Chapter 2: Fiscal Responsibilities

2.2 Audit Realities

The objectives of good research management are threefold:

  • Make best use of available funds to achieve research outcomes
  • Minimize the risk of fraud, waste and abuse of sponsor support
  • Meet the sponsor's requirements

Children's Hospital ensures good research management by implementing systems, processes and policies that support compliance and best practices, including Generally Accepted Accounting Principles (GAAP).

Audits focus on the direct costs of research, including the thousands of individual transactions in which PIs authorize the expenditure of sponsor funds for salaries, supplies and other costs of research. Each year, audits are performed internally and externally to ensure that Children's Hospital research is compliant with government regulations as well as following GAAP.

The two main annual audits for research are:

  • A-133 Audit. The largest audit that is performed at Children's Hospital focusing on sponsor funding is mandated by the federal Office of Management and Budget (OMB) Circular A-133 titled "Audits of State, Local Governments and Non-Profit Organizations". This audit focuses on financial management, compliance, and internal controls surrounding sponsored funds. The results of the audit are submitted to the federal government and to every institution that issues a subcontract to Children's Hospital where federal funds are involved.
  • Annual Financial Audit: In addition to the A-133 audit, an annual financial audit is performed by an independent accounting firm to ensure that Children's Hospital is following GAAP and reporting on internal controls.

There are also several unannounced audits throughout any given year as requested by sponsors and internal audits are conducted on a rolling basis by the Hospital's Compliance Office.

Preparing for audits and ensuring the Hospital remains in good financial standing are important responsibilities of the Department of Research Finance. While PIs are rarely impacted directly by these audits, it is important to recognize that many of our institutional policies and procedures are directly related to ensuring that audits proceed with minimal disruption to daily research activities.

Recent audits and findings at other institutions have highlighted particular areas where regulations and compliance can be complex and sometimes difficult. Auditors focus on these key areas which are highlighted throughout this training. You can also check the "more information" tab for examples of common audit scenarios.

Ask the Experts

Steve Wiley
Department of Research Finance

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CHOP Research Resources

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More Information

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