National Association of College Cost Accountants
San Antonio, Texas
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University of Kentucky
The University of Kentucky
 Established 1865 as a Land Grant Institution
 16 Colleges
 University owned Hospital
 Sponsored Project Awards for 2015
 $285 Million
 Sponsored Project Expenses for 2015
 $281 Million
 Pre and Post Award offices report to separate Executive Vice
Presidents
Preparing for Uniform Guidance
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Steering Committee
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Provost
Executive Vice President for Research
Executive Vice President for Finance and Administration
Associate Provost for Faculty Advancement
Working Committee
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8 Faculty with active sponsored project activity
Directors and managers from administrative offices
4 College Financial Officers
Department Research Administrators
Staff from Central offices
Preparing for Uniform Guidance
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Reviewed existing UK policies and procedures to identify if
updates or changes were needed
Identified some gaps that needed to be addressed in other
areas
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Procurement
Sub-awards
Specifically identified section 200.430
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Biggest risk
Biggest potential reward
University Policies 200.430
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Reviewed
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Governing Regulation
– GR 10 Part X, Regulations Affecting Employment (Sabbatical
Leave)
Administrative Regulations related to faculty pay
– AR 3:6 Faculty assignment and Vacation Leave Policy
– AR 3:9 Consulting and Other Overload Employment
Faculty Payment Policy
Additions needed
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New administrative regulation defining Institutional Base Salary
Business Procedures Manual section related to payroll
University Policies
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Writing
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Revising
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Business Procedures Manual for payroll entry
Administrative regulations for
– AR 3:6 Faculty Assignment and Vacation Leave Policy
Faculty payment policy
GR 10 Part X, Regulations Affecting Employment (Sabbatical
Leave)
Completed
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AR 7:10 Institutional Base Salary for Sponsored Projects
AR 3:9 Consulting and Other Overload Employment
Executive Summary
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UK engaged Huron to assess its current effort reporting process, policy,
systems and procedures and how they meet the requirements of OMB’s
new Uniform Guidance
Areas reviewed encompassed:
• Distribution of Effort process and form (for faculty)
• Staff payroll distribution process
• Faculty and Staff Effort Certification forms
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Background
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At UK, the following processes are used to meet these
requirements:
• Faculty process
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Distribution of Effort (DOE) – at least annually, used to plan effort for fulltime faculty, and identify accounts to which salary is distributed
Cost distribution data is annualized over fiscal year to maximize recovery
from project through active months of project
Three part homegrown integrated system that includes a faculty database,
Faculty Effort System (DOE) and SAP payroll
Originally started as a monitored workload system, modified and
updated to comply with A-21
Background
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Staff pay allocation – accomplished directly in UK’s SAP Payroll
system; changed as necessary (a change in funding or an
account closes)
– Includes both salaried and hourly employees
Effort Certification – performed twice/year for staff (after the fact
certification process) and once/year for any faculty (planned
confirmation system) with charges or commitments to sponsored
programs
University of Kentucky Effort Certification Lifecycle
Process Flow
DOE is updated. Percentages are assigned to each
‘mission’ and account the faculty member expects
to charge or will be charging for the upcoming
fiscal year
Y
Distribution of Effort and Effort Certification
Schools/Colleges receive notice of new fiscal
year DOE for faculty members. Determination is
made to either carry percentages forward or
start from scratch
DOE percentages
are entered into FES
and payroll
distribution is
created
Carry
Forward?
N
Faculty members are
paid according to their
DOE and this continues
until the end of the
fiscal year
DOE is created with an original distribution.
Percentages are assigned to each ‘mission’ and
account the faculty member expects to charge or
will be charging for the upcoming fiscal year
Change in Plan?
New grant?
Cost Transfer?
When the DOE is submitted
and percentages are entered
a labor debit/credit is
submitted for every account
listed on the DOE for the
entire fiscal year
FER contains percentage of
effort charges to each
account for the previous
fiscal year
A new DOE is created
with the new account
line items. Up to 12
DOE’s may be created
each fiscal year
DOE is signed by the
faculty member,
chair, dean, and
department
administrator
Hard copy DOE is
returned to
sponsored program
accounting
Faculty Effort Report
is produced by SPA
Fiscal Year Ends
When the DOE is submitted
and percentages are entered
a labor debit/credit is
submitted for every account
listed on the DOE for the
entire fiscal year
SPA distributes the faculty effort
certifications to the departments
with instructions on how to
complete the certification
Effort report is
delivered to faculty
by department
representative
Faculty reviews and signs
effort report with
percentage of effort worked
for themselves and their
staff (in most cases)
Distribution
of Effort
(DOE)
Effort
Certification
N
Changes to
effort report?
