July 6, 2017 MOREHOUSE COLLEGE AWARD #HRD SETTLEMENT AGREEMENT AUDIT SUPPLEMENT

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1 July 6, 2017 Ms. Lee Stokes, CFE Investigative Attorney National Science Foundation Office of Inspector General 4201 Wilson Blvd. Arlington, VA RE: MOREHOUSE COLLEGE AWARD #HRD SETTLEMENT AGREEMENT AUDIT SUPPLEMENT Dear Ms. Stokes, Morehouse College is pleased to submit this supplement to its annual report for the period of July 1, 2015 through June 30, 2016 concerning its Ethics and Compliance Program pursuant to the August 1, 2011 Settlement Agreement ( Agreement ) between the College and the National Science Foundation ( NSF ). Included in this supplement is a copy of the independent audit report of the College s Ethics and Compliance Program completed by Banks, Finley, White & Co. ( BFW ) (Attachment A). During its independent audit, BFW made a finding regarding improper room and board charges for the NSF NOYCE STEM Award. The College is addressing this error by: 1) the adoption of a written protocol implementing a process requiring oversight of the appropriate budget expenditures through the incorporation of post-award meetings with the Principal Investigator ( PI ) and Budget Analyst; 2) a quarterly review of and expenditure analysis; and 3) a requirement for joint budget approval by the PI and Budget Analyst before posting to Banner System (ERP). This new process will be reinforced through continued training for Principal Investigators. Also, as part of this supplement, the College wishes to modify its statement in section 5 of its Annual Report to correspond with revisions to section 12(3) of the internal auditor s FY2016 Efficacy of the Compliance Program Audit Report No concerning subcontractors during this reporting period (Attachment B). There were, in fact, two subcontractors on one of the College s NSF awards. Pursuant to the Agreement, the Office of Sponsored Programs provided each contractor with written notice of the requirement to post the NSF poster in their common areas during this fiscal period. Morehouse College remains fully committed to maintaining a culture of compliance and making continued efforts to enhance our ethics and compliance practices. Office of General Counsel & Compliance 830 Westview Drive Atlanta, Georgia Joy.White@morehoue.edu

2 Sincerely, Joy White, Esq. Interim General Counsel and Chief Compliance Officer MOREHOUSE COLLEGE FY16 ANNUAL REPORT 2 P age

3 CERTIFICATION OF INDEPENDENT AUDIT I certify that a copy of the independent audit report completed by Banks, Finley, White & Co. for the July 1, 2015 to June 30, 2016 reporting period is as a supplement to the Morehouse College Annual Report. I further certify that the internal auditor had the requisite independence in completing the Audit Plan contained in this report. Signed this 6 th day of July, 2017 Joy White, Esq. Interim General Counsel and Chief Compliance Officer Office of General Counsel & Compliance 830 Westview Drive Atlanta, Georgia Joy.White@morehoue.edu (p) (f)

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20 FY2016 Efficacy of the Compliance Program Audit Report No Section Compliance Requirement (/Non- ) Section I - Preamble IAAS Assessment/ Recommendation 1a Morehouse shall implement a compliance program to ensure compliance with the terms and conditions applicable to any NSF or NASA awards; ensure compliance with all relevant laws and regulations governing NSF awards; and to demonstrate Morehouse s commitment to the prevention of fraud, false statements, and misuse of funds related to NSF/NASA awards by Morehouse, its officers, faculty and relevant employees. The institution's compliance program under the Settlement Agreement has been operational since December 1, The program has an updated charter detailing scope and authority. In FY2016, the compliance program had a separate budget for operational purposes. Activity within the compliance program is periodically reported to the Audit Committee of Morehouse's Board of Trustees. Such activity was reported to the Audit Committee during FY16. 1b The Compliance Program is based upon an assessment of the risk of unlawful activities. One area of significant risk within the compliance area of NASA and NSF pertained to updated institutional federal award policies (grant administration). With the advent of the Uniform Guidance and the effective date of implementation, concentrated efforts were made to ensure that policies and procedures were updated to reflect the Uniform Guidance and that training on such policy and procedures were provided to applicable parties. Such policies and procedures aids in preventing unlawful activities if implemented. Prepared by: Undria Stalling, Chief Audit Officer Issued: June 2017

