfileTraining ProfileComprehensive administrative, financial, oversight, fit the issuesComprehensive administrative, financial, oversight, fit the issues
31%
24%
20%
13%
9%3%
Theft/Embezzlement (31%)
False or Fraudulent Statements (24%)
Miscellaneous* (20%)
False or Fraudulent Claims (13%)
Conflicts of Interest (9%)
Computer Fraud (3%)
Common Types of Civil/Criminal Allegations
*Includes mail fraud, false identification insurance fraud, impersonating a government officer, and copyright infringement.
Data gathered from NSF OIG closed Investigative files (1990 – Present).
Investigation Outcomes
32%
21%
11%8%
8%
6%
6%
4%
4%
Unsubstantiated Allegations* (32%)
Restitution (21%)
Referral (11%)
Termination of Grant (8%)
Miscellaneous** (8%)
Incarceration/Probation (6%)
Termination of Employment (6%)
Civil Action (4%)
Debarment (4%)
* Allegation was preliminarily investigated but found to be insufficiently material to warrant further action.** Includes monitoring, enacting new guidelines, letters of reprimand, etc.Data gathered from NSF OIG closed Investigative files (1990 – Present).
Common Issues Common Issues
Cost ShareCost Share
Program IncomeProgram Income
Subrecipient MonitoringSubrecipient Monitoring
Effort ReportingEffort Reporting
Participant SupportParticipant Support
TravelTravel
Signature ResponsibilitiesSignature Responsibilities
““GRANTS GONE BAD”GRANTS GONE BAD”
Proposal SignaturesProposal Signatures
Compliance with award terms and conditions Compliance with award terms and conditions
Accuracy and completeness of statementsAccuracy and completeness of statements
COI PolicyCOI Policy
Drug-Free WorkplaceDrug-Free Workplace
Debarment and SuspensionDebarment and Suspension
Lobbying (proposal >$100,000)Lobbying (proposal >$100,000)
Certification for Authorized Organizational Representative or Individual Applicant:
By signing and submitting this proposal, the individual applicant or the authorized official of the applicant institution is: (1) certifying that statements made herein are true and complete to the best of his/her knowledge; and (2) agreeing to accept the obligation to comply with NSF award terms and conditions if an award is made as a result of this application.
Willful provision of false information in this application and its supporting documents or in reports required under an ensuring award is a criminal offense (U. S. Code, Title 18, Section 1001).
In addition, if the applicant institution employs more than fifty persons, the authorized official of the applicant institution is certifying that the institution has implemented a written and enforced conflict of interest policy that is consistent with the provisions of Grant Policy Manual Section 510; that to the best of his/her knowledge… . . .
Debarment Certification
Certification Regarding Lobbying
Certification for Contracts, Grants, Loans and Cooperative AgreementsAUTHORIZED ORGANIZATIONAL REPRESENTATIVE SIGNATURE DATE
Page 2 of 2
No Problems, Right?No Problems, Right?
““Well, I’m in the clear. I certainly Well, I’m in the clear. I certainly didn’t KNOW that certification was didn’t KNOW that certification was
false when I signed it.”false when I signed it.”
31 U.S.C. 3729(b)31 U.S.C. 3729(b)
1) acts with 1) acts with actual knowledgeactual knowledge of the information; of the information; 2) acts in 2) acts in deliberated ignorancedeliberated ignorance of the truth or falsity of of the truth or falsity of
the information; or the information; or 3) acts in 3) acts in reckless disregardreckless disregard for the truth or falsity of the for the truth or falsity of the
information.information.4) And, 4) And, no proof of specific intentno proof of specific intent to defraud is required. to defraud is required.
Knowing and Knowingly Defined
Examples of Misused FundsExamples of Misused Funds
1.1. Grant FraudGrant Fraud
2.2. EmbezzlementEmbezzlement
3.3. Multi-Agency FraudMulti-Agency Fraud
4.4. False CertificationsFalse Certifications
5.5. Overcharging GrantsOvercharging Grants
Case Study 1: “No” Means “No”Case Study 1: “No” Means “No”
NSF OIG conduct a Proactive Review NSF OIG conduct a Proactive Review
Proactive Review identified questionable entries in Proactive Review identified questionable entries in General Ledger of a small institutional awardee.General Ledger of a small institutional awardee.
