The expenditure of sponsored (and particularly federally-sponsored) funds is closely regulated and monitored. Each institution that has federally-sponsored research in excess of $500,000 annually is subject to federal audit. The federal agency assigned to audit responsibility depends upon the composition of that institution’s federal funding portfolio. The U.S. Department of Education (USDE) is the University of Idaho’s cognizant agency for audit. (Note that the cognizant agency with responsibility for negotiation with the University regarding fringe benefit and overhead rates is the Department of Health and Human Services (DHHS)).
The financial administration of sponsored funding is managed in accordance with three circulars issued by the Office of Management and Budget (OMB): Circular A-21 Cost Principals for Educational Institutions, Circular A-110 Uniform Administrative Requirements for Grants and Agreements With Institutions of Higher Education, and Circular A-133 Audits of States, Local Governments and Non-Profit Organizations. Note that while these circulars are specific to federal agencies and to grants, the basic principles are generally applied to contracts and agreements as well. Recent high-profile cases involving unauthorized expenditures or questionable accounting practices at some major research universities have led to increased requirements to document that the University is monitoring and enforcing proper stewardship of the funds that taxpayers provide for research.