21 1c The Compliance Program shall have adequate financial and human resources. The institution provided financial resources via a separate compliance program budget. During the FY16 period, the Compliance Program was staffed as follows: 1) Chief Compliance Officer - Lacrecia Cade, and 2) Director of Institutional Compliance - Doris Coleman (Separated 2/29/16) 2 Relevant employees are principal investigators (Pls), co-pls, independent contractors, sub-recipients and any other person who is responsible for the design, conduct, administration or other activity funded or supported by NSF or NASA awards N/A The College understands the compliance requirements as written. 3 Awards, herein means any cooperative agreement, grant, contract, sub-contract or other instrument whereby Morehouse receives NSF or NASA funds. N/A The College understands the compliance requirements as written. Section II - Requirements 4 The period of future compliance obligations assumed by Morehouse commenced August 1, 2011 and will be complete upon receipt and approval by NSF OIG of the compliance program s fifth and final annual report. N/A The College understands the compliance requirements as written. 5 The scope of the Compliance Program shall be limited to any NSF or NASA-funded activity taking place during the term of the plan and NSF or NASA funds awarded or disbursed during the compliance period. All NSF and NASA funded activities are subject to the Compliance Program. 6 All reports and notifications required under the compliance program shall be sent to NSF OIG and NASA AIP. The following documents have been provided to NSF and NASA: 1) the audit plan used to conduct the FY16 Compliance Audit, 2) the audit report of the efficacy of Morehouse's Compliance Program, 3) Morehouse's FY16 A-133 (or Single Audit) Report, and 4) the annual written report for the FY16 period. The audit report of the expenses and administration of NASA and NSF awards will be provided by or before the approved extended due date of July 7, P a g e Prepared by: Undria Stalling, Chief Audit Officer Issued: June 2017

22 Section II A (i) - Compliance Program 8 The Compliance Program shall include identification of relevant employees. Each of those roles and responsibilities shall be described so that their relationship to Morehouse's responsibilities under NSF and NASA awards is clear, from each individual position up to and including Morehouse's responsible signatory officials. A listing of all active NASA and NSF federal awards during FY16 were provided by the Grants Accounting Department which included relevant employees for the respective award. Roles and responsibilities of relevant employees in the position of PIs/PDs are provided in institutional policy. 8a All individuals in such positions will be provided with (or have electronic access to) written policies and/or procedures applicable to their positions for: a code of conduct holding Morehouse personnel to high ethical standards of professional conduct and integrity, including addressing conflicts of interests; During FY16 all such positions had electronic access in Tigernet to institutional policy as it relates to "A Code of Conduct" and "Conflict of Interests". 8b accurate time and effort reporting under NSF and NASA awards to meet the standards of the cost principles specified in OMB Circular A-21 and codified as 2CFR part 220, and the federal administrative requirements contained in 2CFR part 215. During FY16 all such positions were provided the grants policy and procedures manual inclusive of time and effort reporting via a College wide . 8c accurate charging of costs under NSF and NASA awards; the requisite approval(s) and verification needed for invoices, reimbursements, or costs to be submitted to the federal government for payment. During FY16 all such positions were provided the grants policy and procedures manual inclusive of cost charging via a College wide . 8d accurate monitoring, managing and reporting of cost sharing. During FY16 all such positions were provided the grants policy and procedures manual inclusive of cost sharing via a College wide . 3 P a g e Prepared by: Undria Stalling, Chief Audit Officer Issued: June 2017