Y
Cost transfer is
created – Effort
Report is recertified
Faculty Effort Report
is complete
Faculty process
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Since 1993, UK has used the Distribution of Effort (DOE) form, generated from the
Faculty Effort System (FES), to record faculty*’s professional activities; the Effort
Summary section of the form indicates planned effort in the following categories:
• Instruction
• Research
• Service
• Administration
• Professional Development
Accounts to which the faculty member’s salary is to be charged are identified in a
the Payroll Distribution Block of the DOE; the form is used for data input to UK’s
SAP Payroll system
A DOE is generated for all faculty members at the beginning of the fiscal year, and
only tracks academic appointment effort (not summer)
Initial DOE forms must be signed by the faculty member, the department chair and
the dean each year
Faculty process - continued
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The DOE results in two key subsets of data, used UK-wide:
a)
Planned workloads, by general category of effort
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Salary distribution between pay/funding sources (accounts)
b)
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Reports to UK executives have been generated from this data
Used as the official payroll record for faculty salary distribution
Data from the DOE may be used by departments and schools to summarize faculty
activity for various purposes:
• Tenure/promotion review
• Annual or bi-annual performance reviews
• Bonuses/incentives
DOE expectations are often set by the department or college
• Faculty generally allocate effort on the DOE to Research, Instruction, or Service
• As an example, some colleges recommend splitting the percentage 45 Research
(funded and/or unfunded), 45 Instruction, 10 Service
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Commonly this split is only adjusted after the 1 or 2 year performance review
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May be adjusted sooner if there is a significant increase in funded research
Faculty process - continued
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Percentages indicated on form for pay distribution can be confusing to
faculty
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Metrics are not used consistently across the colleges and
departments, and the data may not be accurate
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Percentages are annualized for the UK fiscal year, which is often inconsistent with
how grant effort is proposed
Ex.: if a sponsored project starts January 1st and the awarded effort is 10%, the
percentage on the form is only 5% because the DOE covers July through June
Each “interested party” (Provost, Deans, Chairs) uses the data differently
If DOEs are only completed based on college/department expectations and not
actual plan/activity, the metrics may be inaccurate
Reporting is limited
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Reports not readily available to the university community
Staff process
Payroll distribution for salaried staff and non-salaried staff/students (“Cost Distribution” in the
UK system) is entered into UK’s SAP Payroll system by department administrators
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Payroll distribution continues unless:
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An account ends
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A new account is added to the distribution
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A change in distribution is initiated by the department
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For non-salaried staff/students, hours worked per period interface from Kronos (hospital-based
employees) or are entered directly via Time Management in SAP Payroll
Benefits
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Payroll distribution is entered on the front end, electronically, reducing the risk of lost
paperwork of incorrect account codes being used
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There is no need to update/create a new distribution annually
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Department administrators indicated that this more streamlined process (compared to the
faculty process) resulted in fewer retroactive cost transfers
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Distribution entered at the department level reduces additional administrative steps
No significant issues were identified with staff payroll distribution
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University of Kentucky Effort Certification Workflow - Staff
Staff Salary Allocation and Effort Certification Process
Phase
Payroll distribution for salaried
staff employee is received by a
department administrator
Hourly staff clock in/out
using Kronos or SAP
Department
administrator enters
payroll distribution
into SAP
Payroll Distribution
carries on into
perpetuity
Payroll distribution for
hourly staff employee is
received by a department
administrator
Department
administrator enters
payroll distribution
into SAP
Semi-Annually – an effort certification report
is created containing all payroll charges on all
accounts incurred up to that point
Account reaches end
date. New distribution
is needed
N
Effort Certification is
reviewed by the employee
or an individual with suitable
means of verification and
signed
Changes to
effort report?
Y
Cost transfer is
created – Effort
Report is recertified
Payroll distribution
is updated
Staff Effort
Certification is
complete
Payroll Distribution
carries on in
perpetuity
Faculty Process – Benefits
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Enables UK to meet several OMB requirements associated with documenting
personnel expenses
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Supported by a system of internal control which provides reasonable assurance that
the charges are accurate, allowable, and properly allocated
Reflect the total activity for which the employee is compensated by the institution, not
exceeding 100% of compensated activities
Encompass both federally assisted and all other activities compensated by the
institution on an integrated basis
Support the distribution of the employee's salary or wages among specific activities if
the employee works on multiple activities
Requires at least an annual review and planning of individual faculty members’
activities
Identifies all sponsored projects, including cost share, that an individual is
committed to or has planned to expend effort on for the upcoming
Provides key performance metrics to UK colleges, departments, and executives
Faculty Process – Issues
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Administratively cumbersome – paper-based, requires multiple signatures
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Initial form requires at least three signatures
Updates during the year typically require at least two signatures, and occur
frequently for faculty with sponsored projects starting and ending
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No oversight or ownership of the form or the process
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DOE updated when a grant account number changes (e.g., continuation)
Potential for 12 different DOEs over the course of a fiscal year
Sponsored Projects Accounting (SPA) is viewed by campus as having
responsibility for administering the DOE process, although the data relevant for
SPA is only that associated with sponsored project effort (pay distribution,
accounts, timing).
