Audit reports ASU may have misspent over $1 million in federal research funds

The audit said that ASU improperly spent money on equipment, travel expenses and scholarships

ASU may have misspent over $1 million in research grant funding provided by the National Science Foundation, according to a federal audit published Tuesday detailing the allocation of the money. 

The audit, which analyzed over $4.9 million in funding awarded to ASU, highlighted multiple concerns from the NSF regarding federal, NSF and ASU regulations and policies. 

Among the concerns are that ASU did not obtain NSF approval before transferring funding to other institutions and that some stipends or scholarships awarded to students came from NSF funds when they shouldn’t have. 

The audit was conducted by audit and accounting firm Cotton & Company LLP and evaluated charges that ASU made to its sponsored agreements with the NSF between January 2014 and the end of December 2016. 

The specific grants and names of individuals associated with them are redacted throughout the report, along with other potentially identifying details. 

ASU agreed with some of the findings in the audit, such as that the University "did not allocate expenses to NSF awards based on the relative benefits received by the awards," which means that the University sometimes used funding from certain NSF awards for the wrong purposes like awarding stipends or paying for materials and equipment. 

The University agreed to repay over $200,000 in expenses questioned by the audit for such errors.

But the University "disagreed or partially disagreed" with other findings. In one instance, ASU objected to the notion that it had improperly transferred funds to another university to allow some personnel to continue their research after leaving ASU. 

According to the audit, ASU paid about $588,000, or about 25% of the budget of a specific award, to Georgia Tech to allow the principal investigator to continue conducting research after transferring out of ASU. The University made another payment of about $327,000 to the University of Georgia for similar purposes.

The auditors recommended that ASU repay the questioned costs of $931,811 in regard to these two instances, which is one of the larger charges that it requested the University amend.

But ASU pushed back, saying it did not concur with the premise of the request.

“Based on the fact that there were no changes in the proposed scope of work nor in the key personnel conducting the work we believe it is appropriate to characterize this as a compliance finding with no questioned costs,” ASU said in a response to that finding. 

The audit also highlighted improper use of smaller amounts of funding for non-research related purposes, including "unallowable entertainment-related expenses." 

In one instance, the audit reports that ASU spent about $2,000 to purchase aprons for a team-building activity revolving around cooking, and in another, ASU spent $250 on bartending services for a grant-related conference. 

The auditors wrote that ASU needs "improved oversight of the allocation of expenses of NSF awards" to ensure that the awards are used for their designated purposes. 

In an emailed statement, an ASU spokesperson said that the audit was "completely normal and routine," and that ASU welcomes the oversight of how the funding is spent.

The spokesperson added that the University is currently in "step one of a several step process" with this audit, and that the first step lies with the recently published report. 

"The outside firm highlights things they have questions about," the spokesperson said in the emailed statement. 

The spokesperson also said that the transferring of funds to another university was not unusual. 

"An ASU researcher took a new job at Georgia Tech, and so we transferred his grant with him," the spokesperson said. "This is incredibly common and commonsense. And, NSF was aware of it. The outside auditing firm was just raising the issue as sort of a heads-up for the NSF."

The University and the NSF are now in a six-month resolution period, during which they can work together to develop a "mutually agreeable resolution" of audit findings, according to the report. During this time, the University can negotiate the amount of money the NSF has requested it repays. 

"We look forward to continuing to work with the NSF in this process, and applaud its stringent oversight of taxpayer dollars," the spokesperson said.

The NSF did not respond to requests for comment at the time of publication.

This story is developing and will be updated as more information becomes available. 


Reach the reporter at Vandana.Ravikumar@asu.edu and follow @vandana_rav on Twitter. 

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