23 8e accurate monitoring of sub-recipients and consultants, and sub-recipient and consultant charges. During FY16 all such positions were provided the grants policy and procedures manual inclusive of sub-recipient and consultant monitoring via a College wide . 8f accurate reconciliation of accounting records. During FY16 all such positions were provided the grants policy and procedures manual inclusive of reconciliation of accounting records. Reconciliations are referenced throughout the policy in various context. Examples include account reconciliations during award closeout and for financial status reporting. 8g proper document management and retention. Written institutional policy and procedures on document management and retention was in place during FY16 and accessible electronically to all employees. Section II A (ii) - Compliance Officer 9 The President shall appoint a senior level administrator, reporting to the president as Compliance Officer. The Compliance Officer shall monitor Morehouse s internal controls to ensure compliance with all applicable Federal laws and regulations regarding the use and expenditure of NSF and NASA award funds. The Chief Compliance Officer of the institution during the FY16 period was Lacrecia Cade, Esq. Ms. Cade also served in the role of Chief of Staff and General Counsel and reported directly to the President. 4 P a g e Prepared by: Undria Stalling, Chief Audit Officer Issued: June 2017

24 Section II A (iii) - Compliance Committee 10 The Compliance Officer shall chair a Compliance Committee that shall be responsible for ensuring implementation of the Compliance Program throughout Morehouse. In addition to the Compliance Officer, the members of the Compliance Committee shall include appropriately screened officers, including: The Director of Sponsored Programs; The Chief Financial Officer; The Provost; The Chief Audit Officer; and The Chief Procurement Officer. During FY16, the College created a Compliance, Enterprise Risk Management, and Policy Committee. This committee was responsible for ensuring implementation of the compliance program throughout Morehouse. The Chief Compliance Officer chaired this committee which included the required members. During FY16, the College did not have a Director of Sponsored Programs position. The Office of Sponsored Programs reported to the Associate Provost for Research, Scholarship, and Creative Production - a member of the Compliance Committee. Section II A (iv) - Written Policies 11 Morehouse shall implement written policies regarding its commitment to ensure compliance with all laws and regulations related to the receipt of NSF/NASA awards. They shall be included as part of the annual training and any policies modified during the term of this Compliance Program shall be included as part of the annual report sent to NSF OIG and NASA's Director AIP. Morehouse's compliance policies shall include disciplinary procedures for dealing with employees who fail to meet the terms and conditions of NSF and NASA awards. Morehouse had implemented various policies and procedures demonstrating its commitment to ensure compliance with laws and regulations related to NSF/NASA awards. In addition, Morehouse had adopted and implemented a "Disciplinary Action Policy for Non- Compliance" effective November 2011 which prescribes disciplinary procedures for employees who fail to adhere to policy. Revisions were made during FY16 to Morehouse's policy and procedures pertaining to federal grants. The revised policy and procedures are included in the FY16 annual report to NASA and NSF. In addition, training was provided on the new and revised policies. 5 P a g e Prepared by: Undria Stalling, Chief Audit Officer Issued: June 2017

25 Section II A (v) - Posting and Displaying NSF OIG's Fraud Hotline Poster 12 (1) Morehouse must prominently display NSF and NASA OIG's fraud hotline poster in common work areas within and throughout the College Campus and divisions and worksites performing work under any NSF award. 12 (2) Post on its website an electronic version of the NSF and NASA OIG's fraud hotline poster in a manner easily accessible to Morehouse's relevant employees. 12 (3) Request that any subcontractor working on an NSF award post the NSF OIG's fraud hotline poster in its common areas. It is unknown if a physical inventory of NSF's posters and their respective locations was performed during FY16 by the Compliance Department. However, an unannounced physical inventory was performed in FY17 (April 2017) by internal audit staff. NSF posters were located in various buildings and facilities, including worksites where NSF work was being performed. The overwhelming majority of the posters were in the same place as discovered by internal audit staff in FY16 (April 11, 2016) during the unannounced physical inventory. During FY16, the electronic version of the NASA poster was located on the intranet of Morehouse College, within Tigernet under the subheading "Ethics Line." The intranet is accessible by relevant employees. The College had two (2) NSF subcontractors during the FY16 period. An electronic link detailing the NSF Fraud Hotline poster was provided to the respective subcontractors during the FY16 period with a request to post the fraud hotline poster in their common areas. 6 P a g e Prepared by: Undria Stalling, Chief Audit Officer Issued: June 2017

