VAN ANDEL INSTITUTE AND AFFILIATESNon-Profit

Assistance Listing, Federal Agency, and Program Name – 93.866, U.S. Department of Health and Human Services, Aging Research – Role of Desumoylase SENP6 in Joint Aging and Osteoarthritis Development, Research and Development Center Federal Award Identification Number and Year – R01 AG061086 Pass through Entity – N/A – direct award Finding Type - Significant deficiency and material noncompliance with laws and regulations Repeat Finding - No Criteria – In accordance with 2 CFR 200.405, costs are allocable to a particular federal award if the goods or services involved are chargeable or assignable to that federal award or cost objective in accordance with relative benefits received. Costs must be incurred specifically for a federal award and if costs benefit multiple grants, the costs can be allocated between federal and non-federal grants using a reasonable allocation method. Allocable costs can be requested for reimbursement by the federal agency. Condition – VAIA’s controls requiring investigators to monitor expenses, ensure that costs benefitting multiple projects are allocated using a reasonable methodology, as required by Uniform Guidance, and ensure that allocation errors are timely corrected were not supported by adequate training of investigators and their delegates. Questioned Costs – N/A Identification of How Questioned Costs Were Computed – N/A Context - In December of 2023, VAIA identified it did not properly calculate an allocation of certain costs incurred that benefited both federal and institutionally funded projects. VAIA management performed a look back analysis of these costs and determined that only 50 percent of the costs benefited the federal grant activities instead of the 100 percent originally reported to and reimbursed by the federal agency, resulting in excess draws of approximately $248,000, including approximately $30,000 for the year ending November 30, 2023. The approximate $30,000 includes approximately $16,000 of direct costs and approximately $14,000 of indirect using VAIA’s negotiated rate. VAIA notified the funding agency of this error and reimbursed the federal agency in February 2024. The amount reported on the accompanying Schedule of Expenditures of Federal Awards for the year ended November 30, 2023 does not include any of these unallowable charges. Cause and Effect – VAIA’s training of investigators and their delegates regarding expense monitoring, allocation of costs benefitting multiple projects using reasonable methodologies, and the timely correction of allocation errors was inadequate and resulted in VAIA drawing down funds to which they were not entitled. Recommendation – We recommend that VAIA review its procedures and controls to ensure that principal investigators over grants funds are properly trained and knowledgeable regarding allocation of expenditures between programs. Views of Responsible Officials and Corrective Action Plan - VAIA requires laboratory personnel to review and approve monthly Vivarium transactions by protocol, since investigators and their delegates are the only individuals at VAIA in a position to know with certainty how Vivarium costs proportionately benefit multiple funding sources. Following VAIA’s customary review and approval process, VAIA’s internal controls subsequently identified an improperly calculated allocation. Taking swift action, the allocation was corrected, and funds were returned to the Federal Government within 90 days of identifying improper allocation as required by NIH Grants Policy Statement section 7.5. VAIA management disclosed this correction to our external auditors and the award’s Grant Management Officer. VAI’s corrective action plan for Vivarium charges includes the following: - Deploying an automated front-end solution that requires a protocol review and approval by our IACUC office before a protocol is made available for use by individual sponsored projects. - Evaluating additional opportunities to utilize technology to enhance the control environment, particularly with respect to cost allocation of vivarium charges, - Ensuring proper allocation through three meetings per laboratory in 2024 to review Vivarium costs charged to federally sponsored projects. - Providing additional continuing education on cost allocation principles for those making allocation determinations

Assistance Listing Number, Federal Agency, and Program Name ? 93.395, U.S. Department of Health and Human Services, Cancer Treatment Research, Research and Development Cluster; 93.173, U.S. Department of Health and Human Services, Research Related to Deafness and Communication Disorders, Research and Development Cluster; 93.393, U.S. Department of Health and Human Services, Cancer Cause and Prevention Research, Targeting DNA Methylation and Cancer Epigenome, Research and Development Cluster Federal Award Identification Number and Year ? R01 CA255506, R01 CA268440, R01 DC016519, R35 CA209859 Pass through Entity ? N/A ? direct award Finding Type ? Significant deficiency Repeat Finding No Criteria ? In accordance with 45 CFR 75.305 2 (b), for nonfederal entities other than states, payment methods must minimize the time elapsing between the transfer of funds from the United States Treasury or the pass through entity and the disbursement by the nonfederal entity whether the payment is made by electronic funds transfers, or issuance or redemption of checks, warrants, or payments by other means. In accordance with 45 CFR 75.305 (3), when the reimbursement method is used, the federal awarding agency or pass through entity must make payment within 30 calendar days after receipt of billing, unless it is believed the request to be improper. Condition ? Controls in place did not minimize the time elapsing between the transfer of funds and disbursement to VAIA?s subrecipients. Questioned Costs None Identification of How Questioned Costs Were Computed ? Not applicable as there are no questioned costs. Context ? In 4 out of 7 transactions sampled for testing, it took VAIA greater than 30 calendar days to make payment to a subrecipient after receipt of billing. Cause and Effect ? For a period of the year, the controls in place were not followed in the normal timeline, resulting in VAIA not making payments within 30 calendar days to its subrecipients, after receipt of billing. It took VAIA between 41 and 75 days to make payment to its subrecipients. Late payments could impact the subrecipients abilities to continue the programmatic activities if not paid timely. Recommendation ? We recommend that VAIA review its procedures and controls to ensure disbursement of funds to its subrecipients is consistent with laws and regulations. Views of Responsible Officials and Corrective Action Plan Prior to the auditor?s testing that resulted in this finding, the Office of Sponsored Research (OSR) had created a new Sponsored Research Administrator role dedicated, in part, to proactive subrecipient monitoring and invoicing. This individual reports directly to the Director of Sponsored Research and meets with the Director monthly to monitor the subaward invoicing and routing process. Subaward invoicing activities were fully transitioned to the Sponsored Research Administrator (SRA) in October 2022. As part of the transition to this new SRA role, existing subaward checklists and process documentation were reviewed and improved. OSR also updated the subrecipient payment process document to include an explicit statement indicating invoices must be paid within 30 days of receipt unless the invoice is reasonably believed to be improper. Additional planned corrective actions include: - Further refining policies and procedures and roles and responsibilities related to subrecipient monitoring and invoice payments. - Implementing a formal backup plan for subrecipient payments to ensure timely payment during the absence or work overload of the SRA. - Weekly reporting on subaward invoices and payments by the SRA to OSR leadership. - Updating OSR?s invoice tracking tools to include `Invoice Date ? Received? and `Invoice Date ? Paid? fields to highlight aged invoices and enable expedited resolution plans. - Providing continuing education for the OSR team on subrecipient compliance and regulatory timelines.