Time & Effort Reporting “Keeping Your Commitments”

1. NCURA Region VI & VII Spring Meeting – Denver, CO April 3-6, 2011 Time & Effort Reporting “Keeping Your Commitments”

2. Time & Effort Reporting Agenda • Time & Effort Reporting Regulations • Overview of T&E Reporting Models • T&E Management Reports • Capturing and Managing Effort Commitments • Key Personnel vs. Non-Key Personnel • Tracking Commitment Variance • Compliance Resolution Strategies

3. Introduction to Time & Effort Regulations What is Time & Effort Reporting? The percentage of effort that a Time & Effort (T&E) Reporter warrants as his/her reasonable estimate of actual effort spent on any reportable activity. Certified effort may not be determined on the basis of budgeted effort, committed effort, or dollars available. The purpose of Effort Reporting is to assure that benefit is received relative to salary expenditures on federal awards. Why do we have to do this? • Time & Effort reporting is a federally mandated requirement regulated by Sec. J.10 of A-21, NIH Grants Policy Statement dated 12/03, and OASC-3 (Appendix E of HHS CFR Title 45, Part 74). • Salary and wage charges, along with any associated Fringe and IDC costs, to sponsored agreements are allowable only if supported by an Effort Reporting System. • Key Personnel on federal awards must perform within allowable limits relative to their committed effort. T&E Systems should track performance against these commitments.

4. Compliance Management – Salary & Effort Allowable/Allocable/Reasonable: • Salary charged to federally funded grants must be allowable, allocable and reasonable in accordance with federal cost principles and sponsor specific requirements. • Salary charged to federal projects must be fully supported by proper certification. Effort % vs. Hours: It is important to understand that effort is not calculated on a 40-hour workweek. Effort reports must account for all activities in which an individual participates and, as such, will equal 100% regardless of FTE/assignment.

5. Who Certifies and How Often? Who is required to complete effort reports? Under Federal regulations, all faculty and staff who are paid in part or in full by a federal grant, whose efforts are used to satisfy either a required or a voluntary match or are used in the determination of indirect costs, must report 100% of their effort. How Often Must T&E Reporters Certify? Based on type of Research Institution and T&E System • Research Hospitals - Monthly • Educational Institutions – Varies by Academic Term and/or T&E System

6. T&E Reporting Models T&E Reporting Models: There are 3 federal examples of Time & Effort Reporting models under A-21 which are limited by the category of employees who may use them: • Plan Confirmation – Professional/Professorial • After the Fact – All • Multiple Confirmation – Professional/Professorial

7. Plan & Confirm Plan & Confirm: Under this method, the distribution of salaries and wages of professorial and professional staff applicable to sponsored agreements is based on budgeted, planned, or assigned work activity, updated to reflect any significant changes in work distribution. Frequency: At least annually a statement will be signed by the employee, principal investigator, or responsible official(s) verifying that the work was performed, stating that salaries and wages charged to sponsored agreements as direct charges, and to residual, F&A cost or other categories are reasonable in relation to work performed.

8. Plan & Confirm T&E System – Life Cycle

9. After The Fact After the Fact: Under this system the distribution of salaries and wages by the institution will be supported by effort reports and any unsupported salary will be adjusted accordingly. Frequency: For professorial and professional staff, the reports will be prepared each academic term, but no less frequently than every six months. For other employees, unless alternate arrangements are agreed to, the reports will be prepared no less frequently than monthly and will coincide with one or more pay periods.

10. After the Fact T&E System – Life Cycle

11. After-the-Fact Effort Certification Seattle University, along with many other institutions, uses the After-the-Fact certification model. • Quarterly, an effort report is populated for every salaried employee charged to a sponsored agreement or cost share, taking payroll distribution, cost share distribution, and committed efforts into account. • Anyone charged to a sponsored agreement is then required to certify their effort within 30 days of receipt of the report. • Any certification that requires a transfer of funds (ie, payroll charged exceed effort expended) is done immediately upon return of report to ORSSP, if it has not already been completed.

12. After-the-Fact Effort Certification Unlike many R1 Institutions, SU does NOT have an electronic effort management system. • Reports are populated by hand reflecting payroll, cost share, and committed efforts; employee then must write in his/her actual effort. • Faculty receive effort reports individually from the SRO, and SRO uses knowledge of individual awards and relationships with PI’s to reconcile reports. • Effort reports are submitted hard copy and saved in ORSSP. • This system has a series of downfalls as there is a heavy burden on SRO to do weighted averages, know specific grant information, and do reconciliation of payroll and effort, and approve any payroll distribution changes that affect effort. Calculations for payroll must be taken directly from payroll registers, and effort commitments pulled from award budgets or mods. • Commitment variances, however, are recognized fairly quickly in this model as there is a close collaboration on this model.

13. After-the-Fact Effort Certification The Ever-Present, “Previous Institution” • At previous institution, also used “after-the-fact” confirmation, though system was designed and implemented by Huron. • E-CRT merged information from payroll systems and from internal database system that tracked commitments. • Semesterly, faculty were required to sign into web-based system and certify their effort for the previous term. Faculty members could see payroll, cost share, and committed efforts, and were required to “type-in” their actual effort. • Departmental administrators were responsible for processing certifications, noting where transfers needed to be completed. Journal transfers were not automatically done by the system. Commitments were tracked, but the system flagged cost transfers, not commitment variances. • In this model, much of the burden is on the processor to know when commitment variances are an issue, which can be a problem if that person is more than arm’s length away from the project.