26 Section II B - Audit Requirements 13 Morehouse's Chief Audit Officer shall have conducted, on an annual basis, a comprehensive, statistically-valid, independent audit of Morehouse's compliance with this agreement as well as all applicable Federal laws and regulations regarding the use and expenditure of NSF award funds, including applicable NSF award conditions, federal laws or regulations, and OMB Circulars. This audit shall include each component of Morehouse that receives or has oversight responsibility with respect to NSF awards and shall be conducted in accordance with Generally Accepted Auditing Standards with a statistically-valid sample. An external firm (Banks, Finley, White & Co) was contracted to perform the FY16 compliance audit of Morehouse College's Compliance Program against the Settlement Agreement and of NSF/NASA expenditures with applicable Federal laws and regulations. 13 (a) The audit will also assess the efficacy of Morehouse's compliance program as to whether: Morehouse has established compliance standards and procedures to prevent and detect violations of law and submission of improper payment to the federal government. 13 (b) Morehouse s leadership is knowledgeable about such standards and procedures and whether a high level person is assigned or retained have overall responsibility to ensure the implementation and effectiveness of the standards and procedures. Morehouse's Chief Audit Officer performed the audit of the efficacy of the institution's compliance program for the FY16 period. Selected leaders of Morehouse were interviewed in FY16 for the FY15 NASA/NSF Compliance Audit to gain an understanding of their knowledge of the compliance program, standards, and procedures. The overwhelming majority of the leaders interviewed were knowledgeable of the compliance program, the position of the compliance officer, and the individual deemed with the overall responsibility of the program. The same leaders were in place during FY16, thus the same knowledge of the program was applicable for the FY16 NASA/NSF Compliance Audit. 7 P a g e Prepared by: Undria Stalling, Chief Audit Officer Issued: June 2017

27 13 (c ) Morehouse has made reasonable efforts to exclude from substantial authority any individual whom Morehouse knew or should have known through exercise of due diligence, has a history of engaging in violations of law, or other conduct inconsistent with an effective program to prevent and detect violations of law. 13 (d) Morehouse has made reasonable steps to communicate its compliance standards and procedures to relevant employees through effective training programs and otherwise disseminating information appropriate to such individuals' respective roles and responsibilities. 13 (e) Morehouse took reasonable steps to ensure that its program to prevent and detect violations of law is followed; that compliance standards and procedures are effective; and that a system is in place for employees and agents may report or seek guidance regarding potential or actual violations of law, without fear of retaliation, including mechanisms for anonymous reporting. Non- FINDING: The College was unable to demonstrate during the FY16 period this requirement had been met for all individuals deemed by the College as personnel with substantial authority respective to NSF/NASA awards that were active during FY16. CORRECTIVE ACTION: During the FY17 period, the College performed criminal background checks of all relevant employees (those deemed of having substantial authority) identified for the FY16 audit period with the exception of one employee of the total fourteen. This employee separated from the College after the criminal background check process began for all relevant employees and thus consent could not be obtained. Accordingly, this individual no longer has oversight or administrative duties at Morehouse College of the respective NSF award. Based on the criminal background checks completed, the respective FY16 relevant employees did not have any noted violations of law or any noted violations of law that would impact their fiduciary duties to administer the respective awards. Training was provided to most relevant employees on compliance related matters during FY16. Institutional policy and procedures were in place during FY16 pertaining to Whistleblowers and Retaliation and the protection afforded by the institution for reporting - an effort to prevent and detect violations of law. There was also the anonymous reporting mechanism - the Ethics Hotline used for the same purpose - to prevent and detect violations of law. 8 P a g e Prepared by: Undria Stalling, Chief Audit Officer Issued: June 2017