Forms may be returned late
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Initial DOE form due in September and is used for SACS reporting – late initial
forms could result in inaccurate information reported to SACS
Forms reflecting changes to effort distribution during the year are often
delayed, resulting in late charging and/or cost transfers to accounts
Issues– continued
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Percentages indicated on form for pay distribution can be confusing to
faculty
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Metrics are not used consistently across the colleges and
departments, and the data may not be accurate
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•
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Percentages are annualized for the UK fiscal year, which is often inconsistent with
how grant effort is proposed
Ex.: if a sponsored project starts January 1st and the awarded effort is 10%, the
percentage on the form is only 5% because the DOE covers July through June
Each “interested party” (Provost, Deans, Chairs) uses the data differently
If DOEs are only completed based on college/department expectations and not
actual plan/activity, the metrics may be inaccurate
Reporting is limited
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Reports not readily available to the university community
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Effort Certification Reports - Issues
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Administratively cumbersome
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Electronic certifications are not allowed, reports must be printed and signed
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For units requiring it, staff reports for those working on several PIs’ projects require
signatures from each PI
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Tracking of certifications sent and returned is manual
Differences between actual effort and payroll distribution may not be adequately reflected
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Effort percentages are pre-printed – there is no field for actual effort to be indicated
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Payroll cost transfers occurring after the certification has been printed and prior to
certification will not automatically be reflected on the effort certification (although a new
report can be requested and generated if the fiscal year has not yet closed)
Changes as a result of effort certification will not be reflected at a detailed level in the Payroll
system
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Changes after the fiscal year end or the “Earliest Retro Date” require a journal entry in the
General Ledger; there is no detail in the Payroll system
Staff mid-point effort certification is effectively superseded by the end-of-year report as the
earliest retroactive adjustment date is not updated when certifications are completed
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Results
 In general, UK’s current process is consistent
with federal requirements; however, the
following recommendations will help UK
enhance compliance and improve efficiencies
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Faculty Process - Recommendations
1.
Separate the current DOE process into two separate, but coordinated
processes
Effort Planning
• Change “ownership” of this process from SPA; consider assigning responsibility to
an office with a more vested interest in the overall allocation of faculty effort
• Establish a unified metrics procedure for effort allocation
Salary Charging
• Segregating this process from effort planning and the FES should enable a more
intuitive approach to salary distribution data
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Eliminating the current requirement to annualize the percentages (which is needed
because of system limitations) should address many faculty concerns
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Faculty Process - Recommendations
2.
Consider utilizing an electronic, web-based system and process for
the DOE (effort planning and salary charging) process
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Online approvals, workflow and electronic signatures; enhanced reporting
capabilities would be available
Effort commitment information could also be more easily incorporated into the
process
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Commitments to research sponsors could be uploaded from a sponsored program
proposal/award database
Data from the separated processes could be easily reconciled, especially if a
common system is used for the two processes
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Effort Certification - Recommendations
Consider an electronic salary distribution confirmation system for faculty and
staff with salary charged to sponsored projects.
1.
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Would significantly expedite the process and ease administrative burden
Ideally, the system would allow individuals to review salary distribution pro-actively in order
to determine if the allocation of salary is consistent with effort (UK could still only require
an annual certification, but could strongly encourage periodic reviews)
Could enable better reporting of information such as salary cap cost sharing, sponsored
and non-sponsored research effort, mandatory and voluntary cost sharing by department,
and (assuming effort commitments are captured) comparisons of certified to committed
effort
Would enable automatic identification of salary journal entries (currently, the JV is noted on
the paper form)
Data from the distribution of effort, salary charging, and salary confirmation processes
could be easily reconciled, especially if a common system is used for all processes
UK could also consider certification by project in addition to or in place of current
certification,, which is by individual
 Could further reduce administrative burden by coordinating certification with end-ofbudget period reviews currently performed by PIs
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Effort Certification - Recommendations
Modify timing of staff certifications so that they are performed
annually
2.
