Effort Reporting: Back to the Basics NCURA FRA 2013New OrleansPatrick Fitzgerald

Associate Dean for Research AdministrationHarvard UniversityFaculty of Arts and Sciences

Effort Reporting…not the PIs’ favorite task…

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Regulations Governing “Effort Reporting” for Universities OMB Circular A-21

Cost Principles for Educational Institutions

Section J. 10: “Compensation for personal services”

Payroll distribution system “will reasonably reflect the activity for which the employee is compensated by the

institution…”

Overview of Requirements Theory:

Salary charged to sponsored agreements is based on estimate of effort on the project

Must verify how much effort actually expended to ensure that charges are appropriate

Why? Provides support for salary charged to

sponsored agreements Labor costs are 2/3 of direct research costs Documents that effort commitments have been

met; direct charged salary and cost sharing 4

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A-21 Section J.10 “Compensation for personal

services” Covers amounts paid by the institution

for services rendered during the period of performance under sponsored agreements,

Costs are allowable to the extent they conform to the established policies of the institution and are consistently applied

Reliance is placed on estimates in which a “degree of tolerance” is appropriate

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A-21 Requirements After-the-fact confirmation of personnel

costs charged to sponsored agreements Signed by the employee, principal

investigator or responsible official(s) using suitable means of verification that

the work was performed Must be incorporated into institution’s

official records Reports will reasonably reflect the

activities for which employees are compensated by the institution

Discussion Question #1

Who has primary responsibility for signing effort certifications at your school? Does your policy assign this

responsibility to the right person? What do you think constitutes

“suitable means of verification” that the work is performed?

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A-21 Requirements The institution’s effort reporting system

must provide for modification of an individual's salary distribution commensurate with a significant change in the employee's work activity A-21 doesn’t define “significant”

Time is expressed in terms of a percent of total activity (“effort”)—not

hours Frequency of reporting varies depending

upon method of certification

Discussion Questions Harvard requires monthly effort

certifications for non-faculty. We will be changing to quarterly.1. What is the frequency of certification at

your institution?2. Is this the appropriate interval? If not, what

do you think is the appropriate frequency for certification, and why?

3. What would a federal auditor do if a certification is not signed?

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A-21 Requirements Effort reporting system should be

part of institution’s official records System will provide for

independent internal evaluations to ensure compliance

What is the “independent internal evaluation” process at your institution?

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A-21 Section J.10d. Salary rates for faculty members

Charges for work performed on sponsored agreements by faculty members during the academic year will be based on the individual faculty member’s regular compensation….

In no event will charges to sponsored agreements exceed the proportionate share of the base salary for that period

What does “proportionate share” mean?

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A-21 Section J J.10.d.(2) Periods outside the academic

year

Work performed during summer months will be paid a rate not in excess of the base salary divided by the period to which the base salary relates.

NSF policy change -- maximum of two months summer salary may now be paid over calendar year as “supplemental” salary

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Effort Certification--Recap Salary is charged during the project

and actual effort is certified after the activity has occurred.

Salary must be commensurate with effort

Certification = verification that effort commitment was fulfilled

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Managing Effort Salaries = Actual effort, not estimated Whose effort is committed in the proposal?

Direct-charged salary Cost shared salary

Adjustments/reductions? Reduced budget = reduced effort?

Scope of work changes No cost extension: who pays for salaries during

the extension period?

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Effort Reporting – Areas of Risk Faculty effort based on 100%, not hours

worked How do we differentiate faculty’s

institutional time from personal time? Standard for reporting=“reasonable”

(not precision). What is a reasonable variance? Institutional Base Salary:

12 months; 10 months; 9months How do we deal with consulting effort?

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Effort Reporting – Areas of Risk Proposals with no effort commitment

OK for equipment grants, travel grants, conference grants only

Personnel with salary charged to projects for which there was no effort commitment in the proposal, especially administrative salaries

Cost transfers made after effort has been certified

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Effort Reporting – Areas of Risk Charging 100% of salary to sponsored

projects Doesn’t leave time for other activities How do you account for proposal

preparation? Charging salary to grants in excess of

effort provided Summer salary for academic year effort Not providing required level of effort for NIH

Career awards

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Effort Reporting – Areas of Risk Individual certifying effort does not have

“suitable means of verification” Certification is signed after the period

required by institution’s policy Charging salary on NIH grants in excess of

cap Failure to track effort commitments for which

salary wasn’t requested (cost sharing) No documented “internal independent

evaluation” process

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Ideas to Minimize Risk Evaluate Effort Reporting/Certification Policy

Policy should be understandable and flexible Does frequency of certification and required time

period for certification make compliance more challenging?

Who can certify effort? Is this who should certify? Engage and Educate Faculty

Explain “why” in addition to “how” Relationship of effort reporting to grant terms Consequences of not following policy Salary should be commensurate with effort

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Ideas to Minimize Risk

Review of salary charges to avoid future problems Gaps in support for postdocs/grad students Avoid over-expenditures, misallocation, transfers

Avoid 100% Effort Charges to Grants Doesn’t allow for other activities We can’t draw a bright line between compensated

effort and uncompensated, especially for faculty Most faculty and researchers prepare proposals

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Ideas to Minimize Risk

Document your “internal independent evaluation” process

Education is the Key to Compliance Remember, you will be audited against A-21

and your institutional policies Learn from others—Audit findings at other

institutions keep us informed and help us prevent similar problems

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NSF OIG Recent Audit Findings

NSF Audit of Cornell*

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“Cornell’s policies and procedures did not:” Adequately define what constitutes suitable means of verification Require certifiers to document how they obtained suitable means of

verification, or Hold certifying officials accountable for non-compliance of policies

and procedures; Require the training or involvement of key grants management

personnel namely principal investigators (PIs), in the effort certification process

Identify the use of group certifications whereby one administrative manager certifies multiple employees effort for an entire year with a single signature without supporting documentation from the employee or the PI.”

*NSF OIG, Semiannual Report to Congress, March 2010

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University of Delaware (NSF)* 6 employees lacked an understanding of their

responsibilities for effort reporting Labor charges were certified up to 600 days

after the University’s mandated turn around time

Lack of policy defining what constitutes suitable means of verification

Administrative time or excess salary charged to NSF grants

*NSF OIG, Semiannual Report to Congress, March 2010

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More Examples SUNY Stony Brook*

Employees did not have first hand knowledge when they certified effort reports

University of Wisconsin-Madison* Inadequate oversight of the effort reporting

process and inadequate training of personnel involved in the labor effort reporting process

*NSF OIG, Semiannual Report to Congress, March 2010