Effort Certification

DatePresenter

2

New fiscal policy coming soon

• Existing fiscal policy FI0205– About 2 paragraphs about effort just isn’t

enough

• To ensure compliance with federal requirements as specified in OMB Circulars A-21 and A-110

• Other universities have extensive policies

• Response to recent Federal audits and settlements

3

Recent effort settlements

• Johns Hopkins University (2004)– $2.6 million

• Harvard University (2004)– $2.4 million

• Northwestern University (2003)– $5.5 million

4

Recent effort settlements

• Johns Hopkins University (2004)– $2.6 million

• Faculty time and effort devoted to NIH grants was overstated.

• Knowingly overstated time worked• Charged more than 100% of salary• Chronicle of Higher Education, March 12

2004

5

Recent effort settlements

• Harvard University (2004)– $2.4 million

• Government was billed for salaries and expenses unrelated to federal grants

• Researcher spent fewer hours than promised on a research study

• Researchers not working on grant or did not meet citizenship requirements

• July 2, 2004 Chronicle of Higher Education

6

Recent effort settlements• Northwestern University (2003)

– $5.5 million• Researchers spent less time on NIH-

sponsored projects than they reported.• Misrepresentation of time spent• Failed to comply with effort reporting

standards• DOJ Press Release 02/06/03• Chicago Tribune, February 7, 2003

7

OMB Circular A-21

• OMB Circular A-21, section J.10– As a condition to receive federal

funding, institutions must maintain an accurate system for reporting the percentage of effort that employees devote to federally sponsored projects

– UT uses the “after-the-fact activity records” method

8

OMB Circular A-110

• OMB Circular A-110, Section (c),(2) and (3)– Recipients shall request prior approvals

from federal awarding agencies if• There is a change in a key person specified

in the application or award document• The absence for more than 3 months, or a

25% reduction in effort devoted to the project, by the approved project director or principal investigator

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Who must certify effort?• Every non-hourly employee working on

a sponsored project– Regardless of whether the costs were

charged to the project• If costs weren’t charged, then this is cost sharing –

see next slide about different types of cost sharing

– Employees paid from restricted funds will receive an automated email reminding them to certify effort

– Whether or not an email message is received, an employee who has worked on a sponsored project has the responsibility for certifying their effort

10

Types of cost sharing• Mandatory cost sharing

– Required by sponsor– Charges must be put on the restricted WBSE or companion cost

sharing WBSE– Effort must be certified to the sponsored project

• Voluntary committed cost sharing– Volunteered in proposal and now required– Charges must be put on the restricted WBSE or companion cost

sharing WBSE– Effort must be certified to the sponsored project

• Voluntary uncommitted cost sharing– Volunteered during the course of the project and was not included

in the proposal to the sponsor– Charges are not put on the restricted WBSE or companion cost

sharing WBSE– Effort does not have to be certified to the sponsored project, but

may be shown on the certification with the variance code so that salary will not be transferred

• See fiscal policy FI0210 Cost Sharing

11

How to certify effort

• 2 methods– Individual employee certification on the web– Departmental certification in IRIS

• By supervisor with first-hand knowledge• PI can certify for graduate students• By administrator with written after-the-fact

documentation from the employee– Signed & dated email, letter– Verbal is not acceptable– Kept on file in department in case of audit

12

When to certify effort

• After the work has been performed• Monthly is most frequent• Minimum is semesterly

– Within 30 days of the end of the semester

• Must be within 30 days after the sponsored project end date

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Maintain payroll distribution

• Regularly update employee’s payroll distribution when there is an expected change– Such as a new grant is beginning, an

old one is ending, etc– This minimizes the amount of the

payroll retro transfer that is done as the result of effort certification changes

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Who can certify effort

• The employee can certify their own effort on the web– A PI can certify for GRA’s

• The departmental administrator can certify for an employee if proper documentation– After-the fact signed email or printout

15

Full workload• Effort is not based upon a certain number

of hours worked per week, but represents the totality of effort which is compensated by the University– An employee cannot work “extra” on

administrative duties, preparing a proposal, etc.

– If 100% effort is charged to a sponsored project, make sure this is true!

• Consider teaching workload, advising students, writing proposals, administrative duties, clinical duties, etc.

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Institutional Base Salary

• IBS includes regular pay, agency pay, and professorships

• IBS excludes additional pay, bonus pay, longevity, consulting or medical practice income earned outside the University

• Different pay rates or administrative appointments may or may not be included in IBS

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Nine-month appointments

• Some faculty work a 9-month academic year, but are paid over 12 months– To ensure that sponsored projects are

charged 1/9th instead of 1/12th, an electronic STV should be processed

18

Committed effort

• PI’s may overcommit their effort in proposals, but must adjust this if awarded– Changes in level of effort by PI’s or key

personnel may require prior written approval by the sponsor

• Absence for more than 3 months• Effort reduction > 25%

• Fixed price awards should show their fair share of effort. Auditors will look at these, too! If not appropriately charged, then Federal awards may be overcharged.

19

PI & Dept responsibilities

• Appropriate, accurate, timely effort certification

• Departments should review uncertified effort report regularly

• Set up WBSE in advance, if necessary, to get salary charges in the right place

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NIH salary rate cap

• NIH has a mandatory cap on salary rates that can be charged to sponsored projects– FY08 cap is $191,300 / 12 = $15,941

per month– Salary above the cap cannot be

charged to other Federal awards• Some NIH awards (K awards) have

a minimum effort level of 75%

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Changes to certified effort

• Once effort has been certified, it should not be changed.– This looks really bad to an auditor

• It an error is discovered, then it can be fixed.– For example, the prior year R account was

used instead of the new year R account

• Any other changes should be charged to the departmental E account.

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Training classes• 1 Overview of Accounting for Sponsored Projects• 2 OMB Circulars & Cost Accounting Standards• 3 Understanding F&A Costs• 4 Direct Costing• 5 Cost Transfers & Closeout• 6 Cost Sharing• 7 Subcontract Monitoring• 8 Advanced Topics• 9 Invoicing, Reporting & Cash Receipts• 10 Sponsored Projects Reports in IRIS• 11 Effort Certification

Other – IRIS reporting for sponsored projects