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Audit (A-04-05-01014)

Review of Administrative and Clerical Costs at Duke University for the Period October 1, 2002, Through September 30, 2004

Executive Summary

Based on our two samples, consisting of 114 charges for administrative and clerical salaries and 120 charges for other administrative costs, we estimate that Duke University (the University) claimed approximately $1.7 million in unallowable charges as direct costs to grants, contracts, and other agreements with HHS components during fiscal years 2003 and 2004.

We recommended that the University (1) refund $1.7 million to the Federal Government and (2) revise its policies as needed to comply with the requirements of OMB Circular A-21 and ensure consistent treatment of administrative and clerical costs.

The University partially agreed with our first recommendation and disagreed with our second recommendation. Although the University agreed that some of the questioned costs were not supported with documentation, it stated that most of the questioned costs were allowable and that we had not appropriately applied the allowability standards. Further, the University did not believe that it was appropriate to estimate unallowable costs using a statistical sample. The University stated that its policies complied with Federal requirements.

The University provided additional documentation for 55 unallowable items. Based on a review of this documentation, we concluded that the University had adequately supported 24 of the 55 items, and, accordingly, we revised the total amount recommended for recovery from $2.4 million to $1.7 million. The University's assertions that we had misinterpreted applicable criteria and should not have extrapolated our findings based on statistical sampling techniques, however, did not support the University's assertion that any further charges were allowable.

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