28 13 (f) Morehouse s program to prevent and detect violations of law was enforced consistently through appropriate incentives and as necessary, disciplinary measures for employees engaging in violations of law and for failing to take reasonable steps to prevent or detect violations of law. 13 (g) Morehouse has taken reasonable steps, if a violation of law was detected, to respond appropriately and to prevent future violations of law. N/A During FY16, there was no known violation of laws pertaining to any NSF or NASA federal award. Institutional policy does provide disciplinary measures, where appropriate, for those determined to have violated applicable laws. During FY16, there was no known violation of laws pertaining to any NSF or NASA federal award. 15 (a) Morehouse will provide a working copy of the audit plan to NSF OIG and to NASA's Director AIP thirty (30) days prior to the initiation of the audit. The plan will be designed to: (1) ensure compliance with the terms and conditions applicable to any NSF and NASA awards and (2) assess the efficacy of Morehouse s compliance program. 15 (b) Morehouse will submit to NSF OIG and NASA's Director AIP a copy of the independent auditor s written report and findings as a supplement to the annual written report. (Pending Submission of NASA/NSF Expenditures Audit July 2017) Although the FY16 audit plan was submitted to both the NSF OIG and NASA AIP 30 days prior to the initiation of the audit (actual fieldwork), preliminary planning on portions of the audit began within the 30-day period. The College was prepared to perform any additional auditing procedures deemed necessary by both agencies to meet the objectives of the Settlement Agreement. No additional procedures were provided by NASA or NSF. The independent auditor's report and any findings will be submitted to NSF OIG and NASA's Director AIP as a supplement to the annual written report at the conclusion of the independent audit. 15 (c ) The audit may be conducted in whole or in part by Morehouse s Internal Auditors, provided Morehouse provides NSF OIG and NASA s AIP adequate assurance in writing, certified by the compliance officer, that the internal auditors have the requisite independence in connection with the audit plan. The audit was conducted through Morehouse's Internal Auditing and Advisory Services Department (IAAS), a portion completed by the Chief Audit Officer and a portion contracted out to the external firm, Banks, Finley, White & Co. The Internal Audit Function maintains the requisite independence required to complete the audit. As designated in the approved Internal Audit Charter, the Chief Audit Officer reports functionally to both the College President and the Chair of the Audit Committee. The Chief Audit Officer has direct and unrestricted accessibility to the Chair of the Audit Committee. The Chief Compliance Officer provided certification of the Chief Audit Officer's objectivity and independence of the IAAS function within the annual written report. 9 P a g e Prepared by: Undria Stalling, Chief Audit Officer Issued: June 2017

29 16 Any and all reviews conducted at Morehouse, which reveal situations that might constitute or indicate noncompliance with NSF and NASA requirements are to be timely disclosed to the individual conducting the annual internal audit and to the Compliance Officer. A complaint was received during the FY16 period by the Office of General Counsel and Compliance which included allegations of misuse of NSF funds and wrongful termination. The complaint is currently being investigated by outside counsel. Once the investigation is completed, any instances of noncompliance will be immediately disclosed. Section II C - Annual Written Reports 17 (a) Morehouse will annually provide NSF OIG AND NASA with a written report identifying deficiencies discovered by annual audits or any other audit or review, and the corrective actions Morehouse has taken to address such deficiencies. The report will also be sent to the OIG of any other federal agency from which Morehouse has received or disbursed funds during the period. 17 (b) The reports shall include a certification by Morehouse s Compliance Officer that all deficiencies have been addressed to ensure Morehouse s compliance with all requirements of Federal law, regulations, and the Compliance Program. (Pending Submission of NASA/NSF Expenditures Audit July 2017) (Pending Submission of NASA/NSF Expenditures Audit July 2017) The annual written report will capture all of the elements of this requirement. The report will be sent to all applicable federal agencies. The annual written report will detail the required certification. 10 P a g e Prepared by: Undria Stalling, Chief Audit Officer Issued: June 2017

30 18 All audit work papers and other supporting documents for audits or reviews of compliance shall be retained by Morehouse for eight years after the effective date shall be made available to NSF OIG and NASA AIP upon request. (Pending Submission of NASA/NSF Expenditures Audit July 2017) Audit workpapers and other supporting documents are maintained within Morehouse's Internal Audit Department for the audit periods ending: A) November 2012, B) June 2013, C) June 2014, and D) June Audit workpapers and other supporting documents are due from Banks, Finley, White, and Co. at the completion of their engagement for the period ending June A material violation is one that has a significant adverse impact on the administrative, financial, or programmatic aspects of either NSF or NASA awards. N/A The College understands the compliance requirements as written. Morehouse has a duty to: 19 (a) Immediately report every material violation or material weakness discovered during any audit or review to NSF OIG and NASA s Director AIP; remedy the material violation or weakness within 30 days of learning of it; notify NSF OIG and NASA s Director AIP what actions were taken to correct it; or There are no known material violations or material weaknesses discovered during any audit or review performed to date of the FY16 period. The audit of Morehouse's compliance with the terms and conditions of NSF and NASA awards in which the College administers is currently underway. Should a material violation or material weakness be identified, it will be immediately reported to NASA and NSF. 19(b) If Morehouse is unable to remedy the material violation or weakness within 30 days, Morehouse will so inform NSF OIG and NASA s Director AIP immediately, provide regular status reports thereafter until the material violation or weakness is cured, and notify NSF OIG and NASA s Director AIP what actions were taken to correct it. N/A The College understands the compliance requirements as written. 11 P a g e Prepared by: Undria Stalling, Chief Audit Officer Issued: June 2017

