Transcript Compliance Report: Effort Reporting

Effort Reporting/Certification
(aka “Everything you wanted to know
about effort…
“Everything you wanted to know
about effort…
but was afraid to ask!”
Objectives


Review Definition of Effort Reporting
Overview of Reporting Requirements




Who, What, When, Where, Why (but not in that order)
Important Things to Consider…
The Effort Reporting Process
Current Issues


Direct Charged vs. Cost Shared
Effort vs. Pay
Definition of Effort…. as A-21 would say it…

ef·fort (n.) - the proportion of time spent on any
activity and expressed as a percentage of the
total professional activity for which an individual
is employed by the institution
What is Effort Reporting?
Effort Reporting is the only means that Federal agencies
have to verify that salary dollars were charged properly,
either direct-charged or cost-shared

Accounting for salaries and wages and
certifying to time and effort for:
–
–
–
–
–
Research (Sponsored/Clinical)
Teaching
Service
Clinical
All other professional activities
Why Do Effort Reporting?

A-21 Section J10 requires it…
“a statement will be signed by the employee, principal
investigator or responsible official(s) using suitable means of
verification that the work was performed”

Salary and wage charges to sponsored
agreements are allowable only if they are
supported/documented by an Effort
Reporting System
Why do Effort Reporting? - Cont’d


Required by OMB Circular A-21 –§ J. 10 (b)
NIH Grants Policy Statement (FAQ) Rev. 10/10
http://grants.nih.gov/grants/policy/person_months_faqs.htm




It is the statement of time actually worked on the specific
project during the period versus the time that was budgeted
for the project in the period.
It is the employee’s affirmation that s/he indeed actually
worked the amount of time promised the proposal.
The budgeted commitment is stated in the grant proposal.
Provides verification of the appropriate amount of
compensation charged directly to grants and contracts. Pay
sources should reasonably reflect actual activity. Erroneously
certifying effort can be viewed as fraud.
Why do effort reporting? (continued)




Integrity and responsibility in research
Regulatory requirement when the University
accepts federal awards.
Both the PI and the University committed to
effort in the proposal.
Violations subject institutions and
individuals to both civil actions and
criminal prosecution…
What should be included in Total Effort:

Instruction and administration, which includes writing grant
proposals, departmental meetings, supervising students in non-grant
related activities, interviewing students, participation on Institutional
Committees such as search committees, Institutional Review Board
(IRB) or Institutional Animal Care & Use (IACUC).

Regardless of where effort is expended (office, home) or when
(after hours, on vacation, on weekend), these items should be
included in your sponsored research effort

Effort on current Federal Grants or contracts (e.g.., NIH, NSF, or
DOD), effort on current nonfederal research projects (e.g., a
foundation grant or industry clinical trial), writing progress reports,
lab meetings, attending a scientific conference, or reading scientific
journals.
Examples Included in Effort Reporting:
Mixed Research & Clinical Care


Seeing patients, some of whom are also research patients in
your sponsored project or clinical trial (a reasonable allocation
of effort between sponsored projects activity and clinical care
must be made)
OMB Circular A21 J10b(1)(c)
“In the use of any methods for apportioning salaries, it is recognized
that, in an academic setting, teaching, research, service and
administration are often inextricably intermingled.”
“ A precise assessment of factors that contribute to costs is not always
feasible, nor is it expected. Reliance, therefore, is placed on
estimates in which a degree of tolerance is appropriate.”
Activities NOT Included in 100% Effort
–
–
–
–

Performing external professional activities (with or without
pay) which are approved in accordance with the University’s
policy and procedure on “Regulations on External
Professional Activities for Pay by Faculty and Non-Faculty
EPA Employees”.*Receiving an honoraria or reimbursement
of expenses
Membership/service to professional association
Membership on professional review or advisory panel
Presenting incidental, non-routine lectures, papers,
concerts outside the individual’s university appointment.
*UNC Policy Manual: 300.2.2.1[R]
http://intranet.northcarolina.edu/docs/legal/policymanual/300.2.2.1[R].pdf
In other words…
Employee must account for all
activities in his/her assignment.
This is Total Professional Effort
(TPE).
For Faculty, this usually means:





Teaching
Research
Service
Administrative
Other?
WHO has to certify Effort?
Any individual
(Faculty, Staff)
who works any portion of his/her time
on sponsored projects or activities
whether compensated or uncompensated
by that project
WHEN do we certify?
????
Certification

