Audit of Costs Claimed for Reimbursement by East Carolina University Under National Library of Medicine Contract No. N01-LM-9-3541 - September 30, 1999 Through September 30, 2003

EXECUTIVE SUMMARY:

The objective of this audit was to determine whether costs claimed for reimbursement for the 4 years ended September 30, 2003 were allowable under terms of the contract and Federal regulations.  Our audit showed that the contract was charged for costs that were neither allowable nor reasonable, including:  salaries, wages and fringe benefits of employees who did not actually work on the project; equipment that was not and would not ever be used for project operations; and payments to firms with business relationships to the Co-Principal Investigator, even though the services were either not rendered or were not related to project operations.  Of the $4,070,528 claimed for reimbursement, we recommend $565,820 for financial adjustment and set aside $1,786,568 for adjudication.  The University has initiated a number of significant actions to enhance their internal and management controls over federally funded projects and will negotiate a settlement of our financial recommendations with the National Library of Medicine.