Understanding Effort Certification and Compliance with Federal Funding Requirements

1. Effort Certification Date Presenter

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

9. 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

13. 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

14. 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.

16. 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

17. 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

20. 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%

21. 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.

22. 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