Effort Certification on
Sponsored Projects
2012 CUAV Annual Conference
Mike Laskofski
George Mason University
May 22, 2012
Where Innovation Is Tradition
1
Session Agenda
•
•
•
•
•
•
Effort Defined
Effort Reporting Requirements
Federal Audit Environment
Payroll Certification: An Alternate Approach
Monitoring Effort/Salary
Next Steps
Where Innovation Is Tradition
2
What is Effort?
• Effort is the proportion of time spent on
institutional responsibilities (research, teaching,
administration and service)
• Total effort must equal 100% and is not based
on a standard 40 hour week
• Effort is a “reasonable” estimate
• Effort does not include outside activities
Where Innovation Is Tradition
3
Why is Effort Reporting Important?
• Salary and wages account for nearly 60% of
all sponsored expenditures
• Effort reporting is mandated by the federal
government for recipients of federal funds
• Key area of focus by auditors to verify what
was proposed was actually done
• Avoid audit disallowance that can result in
negative financial and reputational impacts
Where Innovation Is Tradition
4
Federal Regulations
OMB Circular A-21 (Section J.10)
OMB Circular A-110
OMB Circular A-133
Disclosure Statement (DS-2)
www.whitehouse.gov/omb/circulars
Where Innovation Is Tradition
5
OMB Circular A-21 Section J10
• Incorporated into the official records of the
institution
• Reasonably reflect the activity for which the
employee is compensated by the institution
• After the fact confirmation or determination of
the reasonableness of salary allocations
• Incidental work can be excluded
Where Innovation Is Tradition
6
OMB Circular A-21 Section J10
• Confirmed by responsible persons with suitable
means of verification that work was performed
• Reflect categories of activities expressed as a
percentage distribution of total activities
• Significant changes must be identified and
entered into the payroll distribution system
• System provides for an independent internal
evaluation
Where Innovation Is Tradition
7
Effort in an Academic Setting
….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.
Where Innovation Is Tradition
8
PI Effort Reductions
Prior sponsor approval required for,
“The absence for more than three months, or a
25 percent reduction in time devoted to the
project, by the approved project director or
principal investigator.”
A-110 C.25(c)(3)
Where Innovation Is Tradition
9
Intra University Consulting
Since intra university consulting is assumed to
be undertaken as a university obligation
requiring no compensation in addition to full
time base salary, the principle also applies to
faculty members who function as consultants or
otherwise contribute to a sponsored agreement
conducted by another faculty member of the
same institution….(J10d(1))
Where Innovation Is Tradition
10
How Much Effort is Enough?
…most Federally-funded research programs
should have some level of committed faculty (or
senior researchers) effort, paid or unpaid by the
Federal Government. This effort can be
provided at any time within the fiscal year
(summer months, academic year, or both).
OMB Clarification Memo dated January 5, 2001
Where Innovation Is Tradition
11
Effort Reporting Cycle
Appointing
Faculty &
Staff
Preparing
the
Proposal
Budget
•Employment terms
•No. of months
•FTE
•Base Salary
•Effort proposed;
commitment to
sponsor
Charging
Salary
Certifying
Effort
•Salary is charged
•Cost share tracked
•Adjustments to
salary processed
timely
•Effort certified
after activity
completed
Where Innovation Is Tradition
12
Effort Reporting Audit Environment
• Routinely included in IG audit plans
• History of costly effort related audit
disallowances for universities
• NSF recently completed 16 effort reporting
audits and a capstone report with findings and
common themes is in process
• Grant reform initiatives attempting to balance
administrative burden and compliance
Where Innovation Is Tradition
13
University Audit Settlements
•
•
•
•
•
•
•
•
Yale
Northwestern
Cornell
UAB
Johns Hopkins
Harvard
Duke
St. Louis University
$7.6M
$5.5M
$4.4M
$3.4M
$2.6M
$2.4M
$1.7M
$1.0M
Where Innovation Is Tradition
14
Effort Reporting Compliance Issues
• Inadequate effort reporting system
• Failure to distribute and collect effort reports in a
timely manner
• Effort reports certified by individuals without
suitable means of verification
• Failure to account for all institutional effort
• 40 hour work week instead of 100% effort
Where Innovation Is Tradition
15
Effort Reporting Compliance Issues
• Failure to adjust for significant changes in effort
• Faculty charged 100% to sponsored research
• Failure to account for cost shared effort including
voluntary commitments
• Failure to request approval for PI effort reductions
• Lack of independent method for ensuring the
system’s effectiveness (A-133 audit insufficient)
Where Innovation Is Tradition
16
Payroll Certification:
An Alternate Approach
Where Innovation Is Tradition
17
Effort Reporting: Why Change?
• Effort incurred across multiple activities is
difficult to measure
• Effort reports provide limited controls
• Administration is inefficient and costly
• George Mason needed a more efficient process
for growing research portfolio (expenditures up
50% from FY07 to FY10)
Where Innovation Is Tradition
18
Federal Demonstration Partnership
• Federal Demonstration Partnership (FDP) began in 1986
and is a cooperative initiative among 10 federal agencies
and 119 research institutions
• FDP is focused on reducing the administrative burdens
associated with research
• 2005 FDP survey of over 6,000 faculty reported that 42%
of time on federal awards spent on administrative tasks
• George Mason became an FDP member in 2008
Where Innovation Is Tradition
19
Payroll Certification: What is it?