A21….C. 3 (e) To confirm that distribution of activity represents a
reasonable estimate of the work performed by the employee during the
period, the record for each employee will include:
(1) the signature of the employee or of a person having direct knowledge of
the work, confirming that the record of activities allocable as direct costs of
each sponsored agreement is appropriate;
UNC Policy (http://research.unc.edu/n/CCM1_030847)
Authorized Certifiers
The following individuals are authorized to certify employee effort.
 EPA and SPA (including post docs) employees certify their individual
effort.
 Students are certified by the project principal investigator (PI).
 In the authorized signer’s absence, the PI or another individual with
oversight and firsthand knowledge of the employee’s activity should
certify.
Certification is REQUIRED
–
Federal Regulation to maintain compliance
–
Not signing is a violation of our agreement with
the federal sponsor and our federal cognizant
agency
–
Late certification is a violation of University policy
federal compliance requirements
NIH Grants Policy Statement

Salaries and Wages are allowable costs
–
–
–
–
–
Reasonable;
Allocable;
Consistently applied regardless of the source of
funds; and
Reflect no more than the percentage of time actually
performed on an individual project.
NIH Grants Policy Statement-Revised 10/10
http://grants.nih.gov/grants/policy/nihgps_2010/nihgps_ch7.htm
Effort Report Scope

Effort reporting must reflect all compensated activities,
including those efforts not federally funded such as
instruction, administrative responsibilities/roles, and
academic advising

Activities within the scope of the employment
relationship are considered compensated.

OMB Cir. A-21 J10 (a) notes that “compensation for
personal services covers all amounts paid currently or
accrued by the institution for services of employees
rendered during the period of simultaneous performance
of sponsored agreements.”
Effort Report Scope: Supplemental Activities


OMB Cir. A-21 J10 (a) notes that “Incidental work (that is
in excess of normal for the individual), for which
supplemental compensation is paid by an institution
under institutional policy, need not be included in the
payroll distribution systems described below provided
such work and compensation are separately identified
and documented in the financial management system of
the institution.”
Would not consider work done as a paid consultant to
another organization as part of the effort report.
Effort Certification
must be performed
by someone with
first-hand knowledge
of an employee’s effort.
UNC Roles and Responsibilities
Investigator (ultimate responsibility) & Research Staff
– All employees (SPA and EPA) working on sponsored research
activities are generally responsible for the certification of his or
her own effort with the exception of students.
–
Departmental Effort Coordinator (assistive responsibility)
The Departmental Effort Coordinator reviews each individual's
report to determine all applicable personnel actions affecting the
salary distribution for the reporting period have been processed.
–
University (joint responsibility, integrity and reputation)
The Cost Analysis & Compliance section within the Office of
Sponsored Research (Central Effort Administration) is responsible
for distributing, collecting, reviewing, and maintaining the official
file of time and effort reports in compliance with the Office of
Management and Budget Circular A-21.
Important Things to Consider…
Effort Reporting
is a reasonable estimate,
not an exact science.



Degree of Tolerance: OMB Circular A-21 allows
for a “degree of tolerance.”
Certification must rely on a reasonable estimate
of effort during a specified time period, and
when estimating, a degree of tolerance is
acceptable and appropriate.
UNC Policy: Payroll action adjustments are
required when there is a significant change in
activity from the current pay distribution.
Total Effort
 must equal 100%.

The total effort (TPE) expended cannot be
more than or less than 100% regardless of the
FTE.
Is It Direct-Charged
or
Is It Cost-Shared?
Direct-Charged………

Any time Effort is charged directly to a Funding Agency
through the Payroll system (timecard, employment
contract, etc.), then the salary is said to be directcharged.
Please Remember:
Direct Cost must be Allowable/Allocable/Reasonable:
–
Salary must also meet the definition…. to be direct charged.
Cost-sharing……

Any time that Effort is expended towards a project, and
the salary is not recovered from the project, the Effort is
cost-shared.

There are 3 kinds of cost-sharing:
–
–
–

Mandatory-Committed
Voluntary-Committed
Voluntary-Uncommitted
Mandatory-Committed and Voluntary-Committed must
be tracked and reported to the agency. Must be set up
and posted through payroll as cost-sharing in order to be
tracked.
Example: Mandatory Salary Match
A Foundation requires the University to match
50% of the PI’s salary
 PI commits 100% effort on the project
 PI Institutional Base Salary = $200,000
Therefore:
 $100,000 charged to the sponsor’s account
 $100,000 charged to a departmental account
(i.e. trust fund, state appropriations, overhead
receipts) and cost shared to the project

