Effort Reporting:
A Departmental Approach
to Meeting Audit
Requirements
Dianne Valdez, MBA, CIA, CISA, CCSA
Enrique Valdez Jr., MBA
Overview of Audit
What do you think when you hear “Internal Audit”?
What and Who is Internal Audit?
• “Internal auditing is an independent, objective
assurance and consulting activity designed to add value
and improve an organization's operations. It helps an
organization accomplish its objectives by bringing a
systematic, disciplined approach to evaluate and
improve the effectiveness of risk management, control,
and governance processes.” 1
• “Performed by professionals with an in-depth
understanding of the business culture, systems, and
processes, the internal audit activity provides assurance
that internal controls in place are adequate to mitigate
the risks, governance processes are effective and
efficient, and organizational goals and objectives are
met.” 2
Internal Audit vs. External Audits
Internal
• Performed by auditors
who are independent of
operations, but are part
of, and familiar with your
institution. 3
• Audits based on:
• Annual Risk Assessments
• Management Requests
• Specific Events and/or
Incidents.
External
• Performed by
State/Private/ Federal
auditors to provide an
independent opinion. 3
• Audits based on:
• Regular Schedule
• Special Requests
• Specific Events and/or
Incidents.
• Samples are often
extrapolated to full
population.
Types of Audits
• Operational
• Process
• Departmental
• Financial
• Compliance
• Combination
What is Effort Reporting?
• Required by Federal Government as requirement as
condition for receiving federal funding.*
• It is the means for reporting work on sponsored
and non-sponsored funding sources.
• A way for sponsors to be assured that they are
getting what they are paying for.
*Uniform Guidance discussion later in presentation.
Effort Reporting Audits
• Why are they Performed?
• What is the Process?
• What are the Benefits?
The Auditor’s Role
• Examine, evaluate, and recommend improvements
to Internal Controls.
• Internal Controls encompass the policies,
procedures, activities, and systems that are
designed to ensure:
•
•
•
•
•
Reliability, integrity, and security of information
Compliance with regulations and guidance
Safeguarding of assets
Financial efficiency
Accomplishment of objective/goals.
The Department’s Role
• Examine and evaluate policies, procedures, and
systems in place.
• Ensure:
• Reliability and integrity of information
• Compliance with policies, procedures, regulations, and
guidance
• Accomplishment of established objectives and goals.
Effort Reporting Audits
What auditors are looking for and how to prepare.
Educated Faculty and Staff
What Auditors look for:
How Departments can
prepare:
• Understanding by faculty
and staff of effort
reporting requirements.
• Consistency between
reported and stated
effort in interviews with
faculty and staff.
• No delegation of
responsibility to
unqualified individuals.
• Send faculty and staff to
institutional training,
including refresher
training.
• Encourage departmental
discussions and reviews
of effort reporting.
• Meet with faculty and
staff to review applicable
policies and procedures.
Documented Controls
What Auditors look for:
How Departments can
prepare:
• Documented procedures
that are clear and easy to
understand.
• Procedures that are
compliant with
institutional and sponsor
requirements.
• Indications that
procedures are being
followed.
• Document and review
procedures to ensure
that they represent what
you do.
• Periodically review
institutional and sponsor
requirements.
• Do what you say you will
do and keep records as
proof.
All Effort Cards Certified in a
Timely Manner
What Auditors look for:
• All cards are certified.
• Cards were completed
within the prescribed
reporting period.
• No cards were not
reopened and
recertified.
How Departments can
prepare:
• Monitor and follow up
with key personnel
concerning all open effort
cards.
• Diligently follow
institutional timeline
requirements.
• Make sure that effort
reporting is done
correctly the first time.
Reasonable Level of Effort
Commitments
What Auditors look for:
• Commitments
commensurate with the
level effort of the individual
and at least 1% for Principal
Investigators.
• Commitment levels that
allow time for other duties.
• Consideration during preaward of what is
reasonable if proposal is
awarded.
How Departments can
prepare:
• Periodically review total
effort commitment levels
for key personnel.
• Ensure that key personnel
have time for institutional
and other duties.
• Scrutinize proposed
effort in applications,
have a plan for
requesting reductions if
required.
Reasonable Estimates of Effort
What Auditors look for:
• Effort not less than salary, but
exact ties between salary and
effort for the duration of the
project can raise questions.
• Effort not certified to the
hundredth of a percent.
• How Justified?
• Effort applied to non project
responsibilities
• Teaching
• Administrative Duties
• Proposal writing.
How Departments can
prepare:
• Report effort as an
estimate that is not
based upon salary: effort
drives salary.
• Encourage key personnel
to review calendars, lab
notebooks, data, and/or
other documents to
refresh their memories.
• Avoid simply replicating
previously reported effort
percentages.
Fulfilment of Effort Commitments
What Auditors look for:
How Departments can
prepare:
• Monitoring of changes • Consistently monitor, do
not assume that the
in reported effort to
Sponsor will allow
committed effort. Effort
changes in commitment.
commitments are
• Initiate effort reduction
obligations to sponsors.
requests if required.
Institutions do not have
• Timely notification of
authority to reduce
sponsors in event that
committed effort on a
adjustment in
sponsored program
without approval.
commitment needs to
be made.
Effort Reports are Consistent with
Other Reports
What Auditors look for:
How Departments can
prepare:
• Consistency with
Appointment Letters.
• Consistency with
Clinical Reporting
Requirements, if
applicable.
• Consistency with
progress reports.
• Periodically review and
compare Appointment
Letters to effort.
• Ensure that key personnel
are meeting sponsor
requirement as well as
clinical responsibilities.
• Prior to submitting
progress reports, review
certified effort for
consistency.
Dealing with Auditors
• Treat internal auditors as professionals, and with respect.
• They work for the same institution!
• Be truthful and succinct with answers.
• Qualify your responses if required.
• Ask for clarification if required.
• Demonstrates a desire to understand.
• Keep an audit perspective by leaving a clean audit trail.
• Document actions.
• Develop processes that are easy for you to understand and
explain.
• This will promote understanding by the auditors.
• Establish an audit file that contains:
• Audit correspondence
• Conversation notes.
• Copies of all documentation provided to the internal auditor.
Uniform Guidance
Internal Controls get tested.
Questions?
References
• 1 The Institute of Internal Auditors. (2013). Definition of
Internal Auditing in The IIA's International Professional
Practices Framework (IPPF). Retrieved from:
https://na.theiia.org/standards-guidance/mandatoryguidance/Pages/Definition-of-Internal-Auditing.aspx
• 2 The Institute of Internal Auditors. Retrieved from:
https://na.theiia.org/about-us/about-ia/Pages/Aboutthe-Profession.aspx
• 2 The Institute of Internal Auditors. Retrieved from:
https://na.theiia.org/about-us/aboutia/Pages/frequently-asked-questions.aspx