Investigation initiatedInvestigation initiated
Obtained and reviewed all financial records Obtained and reviewed all financial records
Identified improper drawdownIdentified improper drawdown
Revealed $27K expenditures incurred Revealed $27K expenditures incurred afterafter expiration of awardexpiration of award
OIG investigation of those expenditures revealed thatOIG investigation of those expenditures revealed that PI requested award extension to spend remaining fundsPI requested award extension to spend remaining funds Request was denied 3X by Program OfficerRequest was denied 3X by Program Officer
Nevertheless, Nevertheless, afterafter award expiration, PI drew down and spent the award expiration, PI drew down and spent the $27K on post-expiration expenses$27K on post-expiration expenses
PI falsely characterized drawdown as reimbursementsPI falsely characterized drawdown as reimbursements PI filed Final Project Report falsely reflecting program completionPI filed Final Project Report falsely reflecting program completion PI and awardee made false statements to OIG – claimed lack of PI and awardee made false statements to OIG – claimed lack of
knowledge regarding Program Officer’s 3 denials of requestknowledge regarding Program Officer’s 3 denials of request
Case Study 1: “No” Means “No” (cont)Case Study 1: “No” Means “No” (cont)
Case Study 1: “No” Means “No” (cont)Case Study 1: “No” Means “No” (cont)
Presented case to AUSA (civil and criminal)Presented case to AUSA (civil and criminal)
Proceeded as civil false claims caseProceeded as civil false claims case
DOJ settled case DOJ settled case
Imposed a 3-year Compliance PlanImposed a 3-year Compliance Plan
NSF OIG recovered $52K from institutionNSF OIG recovered $52K from institution
NSF debarred PI for 5-yearsNSF debarred PI for 5-years
A company received a grant from NSFA company received a grant from NSF
A source provided information to NSF OIG, alleging that the A source provided information to NSF OIG, alleging that the company charged time to the NSF grant for work she did not company charged time to the NSF grant for work she did not perform perform
NSF OIG opened investigationNSF OIG opened investigation Interviewed company officials Interviewed company officials Interviewed employeesInterviewed employees Obtained and reviewed recordsObtained and reviewed records
Case 2:Case 2: “ “Just Charge It To The Grant Just Charge It To The Grant With Money In It” With Money In It”
Case 2:Case 2: “ “Just Charge It . . .” (cont)Just Charge It . . .” (cont)
OIG investigation revealedOIG investigation revealed some of the time charged to the grant should have been some of the time charged to the grant should have been
charged to overhead charged to overhead the company shifted charges between various federal grants the company shifted charges between various federal grants
as money was availableas money was available the company charged grants for proposal preparation the company charged grants for proposal preparation the company charged grants for costs unrelated to the grantthe company charged grants for costs unrelated to the grant NSF was overcharged $370,000NSF was overcharged $370,000 other federal agencies were overcharged $970,000other federal agencies were overcharged $970,000
Case 2:Case 2: “ “Just Charge It . . .” (cont)Just Charge It . . .” (cont)
Presented case to AUSAPresented case to AUSA
Proceeded as civil false claims caseProceeded as civil false claims case
DOJ settled case DOJ settled case $1.55M $1.55M 4-year Compliance Plan imposed4-year Compliance Plan imposed
Case 3: Know what you are signingCase 3: Know what you are signing
Allegation received:Allegation received: A Principal Investigator complained that he was not A Principal Investigator complained that he was not
receiving the cost-share monies he was promised by receiving the cost-share monies he was promised by the university the university
Investigation opened:Investigation opened: Request and review financial records for grantRequest and review financial records for grant Travel to universityTravel to university Interview relevant individualsInterview relevant individuals Coordinate with Department of JusticeCoordinate with Department of Justice
Case 3: Know what you are signing Case 3: Know what you are signing (cont)(cont)
Investigation revealed:Investigation revealed: the university did not have a system the university did not have a system
for tracking cost-sharefor tracking cost-share could not document costs submitted could not document costs submitted
to NSF as cost-share to NSF as cost-share could not document costs claimed could not document costs claimed
as direct expenses as direct expenses the university had submitted the university had submitted
numerous false cost-share numerous false cost-share certificationscertifications
Case 3: Know what you are signing Case 3: Know what you are signing (cont)(cont)
Presented case to AUSAPresented case to AUSA
Proceeded as civil false claims caseProceeded as civil false claims case
DOJ settled case DOJ settled case
Imposed a 5-year Compliance PlanImposed a 5-year Compliance Plan
NSF OIG recovered $1.4MNSF OIG recovered $1.4M
Case 4: Plagiarizing the ThesisCase 4: Plagiarizing the Thesisa/k/a Watch out for the CPS and COI a/k/a Watch out for the CPS and COI
PI submitted his student’s thesis chapter as an PI submitted his student’s thesis chapter as an SBIR-1 proposal ($100K, 6 months) SBIR-1 proposal ($100K, 6 months) from a non-existent company.from a non-existent company.