Example: Voluntary Cost Sharing
In the proposal narrative:
“Dr. Smith has committed 5% of her effort at no charge to
the project to advise PI John Doe.”
Therefore:
Five percent of Dr. Smith’s salary, paid by a nonsponsored account must be cost shared to the project.
If the effort committed is accepted by sponsor we would
consider the effort same as “required” and should be
documented as such.
K-Awards and Cost Sharing
Career Development Awards - projects specify minimum effort
required which may result in required cost sharing
75% min effort required
25 - 50% min/max required
K01
K05
K02
K07 Leadership
K07 Development
K18
K08
K24
K12
K26
K22
K23
K25
Read your particular award as specific requirements may vary
(salary limitations, admin. charges, etc.)
http://grants2.nih.gov/training/careerdevelopmentawards.htm

K-Award Examples

K07 requires a minimum 75% effort by the PI and has
a salary limit of $75,000
If PI’s Inst. Base Salary = $115,385
Payroll
Effort Distribution
K 07
K 07 Award
$ 75,000
65.0%
Cost share to K 07 $ 11,539
10.0%
Other sources
$ 28,846
25.0%
Total
$115,385
100.0%
Managing Effort Reports

Effort is not based on a 40 hour work week.

Normal Work Week: Effort is not calculated on a 40-hour
workweek or other University approved standard workweek.
Effort is expressed as a percentage based on the distribution
of salary sources supporting the individual's university work
activities.
Example: If the employee worked 40 hours in one week on a
sponsored project and 20 hours in the same week on an unrelated
University project, then the employee’s effort report should show:
67% effort devoted to the sponsored project:
40 hours / 60 total-effort hours = 67%
and 33% on the unrelated University project:
20 hours / 60 total-effort hours = 33%
Example 1: Calculating effort.
Dr. Adams is budgeted to devote 75% of her total effort to an
NIH project and is paid from the grant at that rate.
She puts in 30 hours a week on the project, but also spends 20
hours a week on her teaching and administrative
responsibilities.
Review Dr. Adams’ effort entry below to see if it is correct.
30 hours is 75% of a 40-hour week, so on her Level of Effort
report Dr. Adams enters 75% as her actual effort on the NIH
project.
Is that correct?
Example 1
Answer: No
Her actual effort is 60%. 30÷50. It is not permissible
to calculate actual effort percentages on the basis
of a 40-hour work week or any other "standard"
work week.
Actual effort must always be calculated and
expressed as a percentage of total effort.
Federal Sponsors – 25% Rule

Reduction of 25% of committed effort requires action!
Per the NIH Grants Policy Statement, Part II, Subpart A,
General—Administrative Requirements'; Revised December 1, 2003:
http://grants2.nih.gov/grants/policy/nihgps_2003/NIHGPS_Part7.htm#_Toc54600127
 The sponsor must be notified in writing if the PI or key
personnel specifically named in the notice of grant award will
withdraw from the project entirely, be absent from the project
during any continuous period of three months or more, or
reduce time devoted to the project by 25% or more from the
level that was approved at the time of award.

Example: If committed 30% effort, 25% of 30 is
(7.5%)

22.5% is minimum threshold without having to
ask permission from NIH to change budgeted
amount.
University Effort Reporting Policy
Procedure Statement
Office of Sponsored Research

OSR Policy 600.5 Effort Reporting
http://research.unc.edu/n/CCM1_030847

OSR Procedure 600.5 – Pro.1- Certifying Effort
http://research.unc.edu/n/CCM1_030842
Is the Government serious about Effort Reporting??

University of Minnesota (1998) - $32 million settlement
–
Some salaries charged to grant in excess of employee effort spent on the
grant; effort reports completed by employee(s) who did not have reasonable
means of verification of the effort expended

Northwestern University (2003) - $5.5 million settlement
– Qui tam (whistle blower) case; relator receives $907,500; False Claims Act
– Review of 1995-2001 faculty effort
– “Knowingly or recklessly overstated salary rates for faculty”
– Faculty did not devote committed effort
– University lacked system to reconcile proposed effort and actual effort
– University knowingly made false statements
– Researchers overstated effort commitment for federal medical research projects

Johns Hopkins University (2004) - $2.6 million settlement (one investigator)
– Qui Tam case; relator receives $439,582
– Faculty did not devote committed effort
– Overcharging for fringe benefit costs
– Researchers overstated effort commitment for federal clinical research projects
Fines Levied and Recent Audits
Northwestern University $5.5 million (‘03)
East Carolina University $2.4 million (‘04)
Harvard University/Beth Israel Deaconess Medical Center $3.25 million
(‘00 & ‘04)
Dartmouth $37,780 (‘05)
University of Connecticut $2.5 million (‘06)