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Grants Management: Smithsonian Astrophysical Observatory Can Improve the Closeout Process for Chandra Grants (OIG-A-18-06, May 9, 2018)

What OIG Did

The objective of this audit was to assess the effectiveness of the processes that SAO uses to close out grants under the National Aeronautics and Space Administration (NASA) Chandra contract. The audit focused on the timely submission of final reports and SAO’s controls over closing purchase orders and deobligation of funds from completed grants.


Background

SAO, located in Cambridge, Massachusetts, is the Smithsonian Institution’s largest recipient of grants and contracts from outside entities. Under a contract with NASA, SAO directs the science and flight operations of the Chandra X-ray Observatory, a telescope that detects X-ray emission from high-energy regions of the universe.

SAO has an annual funding level of approximately $55 million for its work with the Chandra X-ray Observatory, including $16 million for awards to eligible recipients under two types of grants: Chandra research grants and Einstein fellowship grants.

What OIG Found

The recipients of Chandra research and Einstein fellowship grants (Chandra grants) must submit final financial and performance reports to the Smithsonian Astrophysical Observatory’s (SAO) Subawards Section before these grants can be closed. The Subawards Section has a process to help ensure that the final reports needed to close Chandra grants are submitted by the due date specified in the grant. However, the Office of the Inspector General (OIG) found that final reports for 52 (or 70 percent) of the 74 expired grants that OIG reviewed were not submitted on time, and some were between 1 and 2 years late. In addition, the grant specialists responsible for closing out the grants frequently did not follow up with past due notices to grant recipients when the final reports were late or were inconsistent in their follow-up activities. SAO grant specialists said a heavy workload and limited staff contributed to these problems.

OIG also found that the Subawards Section’s process to close out Chandra grants generally did not include closing the purchase orders associated with these grants in the Enterprise Resource Planning Financials (ERP Financials), Smithsonian’s financial management information system. Specifically, OIG identified 3,655 purchase orders that were associated with Chandra grants and dated from September 2002 through June 2016. Only 124 of these purchase orders were closed or cancelled in ERP Financials. OIG’s analysis showed that 2,891 (or 79 percent) of these were for grants completed as of June 2016, but the purchase orders remained open in ERP Financials. Purchase orders that remain open in ERP Financials are at risk of being used inappropriately such as allowing unauthorized purchases. Furthermore, the Subawards Section did not always deobligate Chandra grant funds in a timely manner. OIG identified $960,894 that SAO had not deobligated in ERP Financials when other closeout procedures were performed on the grants. During this audit, SAO deobligated most of these funds. However, as of February 2018, $75,241 remained to be deobligated.





What OIG Recommended

OIG made three recommendations to improve the grant closeout process. Management concurred with all three recommendations.















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