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Will reduce administrative burden and be aligned with faculty certification cycle
Consistent with federal regulations - new Uniform Guidance removes previous
requirement on timing of certification
UK should ensure that individuals review their payroll distribution more often than
once a year
UK should revisit the “Earliest Retro Date” for staff
Investigate whether certification of non-salaried staff can be done via
the existing time-keeping mechanisms (Kronos and SAP)
3.
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Determine if the supervisor approves the hours worked
Determine if the labor distribution account(s) can be provided and confirmed with
the same process as the supervisor’s approval of hours
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Action
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Recommended separation of effort planning from payroll distribution
for FY 16 for the faculty.
Approved – committee requests the following:
o
o
o
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Simple annual planning document
Simple process that may be modified if necessary
Report to link effort planned with funded effort for VPR reporting needs
Completed interim solution May 2015, additional functionality added
throughout the summer
Remove annualization of payroll distribution allowing more accurate
reflection of actual effort and encumbering of salaries to end of
current budget period.
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Recommendation approved
Completed May 2015, additional functionality added throughout summer
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Action
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Recommended purchase of third party system for web based effort
certification based on following considerations:
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In House Development
o Institutional knowledge of existing processes
o Flexibility to customize design and layout
o Ability to design system within university defined requirements
o Faculty input into design and functionality of system
o Local on-site resources for support
o Uses easily modifiable web pages
o Visually similar to Employee Self Service and Manager Self Service
o Integration issues less likely because within existing ERP solution
o No need to manage third party access to our systems
o No external competition for desired enhancements
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Action
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Third party purchase
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o
o
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o
o
o
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Comprehensive tool addresses effort reporting, cost sharing and cost transfers
SAP interfaces and simple navigational tools
Drilldown capability for payroll reports (not available in our system)
Dashboards allow faculty member can go to one place and see all reports
requiring certification and all individuals currently being paid from those projects
Choice of hosted (cloud) vs local implementation - UK IT moving toward cloud
solutions
Previously audited by the federal government at several institutions
Frequent upgrades to enhance functionality or rework for compliance
Flexibility to certify on a project or person basis and confirm at various points of
time
NIH Salary cap flags, K-award reporting already present
Ability to customize to UK business rules
Recommendation approved to pursue purchase third party effort certification
system
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Action
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Recommendation to continue to certify non-exempt employees
based on following considerations:
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Excessive consultant and UK hours involved to develop web-based approval
process in SAP~1,900 hours
Difficulty of including departments that use Kronos into the proposed solution
Could reduce administrative burden by only certifying those paid on federal
funds – does increase audit risk
Recommendation approved
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Interim solution
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UK developed an interim solution for faculty to separate the
effort planning form (DOE) from the cost distribution
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The new DOE form was simplified and was readily accepted by the
faculty (from 12 page form to 4)
Ownership of the form rests with the college
The college approval is the final approval required
Cost distribution is no longer annualized
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Data entry was expanded to allow for cost distributions beyond the
fiscal year
Proposes percent per month based upon “commitment” section
Allows percent allocated per month to be updated
Interim solution
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System changes have been well received
Hardest issues were within colleges to update their internal
workflow and procedures as they took ownership of the form
Very little time for colleges to react
Currently have half of faculty cost distributions in the system
Additional enhancements
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Salary and benefit encumbrances
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Due to the annualization of the faculty salaries under our previous
system, encumbrances did not accurately reflect the actual salary
and benefits on sponsored accounts
All encumbrances were limited to the current fiscal year and did not
follow the sponsored account budget period
The staff encumbrances did not extend beyond the university fiscal
year
Student and temporary employees were not included
PI monthly reports, delivered to them via e-mail, did not contain
accurate available balance information
Long term solution
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RFP for new solution encompassing entry for faculty and staff – will be
payroll certification not effort
Both faculty and staff cost distribution will use same front end entry
process
Both faculty and staff will be certified annually with interim check points
for review built in
Temporary staff and students will be included
NIH Salary Cap and K-award flags
Campus involvement in the selection, implementation and training vital
to success
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RFP committee
College financial officers
Faculty advisory group
Helpful Links
Governing Regulations
http://www.uky.edu/regs/gr.htm
Administrative Regulations
http://www.uky.edu/regs/ar.htm
2015-16 Distribution of Effort Form
http://www.uky.edu/Faculty/Senate/files/DOE%20form%20for%
20web%20detail.pdf
Contact Information
Jennifer Miles
Sponsored Projects Accounting
Jennifer.miles@uky.edu
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