14. Seattle University Sample Effort Report-All Grant Funding; No Variances

15. Seattle University Sample Effort Report-Cost Share Funding

16. Seattle University Sample Effort Report-Federal Funding w/ Commitment Variance

17. After-the-Fact/Plan & Confirm – Scorecard Pros: Less frequent certification requirements depending or organization type and academic term (monthly/quarter/semester/every 6 months/annually). Number of commercially available products based on After-the-Fact reporting. Cons: Efforts may change at any time when an individual’s account distribution changes Assumptions made when new projects come in that may not be accurate since they are going off requested start and end dates Reporting sent out that show current effort but is not certified until a future date (sometimes nearly a year later) Delays due to reconciliation and approval of cost transfers (plans sent out on a set basis certification done on a yearly basis) Commitment Variance reconciliation impacted by delay in corrections and certification done Controls, if they exist, in the system are challenging to monitor Features to look for: • Automated Notifications • Internal Controls • Automated Effort & Salary Reconciliation • Commitment Performance Monitoring

18. Cedars-Sinai – Effort Based Payroll Distribution Cedars-Sinai Medical Center: Cedars-Sinai has developed a Time & Effort Reporting Application based on the After the Fact model. However, unlike other models, Effort Certification drives payroll distribution, assuring no variance between certified effort and allocation of labor charges. Frequency:Weekly

19. Effort Based Payroll Distribution – Life Cycle

20. Effort Based Payroll Distribution – Scorecard Pros:No discrepancy between effort certified and salary charged. • High certification frequency. • Requires Labor suspense accounts with reconciliation and monitoring. Features/Highlights: • Automated Notifications • Internal Controls • Automated Effort & Salary Reconciliation • Automated Journal Creation for Effort/Salary Variances • Automated Effort Correction and approval routing • Commitment Performance Monitoring Cons:

21. T&E Management Reports Simply having a Time & Effort System in place does not guarantee compliance. Research institutions must have adequate Time & Effort systems, policies, procedures, training and monitoring in order to effectively manage the confirmation of activities. The development and distribution of critical reporting tools is primary to effectively monitor Time & Effort. • Certification Completion Reports – It is essential that Time & Effort Reports are completed and collected within established deadlines and that institutions have a process to monitor submission. • Commitment Variance Reports –The Commitment Variance Report is a critical tool for monitoring the variance between effort committed for Key Personnel and actual effort certified. • Over-Committed Effort – There should be controls in place to track whether total commitments are greater than 100%. An individual who is 100% committed may be required to seek reductions of existing commitments if/when new awards are granted.

22. Compliance Management – Effort Commitments Which Commitments are Monitored? • Key Personnel: Only those named in the federal Notice of Award (NOA) or named specifically in the contract/subcontract as key to the project, (requiring approval for replacement) shall be considered “Key Personnel.” • Non-Key Personnel: These are faculty members who are not specifically named in the NOA or the contract/subcontract, but have made effort commitments to the sponsor funded portion of the award and/or to the internally funded cost sharing activity within the proposed budget.

23. Effort Committed vs. Effort Certified Effort Committed: Committed effort is the amount of effort proposed in a grant or other project application that is accepted by a sponsor, regardless of whether salary support is requested for the effort. Allowable Variance: For federal projects, Key Personnel must receive prior approval for reductions to proposed effort commitments of 25% or more from the level in approved application, as stated in the NIH Grants Policy Statement dated December 2003. Variance equal to or less than 25% of committed levels is a compliance issue. No Cost Extensions: It’s important to note that commitment levels during a No-Cost Extension period are equal to the awarded commitments unless a formal request is presented to and agreed upon by the sponsoring agency to reduce the commitment.

24. Commitment Variance Report - Example Employee Commitment Variance Report by Individual Department Chair: Smith, ElizabethDepartment: Medicine Employee Division: HemOnc Employee Name: Jones, DavidPPE(s): 05/08/2010 to 01/15/2011Run Date: 04/01/2011 Employee ID: 55555 Employee Go Live Date: 8/2/09

25. Effort Reporting Risk Exposure In recent years, the federal government and its auditors have become more active in the review of effort reporting requirements. A number of institutions have paid large settlements as a result of whistleblower complaints or voluntary disclosures: • Northwestern University received audit disallowances related to problems with effort reporting of $5.5 M in FY01. • University of South Florida returned $4.1 M to the federal government to settle a number of charging issues including effort reporting. • Johns Hopkins agreed to pay back $2.6 M to settle an effort reporting finding in 2004. • Harvard voluntarily paid back $3.3M in 2004 to resolve accusations related to effort and other accounting management issues.

26. Compliance Resolution Strategy Audit/Documentation: Perform internal audits to document issues and extrapolate findings to total population. If applicable, collect supporting data to show that benefit was received. Disclosure: Work with counsel (internal and/or external) on disclosure strategy with sponsoring agency to show a good faith effort to notify and correct weaknesses within Institution’s T&E policies, procedures and/or systems. Corrective Action Plan: Develop a comprehensive corrective action plan with sponsoring agency to correct all identified areas of weakness. On-Going Audit/Monitoring: Once implemented, ongoing monitoring and status updates with sponsor to confirm successful implementation of corrective action plan.

27. Questions? Steve Lichtenstein Cedars-Sinai, Director - SRFA (323) 866-6885 steven.lichtenstein@cshs.org Ryan SchroederAttain, Manager Higher Education & Academic Medical Centers (415) 415-6571raschroeder@attain.com Lindsey DemerittSeattle U, Sponsored Research Officer, ORSSP (206) 398-4408demeritl@seattleu.edu