IAD Letter

STANFORD UNIVERSITY
Internal Audit Department

Rick Moyer
Executive Director 20 June 2005

Since the frenzied controversy in the early 1990s regarding alleged overcharging of indirect costs, Stanford has received an unprecedented amount of attention by government auditors. At one time, Stanford had the distinction of being one of only a handful of universities with a suboffice of the Defense Contract Audit Agency (DCAA) located on its campus - the only one without a major defense laboratory. DCAA's Stanford office was closed in February 2005, but audits aimed at identifying mischarges and violations of government regulations in the sponsored research area are ongoing.

DCAA's efforts have in the past focused on compliance with regulations in the area of faculty effort reporting and validation. For example, in the late 1990s, DCAA began conducting "labor floorchecks" in which, on short notice, auditors interviewed individuals whose salary was being charged to government grants or contracts, attempting to validate the relationship between the charging of salaries and the expenditure of effort. In addition, audit attention continues to be given to direct charging of administrative expenses, cost sharing, observation of "periods of performance," equipment vesting and property administration, grant and contract close-out reviews, as well as the timely review and certification of all sponsored project expenditures.

As a result, perhaps more than any other major research university, Stanford has devoted significant resources to expanding and improving the effectiveness of its controls to ensure full compliance with government rules. This training program represents a hallmark of these efforts, and provides to all of our Principal Investigators an overview of regulatory requirements related to the management of project expenses.

I commend this information to your careful attention. Your understanding of and compliance with the principles discussed here is our front line of defense in the protection of your research funding, and our best hope of minimizing the future intrusion of auditors into the conduct of research at Stanford.

Please do not hesitate to contact me, or any member of my staff in the Internal Audit Department, if you have any questions in this regard.

Rick Moyer
Executive Director of Internal Audit
Stanford University

STANFORD UNIVERSITY Internal Audit Department
Rick Moyer Executive Director	20 June 2005
Since the frenzied controversy in the early 1990s regarding alleged overcharging of indirect costs, Stanford has received an unprecedented amount of attention by government auditors. At one time, Stanford had the distinction of being one of only a handful of universities with a suboffice of the Defense Contract Audit Agency (DCAA) located on its campus - the only one without a major defense laboratory. DCAA's Stanford office was closed in February 2005, but audits aimed at identifying mischarges and violations of government regulations in the sponsored research area are ongoing. DCAA's efforts have in the past focused on compliance with regulations in the area of faculty effort reporting and validation. For example, in the late 1990s, DCAA began conducting "labor floorchecks" in which, on short notice, auditors interviewed individuals whose salary was being charged to government grants or contracts, attempting to validate the relationship between the charging of salaries and the expenditure of effort. In addition, audit attention continues to be given to direct charging of administrative expenses, cost sharing, observation of "periods of performance," equipment vesting and property administration, grant and contract close-out reviews, as well as the timely review and certification of all sponsored project expenditures. As a result, perhaps more than any other major research university, Stanford has devoted significant resources to expanding and improving the effectiveness of its controls to ensure full compliance with government rules. This training program represents a hallmark of these efforts, and provides to all of our Principal Investigators an overview of regulatory requirements related to the management of project expenses. I commend this information to your careful attention. Your understanding of and compliance with the principles discussed here is our front line of defense in the protection of your research funding, and our best hope of minimizing the future intrusion of auditors into the conduct of research at Stanford. Please do not hesitate to contact me, or any member of my staff in the Internal Audit Department, if you have any questions in this regard.
Rick Moyer Executive Director of Internal Audit Stanford University