Arizona State University inappropriately spent more than $1 million in research grant funds on things like scholarships, equipment and travel, a federal audit published Tuesday found.

The audit of National Science Foundation grant funds analyzed multiple grants the university received over two years. The scale of questioned spending far exceeds other universities that were audited in the past year.

And, if the audit’s findings hold up through the NSF's resolution process, the university may have to repay more than $1 million to the federal agency.

Already, ASU has agreed to pay back more than $200,000 in expenses questioned by the audit, the university’s response to the audit states.

But ASU is pushing back against the largest chunk of money that auditors raised concerns about, as well as several smaller ones.

ASU's research profile and ability to pull in major research money has grown steadily over the past decade, and the university has moved up in NSF's research expenditure rankings to No. 44.

The NSF is the second-largest sponsor of research at ASU, the university said.

The specific grants and people responsible for them are redacted throughout the audit, as are most other potentially identifying details.

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Audit analyzed two years of spending

The science foundation’s Office of Inspector General hired an outside firm to conduct an audit covering Jan. 1, 2014, to Dec. 31, 2016.

The audit examined about $5 million of $159 million spent by ASU during that period. Of that $5 million, auditors questioned nearly $1.2 million.

That means nearly one-quarter of the audited spending raised concerns, the highest percentage among the more than 10 universities who underwent similar routine audits in the past year.

“ASU did not always comply with all Federal, NSF, and ASU regulations and policies when allocating expenses to NSF awards,” the auditors wrote. “It needs improved oversight of the allocation of expenses to NSF awards to ensure costs claimed are reasonable, allocable, and allowable in accordance with those regulations and policies.”

In some instances, the auditors said the university lacked the proper oversight and controls for its expenses and how they are submitted to the NSF. The university has agreed to review its processes in some areas to see what may need improvement.

The biggest piece of spending in question was nearly $900,000 in unapproved transfers to other entities, which resulted when ASU gave NSF funds to follow researchers who left the university for other institutions.

Auditors also said they were concerned about nearly $130,000 in “inappropriately allocated expenses,” more than $50,000 in other expense problems, and more than $5,000 in “unreasonable” travel expenses.

The audit was conducted by Cotton & Company, and the NSF’s inspector general office said it doesn’t “express any opinion on the conclusions” in the audit.

The foundation and the university now enter a “resolution period,” where the two sides work on a mutually agreeable resolution to the audit’s findings.

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Grants transferred without approval

One category represents the majority of questionable spending found by the audit.

ASU didn’t request or receive approval to transfer a “significant amount” of a grant to two other organizations, the audit claims.

The university gave nearly $590,000 of a $2.3 million award to the Georgia Tech Research Corporation to allow the principal investigator associated with the award to continue their research.

The university also gave about $327,000 of that award to the University of Georgia for another investigator to continue their research after leaving ASU.

This represented a transfer of “a significant portion of the research, effort, and funding” to other organizations, something ASU should have sought NSF approval for.

In its rebuttal, ASU said it had the agreement of the appropriate NSF program director to make the awards, called “subawards,” to the other institutions. The scope of the work didn’t change, nor did the key people working on it, ASU wrote.

“Arizona State University was unequivocally acting with the understanding that we had the full support and approval of NSF for issuance of these two subawards,” ASU wrote.

Other spending raised questions

The audit also found multiple instances where ASU gave students scholarships or stipends for work that didn’t relate to the NSF awards where the money was billed.

The university also paid for various items that it should not have, including publication costs, supplies and travel costs.

In other instances, the audit found, ASU charged NSF awards for equipment that was minimally used for the grant purposes.

For example, the school billed more than $27,000 for “wearable eyetracking units” that weren’t received until after the grant ended.

In another instance, NSF was billed for more than $12,000 for two computers and a graphics card that would have only been used for a maximum of six days during the four-year grant period.

And separately, the school charged more than $3,500 to repair a centrifuge a team was using on grant-related research. But the audit said the full cost should not have been submitted because the repairs took place one day before the award’s four-year term ended.

Plus, the repair was for a “general piece of laboratory equipment that ASU had used, and would continue to use, to benefit multiple projects,” the audit said.

In total, the audit questioned nearly $130,000 on "inappropriately allocated expenses" during the time period, and directed ASU to repay those costs. ASU accepted the findings in this case and agreed to repay the funds.

Documentation lacking in some cases

For some expenses, the audit found ASU did not sufficiently document how money was used or how it related to the award.

In one instance, ASU charged NSF more than $2,000 to buy aprons for faculty, students and “industry members” for a “teambuilding activity that revolved around cooking.”

“Because ASU appears to have purchased these aprons to benefit an event that would be considered entertainment and/or a social activity, it should not have charged these costs to the NSF award,” the audit said.

ASU also charged $250 for bartending services at a grant-related conference, which isn’t an allowable expense.

In some instances, ASU exceeded the per-diem amount for hotels under its own policy, resulting in higher charges sent to NSF.

Some of the questioned spending involved regulations or policies the university didn’t properly follow.

For example, a researcher traveled overseas for a conference that was related to an NSF grant, but didn’t comply with the Fly America Act, a federal regulation that requires the use of U.S. airlines, and instead used a foreign airline, meaning more than $2,400 in travel could not be covered by NSF.

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ASU will pay some money back

Tamara Deuser, the chief operating officer of ASU’s Knowledge Enterprise Operations, said the audit was fairly routine, and the amount of money in question would likely be negotiated down “significantly” through the NSF’s resolution process.

She said the audit is evidence that government spending like major grants are “heavily scrutinized,” and all parties involved take seriously that grant money is spent where it should be.

While ASU is disputing some of the larger charges questioned, like the nearly $900,000 in subaward issues, there are other issues raised that may not be debated, Deuser said.

“There may be some transactions we decide are worth paying back to maintain our relationship with NSF,” she said.

The university won't come away from the audit without paying at least some money back, she said.

“I would just expect it to be very low compared to the number we started with,” Deuser said.

She said the audit's results should not affect the university's ability to receive NSF funding going forward.

Reach reporter Rachel Leingang by email at rachel.leingang@gannett.com or by phone at 602-444-8157, or find her on Twitter and Facebook.

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