When awarded, PI used the money to When awarded, PI used the money to pay his child’s tuition at an ivy leaguepay his child’s tuition at an ivy leagueinstitution and other personal expenses.institution and other personal expenses.
PI copied the thesis into his final reportPI copied the thesis into his final reportand proposal for the SBIR-2 award ($500K).and proposal for the SBIR-2 award ($500K).
University notifies OIG of plagiarism allegationUniversity notifies OIG of plagiarism allegation PI denied everything. PI denied everything.
Case 4: Plagiarizing the ThesisCase 4: Plagiarizing the Thesisa/k/a Watch out for the CPS and COI a/k/a Watch out for the CPS and COI
NSF suspended the award NSF suspended the award OIG issued subpoenas.OIG issued subpoenas.
OIG referred the case to OIG referred the case to DOJ, who accepted it for DOJ, who accepted it for prosecutionprosecution..
Case 4: Plagiarizing the ThesisCase 4: Plagiarizing the Thesisa/k/a Watch out for the CPS and COI a/k/a Watch out for the CPS and COI
At a meeting with DOJ, the professor through his attorneys At a meeting with DOJ, the professor through his attorneys agreed agreed
1)1) Plead guilty to a criminal count (1001) Plead guilty to a criminal count (1001) but wanted to avoid jailbut wanted to avoid jail
2)2) Would pay $240,000Would pay $240,0003)3) No action against wifeNo action against wife
NSF OIG recommended RM NSF OIG recommended RM finding and debarment. finding and debarment. Professor and NSF settled for Professor and NSF settled for 3 years voluntary exclusion from Federal funding.3 years voluntary exclusion from Federal funding.
Could a proactive compliance plan have prevented the loss?Could a proactive compliance plan have prevented the loss?
ReferencesReferenceshttp://oig.hhs.gov/fraud/complianceguidance.htmlhttp://oig.hhs.gov/fraud/complianceguidance.html
http://www.nacua.org/documents/FedSentencingGuidelines.pdfhttp://www.nacua.org/documents/FedSentencingGuidelines.pdf
http://www.ussc.gov/corp/Murphy1.pdfhttp://www.ussc.gov/corp/Murphy1.pdf
http://www.usdoj.gov/dag/cftf/corporate_guidelines.htmlhttp://www.usdoj.gov/dag/cftf/corporate_guidelines.html
Grant, G. Odell, G., and Forrester, R; Grant, G. Odell, G., and Forrester, R; Creating Effective Research Compliance Creating Effective Research Compliance Programs in Academic InstitutionsPrograms in Academic Institutions; Academic Medicine, Vol 74, No. 9, September ; Academic Medicine, Vol 74, No. 9, September 1999, p. 951. 1999, p. 951.
Jordan, K. and Murphy, J.; Jordan, K. and Murphy, J.; Compliance Programs: What the Government Really Compliance Programs: What the Government Really Wants.Wants. p. 121. p. 121.
Managing Externally funded Research Programs; A Guide to Effective Management Managing Externally funded Research Programs; A Guide to Effective Management Practices; Council on Government Relations, June 2005Practices; Council on Government Relations, June 2005
DHHS Draft OIG Compliance Program Guidance for Recipients of PHS Research DHHS Draft OIG Compliance Program Guidance for Recipients of PHS Research Awards; Fed. Reg. Monday Nov 28, 2005, vol. 70#227, p:71312 Awards; Fed. Reg. Monday Nov 28, 2005, vol. 70#227, p:71312
Ingram, Ginna; Ingram, Ginna; Corporate Compliance Programs: More Than Window DressingCorporate Compliance Programs: More Than Window Dressing. . Journal of Public Inquiry, Spring/Summer 2007, p. 5. Journal of Public Inquiry, Spring/Summer 2007, p. 5. http://www.ignet.gov/randp/sp07jpi.pdfhttp://www.ignet.gov/randp/sp07jpi.pdf
Contact InformationContact Information
www.oig.nsf.gov
Hotline:1-800-428-2189Hotline:1-800-428-2189E-mail:[email protected]:[email protected]:(703) 292-9158Fax:(703) 292-9158
Mail:Mail: 4201 Wilson Boulevard 4201 Wilson Boulevard Suite II-705Suite II-705 Arlington, VA 22230 Arlington, VA 22230 ATTN: OIG HOTLINEATTN: OIG HOTLINE
Scott J. Moore, Ph.D., J.D.Scott J. Moore, Ph.D., J.D.Investigative ScientistInvestigative [email protected]