SECTION 7

Questions You May Be Asked During an Audit

The tables on the following pages contain some of the questions typically asked during the different types of audits occurring at Stanford, along with an indication of the kinds of information which should be supplied in response. It is important to note that this is not an exhaustive list of all questions which might be asked or the kinds of information which might be requested.

 

CLAIMED COST AUDITS

	Typical Auditor’s Question	Information Needed	Where and How to Find It
1	Have any unallowable or unallocable costs been included in sponsor billings?	Support for the allowability and allocability of specific expenses sampled from billed costs (usually from sponsored function 1 and 2 accounts)	Descriptions of the reasons the expenses were incurred (which should be included in the on-line transaction records); documenta- tion that the PI has certified the expense as appropriate for charging to the sponsor (i.e., certified monthly expenditure statements) at the departmental level
2	Has all promised cost sharing been provided?	Match between proposed cost sharing and expenses captured in associated cost sharing accounts	On-line description of business purpose for all costs captured in cost sharing accounts; PI certification of monthly expenditure statements
3	Has Cost Accounting Standard (CAS) 502 been followed (i.e., consistent treatment of indirect and direct costs)?	Support that costs generally treated as indirect (e.g., administrative expenses) have not been direct-charged to award unless the project is "major" and the expenses were specifically budgeted and not disallowed by the sponsor	Properly documented and charged administrative costs either on-line or at departmental level
4	Have all expense transfers been processed in a timely manner and are costs allocable to account being charged?	Reasonable explanation of any late transfers and rationale for allocability to receiving account	Explicit documentation that PI has determined transferred expense to be an appropriate charge to receiving account; PI certified monthly expenditure statement at departmental level

 

 

INDIRECT COST (IDC) AUDITS

	Typical Auditor’s Question	Information Needed	Where and How to Find It
1	Have unallowable or unallocable costs been included in any IDC pools in which the government participates?	Support for the allowability and allocability of specific costs sampled from claimed pool costs (usually from function 1, or functions 3-9 accounts)	Information about the business purpose of costs, which should be included in on-line transaction records
2	Have space-related IDCs been properly allocated?	Support to demonstrate that organized research usage of space is correctly coded	SUFED, records of annual space usage inventory and GCRS validation, documenting the actual usage of rooms and buildings
3	Has all cost-sharing been reflected in the University research base?	Support that all committed cost-sharing (mandatory and voluntary) as well as project overruns, have been captured in cost-sharing accounts	Clear justification for all cost transfers from function 2 accounts to accounts in a cost sharing series (fund class 127 or function 2 departmental cost sharing)
4	Has any government-financed equipment been included in depreciation costs charged to the Government?	Documentation to show source of funding for claimed capital equipment depreciation	On-line and departmental procurement records showing correct use of capital equipment General Ledger (GL) codes

 

 

PREAWARD AUDITS

	Typical Auditor’s Question	Information Needed	Where and How to Find It
1	Have the correct staff benefit and indirect cost (IDC) rates been applied?	Currently approved benefit and IDC rates	SPO, or on-line in the Research Policy Handbook
2	Are the salary rates for the proposed staff and students current and accurate?	Current salary rates for proposed staff and students	CHRIS
3	If salaries are proposed for unnamed staff or students, can the proposed rates be supported?	Analyses of current salary rates for job class	Salary ranges for job classifications from HR or actual salaries being paid to staff or students in same classification
4	Do non-salary direct costs appear justified and reasonable?	Support for all non-salary costs proposed, in the form of price lists, prior experience on similar projects or the judgment of the PI	Written documentation in the files of the person(s) preparing the proposal budget

 

 

COMPLIANCE AND GENERAL CONTROLS AUDITS

	Typical Auditor’s Question	Information Needed	Where and How to Find It
1	Are all important internal controls exercised at the departmental level in place and operating as intended?	IAD Departmental Compliance Audit Program	Self-Check version of this audit program is available from the Stanford IAD Home Page, or contact IAD
2	Is Stanford’s labor billing system properly controlled?	Evidence of timely review of labor charges incurred through Lab Time Card and PAF systems	Signed and dated copy of Lab Time Card System Run One report; properly approved on-line PAFs; PI certified Monthly Expenditure Statements at departmental level
3	Are subcontractor expenses properly reviewed?	Evidence of review of allowability, allocability, reasonableness of subcontractor billings	Documentation of review of subcontractor billings; PI certified Monthly Expenditure Statements at departmental level
4	Are all expenses to State of California awards allowable per the terms of the award document (note that State awards sometimes have different award provisions)	Evidence of compliance with specific provisions of California awards (e.g., travel reimburse-ment limits may be lower than federal and Stanford limits; line item budget restrictions)	Specific mention in on-line transaction comments that California award provisions have been noted and observed

 

 

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