Grant Fraud

Published by the National Science Foundation, Office of Inspector General on 2003-09-30.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                                             I      NATIONAL SCIENCE FOUNDATION                             II
                                                     OFFICE OF INSPECTOR GENERAL
                                             15        OFFICE OF INVESTIGATIONS                         11

                                         !        CLOSEOUT MEMORANDUM                                   [I

Case Number: 101060011/i                           .-c                                   Page 1 of 2

                                         !                                                             11

      The National scienceii~oundation,Office of Inspector General (NSFIOIG) received an allegation
      fiom a former employee alleging that a compky 'had over billed on hotel and meal expenses.

      The National Science,Foundation (NSF) conducted a survey, which revealed that the company's
      accounting procedures, accounting system and supporting documentation did not provide
      detailed fmancial infiirmation as required for the grant. The survey also revealed that the
      company was unable,to distinguish costs that were indirect to the NSF grant fiom direct costs
      belonging to other programs. Estimated salaries and benefits charged to the grant failed 'to have
      supervisory signatures. Finally, travel expenditures revealed that the grant was charged for both
      per diem meal expenses and restaurant receipts for the same travel event.
      The company was directed to reestablish its accounting management system and reconstruct all
      accounting records to comply with grant management. The initial report contained errors
      therefore, a second request for information was sent to the company. The second report,revealed
      numerous discrepancies with the numbers they provided.
                                    !                                                          I'

      Members of our office traveled to the company to review records related to the NSF grants and
      interviewed employkes. The company's employees stated that the errors must have beeli typos or
      miscalculations.          ,
      A review of the Federal Cash Transaction Reports (FCTRs) revealed that one of the aw,pdhad
      been closed and the money was deobligated. However, further review revealed that an
      adjustment had been made. The company advised NSF that the cash disbursements were
      incorrectly reported on five FCTRs due to clerical errors.
                                I                                                              I

      Based on the compa,ny7slack of reliable accounting records and poor management of its NSF
      award funds, NSFIOIG recommended that the company be suspended or placed on a
      reimbursement agretment for all active awards to ensure the protection of federal funds. NSF/
      OIG strongly encouraged that the company hire a licensed and reputable CPA fum to evaluate all
      policies, procedures"and internal controls to ensure compliance with relevant federal financial
      management guidelines, terms and agreements of NSF awards. NSFIOIG also requested that the
      company provide written   documentation identiQing specific corrective actions.

        Footnote Redacted

                        Investigator                     Attomey        Supervisor                               AIGI
                            I                                                                 #I
  Sign / date

                                                                                       NSF OIG Form 2 (1 1/02)
                               !             NATIONAL SCIENCE FOUNDATION
                                              OFFICE OF INSPECTOR GENERAL                    I/ I
                                               OFFICE OF INVESTIGATIONS

                                         CLOSEO'CTT MEMORANDUM


Case Number:   101 060d I I                                                                 i
                                                                                       Page of 2

                             /j                                                              I
     As of 11 June 2003, the company was placed on a cost reimbursement plan. NSFIOIG plans to
     monitor this plan for one year and at the conclusion will determine whether conditions continue
     to exist that indicate an NSF audit should be recommended.

     On 12 September 20d3 the company advised that they had retained a new Certified Public
     Accounting f m with!expertise in government grant conditions and compliance with financial
     regulations. The company further advised that an A-133 single audit would be conducted in
     October 2003.
                           It                                                                 'I
     In response to our request  for corrective action, the company provided a current completed
     Financial ~anagementSystem Questionnaire, a copy of the company's travel expense policy and
     a revised time and effort template, which was modified to include recommendations made by the
     forensic auditor.
     2 ~ hBranch
                  Chief, Division of Grants and Agreements advised that to date,  -         1
     Inc. has been complying with the term and conditions of the reimbursement agreement.

     Accordingly, this case is closed.

      Footnote Redacted