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…

For Faculty, this usually means:

Teaching Research Service Administrative Other?

Employee must account for all activities in his/her assignment. This is Total Professional Effort

(TPE).

WHO has to certify Effort?

Any individual(Faculty, Staff)

who works any portion of his/her timeon sponsored projects or activities

whether compensated or uncompensatedby 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 Certificationmust be performedby 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-Chargedor

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 direct-charged.

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 non- sponsored 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 sharing75% min effort required 25 - 50% min/max required

K01 K05 K02 K07 LeadershipK07 Development K18K08 K24K12 K26K22K23K25

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 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%

K 07

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%

Managing Effort Reports

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 PolicyProcedure 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)