31 Section II D - Training 20 (a) Morehouse shall institute and maintain a comprehensive training compliance program designed to ensure that each officer and relevant employee is aware of all applicable laws, regulations, and standards of conduct that such individual is expected to follow with regard to NSF and NASA awards, and the consequences both to the individual and Morehouse that will ensure from any violation of such requirements. 20 (b) Each officer and relevant employee shall receive at least two hours of initial training that shall include the contents of this Compliance Program as well as the relevant award requirements, and shall receive additional compliance training of at least two hours on an annual basis. Non- Training related to various federal award topics and accessible policy/procedures pertaining to the management of federal awards help to ensure the comprehensiveness of the compliance program. Such training activities were in place during the FY16 period. Finding: Of the fourteen (14) relevant employees and officers required to receive training, two (2) did not appear to meet this requirement. No evidence was provided to support training had been received. 20 (c) A schedule and topic outline of the training shall be included in the annual report submitted to NSF OIG and NASA s Director AP. 20 (d) A certificate will be placed in the personnel file of each officer and employee completing the training stating the date, topic, and hours of training received. Non- This information has been included in the Annual Report. Finding: Certificates of training were not placed in the personnel files of each officer and relevant employee that completed the training during the FY16 period. However, certificates of training for the respective individuals were on file within the Office of Ethics and Compliance (OEC) for training provided by OEC for the FY16 period. 12 P a g e Prepared by: Undria Stalling, Chief Audit Officer Issued: June 2017

32 Section II E - Confidential Disclosure Compliance Program 21 (a) Morehouse shall establish a confidential disclosure mechanism enabling Morehouse, and relevant employees to disclose anonymously to Morehouse s Compliance Officer any practices, procedures, or acts deemed by the employee to be in appropriate. 21 (b) Morehouse shall make the confidential disclosure mechanism known to each relevant employee as part of the training described above. During the FY16 period, Morehouse offered a 24-hour manned Ethics Line for employees and anyone else wanting to make confidential disclosures. The Ethics Line is managed by an independent provider. Suspected or known instances of improper acts, inappropriate acts or unethical behavior may be reported. During the FY16 period, Ethics Line information could be found by all employees on the Office of Ethics and Compliance's Website, the Internal Auditing and Advisory Service's Website, on Tigernet, and at various Awareness Centers located throughout the Morehouse Campus. Awareness of the Ethics Line is made available to new employees (which would include relevant employees) through New Hire Orientation conducted by the Office of Ethics and Compliance and HR. Ethics Line Awareness Centers are located throughout the campus in strategic locations accessible by relevant employees. Information pertaining to the Ethics Line is also located in various locations on the College's website: 1) Office of Ethics and Compliance, 2) Internal Auditing and Advisory Services, and 3) Tigernet. 21 (c ) Morehouse shall require the internal review of all such credible disclosures and ensure that proper follow-up is conducted. All such disclosures received through the Ethics Line are routed to the appropriate parties for further review and/or investigation if sufficient information has been provided. During FY16, most of the reports surrounded employee relations or student conduct. There was one report that suggested possible non-compliance with HIPAA regulations. Follow-up occurred and a report was issued. There were no reports regarding NASA or NSF awards during the FY16 period. 13 P a g e Prepared by: Undria Stalling, Chief Audit Officer Issued: June 2017