Payroll Certification is an alternative to Effort
Reporting that uses a project based
methodology and utilizes the concept that
“charges are reasonable in relation to work
performed”
Where Innovation Is Tradition
20
Payroll Certification: Benefits
• Concept is straightforward and easy to
understand by faculty and administrators
• Certification timeframe consistent with
project period and annual technical reporting
• Smaller group of certifiers allows for more
effective outreach and training
• More time to focus on key internal controls
• Reduced administrative burden
Where Innovation Is Tradition
21
Payroll Certification: Approval
• Mason received approval from the FDP and
the Office of Naval Research (ONR) effective
January 1, 2011 to pilot Payroll Certification
• George Mason was the first school to receive
approval for Payroll Certification
• Three other pilot schools – UC Irvine (HHS),
UC Riverside (HHS), Michigan Tech (ONR)
Where Innovation Is Tradition
22
Pilot Proposal Conditions
• All awards transitioned by January 1, 2012
• Update policies/procedures, revise DS-2, deploy
training and provide ONR detailed milestone plan for
implementation
• Provide feedback to FDP semi-annually
• DCAA review of DS-2 for adequacy
• Meet with ONR quarterly to review implementation
• Review pilot progress regularly but no stated end date
Where Innovation Is Tradition
23
Payroll Certification vs. Effort Reporting
Description
Effort Reporting
Payroll Certification
System Focus
Individuals
Project (Grant or Contract)
Timeframe for
Distribution
Consistent points in time
End of Project Budget Year
Certification
Frequency
Three Times per Year
Annually
Types of Funding
All Sponsored Funds
Federal Funds
Annual # of Reports
2700
700
Approvers
Individuals charged to
projects
Principal Investigator
System Rationale
Effort reasonable based
on overall institutional
effort
Salary and wage amounts
reasonable based on work
performed
Committed Cost
Sharing
Shown as percentage of
Shown as amount reasonable
overallWhere
institutional
effortIs Tradition
based on work performed
Innovation
24
Payroll Certification Report Samples
Where Innovation Is Tradition
25
Where Innovation Is Tradition
26
Where Innovation Is Tradition
27
Payroll Certification Process
• OSP generates reports 60 days after the last
day of the month for the anniversary date or
project end date, whichever is sooner
• Reports distributed to Payroll Certification
Liaison
• Payroll Certification Liaison works with PIs
to obtain approval
Where Innovation Is Tradition
28
Payroll Certification Process cont.
• Payroll Certification Liaison returns reports to
OSP within 45 days of distribution
• Reports not received within 45 days sent to
Dean for follow-up and completion within 2
weeks
• Any reports not certified within 60 days will
result in salary charges moved to a nonsponsored source of funding
Where Innovation Is Tradition
29
Assessment of Payroll Certification
• Comparison to “old” effort reporting process
• Survey completed February 2011 (150
respondents; majority faculty) to benchmark effort
reporting process
• Payroll Certification follow-up survey will be
completed Summer/Fall 2012
• Ongoing discussions with various groups on
campus to solicit feedback
Where Innovation Is Tradition
30
Assessment of Payroll Certification
• Through twelve reporting cycles (Jan thru Dec 2011)
• 67% of reports received within 30 days compared to
33% under prior process in 2010
• 93% of reports received within 45 days
• 100% of reports received within 60 days
• DCAA DS-2 adequacy review completed Fall 2011
with no findings
• Feedback from faculty and administrators continues
to be very positive
Where Innovation Is Tradition
31
Monitoring Effort/Salary
• Include some level of PI effort on all projects
• Request sponsor approval if PI is absent for more
than 3 months or 25% reduction in PI time
• Avoid charging faculty 100% to sponsored funds
if they have other responsibilities
• Process funding change forms timely (avoid cost
transfer issues)
Where Innovation Is Tradition
32
Monitoring Effort/Salary cont…
• Include complete explanations and necessary
approval signatures
• Track committed cost share with activity code
• Complete payroll certifications timely
• Avoid funding adjustments after project period
previously certified
• Review project expenses regularly
Where Innovation Is Tradition
33
Next Steps for George Mason Pilot
•
•
•
•
•
•
•
Solicit feedback from Mason faculty and staff
Ongoing training and outreach
Regular updates to FDP on pilot progress
Meet with ONR quarterly
ONR review Fall 2012
Internal Audit review Fall 2012
IG Audit 2013
Where Innovation Is Tradition
34
Next Steps Beyond FDP Pilots
• Advanced Notice of Proposed Guidance
published February 28, 2012 - discusses
exploring alternatives to time and effort
reporting and makes reference to FDP Pilots
• Universities continue to look for ways to
streamline processes and reduce
administrative burden
• Wait and see results of grant reform efforts
Where Innovation Is Tradition
35
Questions
Mike Laskofski
Associate VP of Research Operations
George Mason University
mlaskofs@gmu.edu
(703) 993-4573
Where Innovation Is Tradition
36