33 Section III - NSF OIG Inspection, Audit, and Review Rights 21 (d ) Morehouse shall include in its annual report, a summary of communications received under the confidential disclosure compliance program, and the results of the internal review and follow-up of such disclosures. A summary of the communications received through the Ethics Hotline for FY16 and the results has been included in the annual report. There were no disclosures made pertaining to a NSF, NASA or any federal award. 22 NSF OIG and NASA s Director AIP have the right to examine and copy Morehouse records and interview Morehouse employees for the purpose of verifying and evaluating: (a) Morehouse's compliance with the terms of this Compliance Program; and (b) Morehouse's compliance with any NSF requirements. 23 In the event that NSF OIG or NASA s Director believes Morehouse has breached any of its obligations under the Compliance Program, NSF OIG shall notify Morehouse s authorized organizational representative (AOR), specifying the nature and extent of the alleged breach. Morehouse will have 30 days from the receipt of the notice to: (a) cure said breach; or (b) otherwise satisfy NSF OIG and NASA s Director AIP that (1) it is in full compliance with this Compliance Program; (2) the breach cannot be reasonably cured within 30 days, but that Morehouse has taken effective action to cure the breach and is pursuing such action with diligence. N/A N/A The College understands the compliance requirements as written. The College understands the compliance requirements as written. 14 P a g e Prepared by: Undria Stalling, Chief Audit Officer Issued: June 2017

34 24 If at the end of the 30-day period NSF OIG and NASA s Director AIP determine Morehouse continues to be in breach of any of its obligations under the Compliance Program, they will inform Morehouse s AOR of its conclusion that Morehouse is in default. They may also initiate proceedings to undertake appropriate administrative action, including but not limited to the suspension or termination of any or all NSF/NASA awards and/or suspension or debarment of Morehouse. 25 Federal courts have jurisdiction over any matters pertaining to the Compliance Program. The execution of the settlement agreement (SA) shall be final as to all matters alleged in the settlement agreement. 26 Absent a breach, so long as Morehouse is fully satisfying the conditions stipulated by the Compliance Program, NASA and NSF OIG agree to refrain from instituting, directing, or maintaining any administrative action seeking suspension or debarment of Morehouse, or its current or former trustees, officers, agents, servants, or employees, other than Dr. Herbert Charles or Dr. Darlene Charles, for the covered conduct. N/A N/A N/A The College understands the compliance requirements as written. The College understands the compliance requirements as written. The College understands the compliance requirements as written. 15 P a g e Prepared by: Undria Stalling, Chief Audit Officer Issued: June 2017

35 Section IV - Costs 28 All costs, whether direct or indirect, incurred by or on behalf of Morehouse in connection with the following are unallowable costs under the cost principles applicable to government awards: (1) matters covered by this Compliance Program; (2) the negotiation of this Compliance Program and the Settlement Agreement (including attorney's fees) and (3) any payments made pursuant to the Settlement Agreement. Morehouse's Compliance Program had its own separate budget for FY16. The budget was funded with Unrestricted Funds. Expenses incurred in completing the annual compliance audit for FY16 (utilization of the external accounting firm - Banks, Finley, and White) will be covered by unrestricted funds. Section V - Modification 30 Any modification to the Compliance Program shall not be effective until a written amendment is signed by representatives duly authorized to execute such amendment. No modifications have been made to the Compliance Program, as there are no signed amendments on file within the Office of Ethics and Compliance or the Legal Department. 16 P a g e Prepared by: Undria Stalling, Chief Audit Officer Issued: June 2017

36 Section VI - Integration Clause 31 The Compliance Program and settlement agreement to which it is attached and incorporated by reference embodies the entire settlement agreement and understanding of the parties with respect to the subject matter contained herein. There are no restrictions, promises, representations, warranties, covenants, or undertakings other than those expressly set forth or referred to in the Compliance Program and the Settlement Agreement. This Compliance Program, together with the Settlement Agreement supersedes any and all prior Settlement Agreements and understandings between the parties with respect to the subject matter, except for the terms and conditions of individual awards. N/A The College understands the compliance requirements as written. 17 P a g e Prepared by: Undria Stalling, Chief Audit Officer Issued: June 2017