Payroll Certification:
An Alternative to Effort Reporting
NCURA FRA
Rich Andrews, UC Irvine
Mike Laskofski, George Mason
March 11, 2013
Where Innovation Is Tradition
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Why Monitor Effort/Salary?
• Salary and wages account for approximately
60% of all sponsored expenditures
• Certification of salary and wages on federal
awards is required by the federal government
• Key area of focus by auditors to verify what
was proposed was actually done
Where Innovation Is Tradition
2
Effort Reporting: Why Change?
• Effort incurred across multiple activities is
difficult to measure
• Effort reports provide limited controls
• Administration is inefficient and costly
Where Innovation Is Tradition
3
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 6000 faculty reported that 42%
time on federal awards spent on administrative tasks
• 2011 FDP survey of over 13000 faculty similar results
Where Innovation Is Tradition
4
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
5
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
6
George Mason University
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Public University located in Fairfax, Virginia
Established in 1972
Over 32,500 students on 4 campuses
Sponsored Expenditures FY12: $97M
George Mason became an FDP member in 2008
Where Innovation Is Tradition
7
Payroll Certification: Approval
• Mason received approval from the FDP and
the Office of Naval Research (ONR) effective
January 1, 2011 to pilot Payroll Certification
• Three other pilot schools – UC Irvine (HHS),
UC Riverside (HHS), Michigan Tech (ONR)
Where Innovation Is Tradition
8
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
9
Communication and Outreach
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Research Council
Senior Administration (Provost, Deans)
Department Chairs
Faculty Meetings
OSP Advisory Group (Senior Unit Administrators)
Training Sessions (50+ attendees March/April 2011)
Website, Email, Newsletter
Individual support for PIs and Liaisons monthly
Where Innovation Is Tradition
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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
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Payroll Certification Report Samples
Where Innovation Is Tradition
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Where Innovation Is Tradition
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Where Innovation Is Tradition
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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
15
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
16
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 Spring 2013
• Feedback from faculty and administrators
continues to be very positive
Where Innovation Is Tradition
17
Assessment of Payroll Certification
• DCAA DS-2 adequacy review completed Fall 2011
with no findings
• Through 20 reporting cycles (Jan 2011 thru Aug 2012)
• 70% of reports received within 30 days compared to
33% under prior process in 2010
• 95% of reports received within 45 days
• 100% of reports received within 60 days
Where Innovation Is Tradition
18
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
Where Innovation Is Tradition
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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
20
Next Steps for George Mason Pilot
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Complete follow-up survey Spring 2013
Regular updates to FDP on pilot progress
Meet with ONR quarterly
Internal Audit report March 2013
IG Audit 2013 Spring 2013
Where Innovation Is Tradition
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Questions
Rich Andrews
UC Irvine
randrews@uci.edu
Mike Laskofski
George Mason
mlaskofs@gmu.edu
Where Innovation Is Tradition
22
Payroll Certification:
An Alternative to Effort Reporting
Rich Andrews
University of California, Irvine
March 11, 2013
University of California, Irvine
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Public University located in Irvine, California
Part of a 10 campus system
Founded in 1965
About 28,000 students
FY 2011-12 research expenditures: $245M
A Medical Center
No football team
Payroll Certification: Approval
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UC Irvine received approval from the FDP and
the Department of Health and Human
Services (HHS) effective April 1, 2011 to pilot
Payroll Certifications
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UC Irvine implemented the system in August
2011
Control Benefits
• Focuses on special costing rules
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NIH Salary Cap
NSF Salary Limit
Clerical and Administrative Salaries
No proposal preparation charges
90% to 100% federal funded salary = minimal
other activities
• Easier to understand
• Integrates with other controls
Internal Controls Supporting Effort Reporting
Payroll and
Payroll
Distribution
Training
Policies and
Procedures
Human
Resources
Effort
Reports
Accounting System
Proposals
Federal Guidelines
Internal Audit
Internal
Controls
Whistleblower
Monitoring
Work Load
Records
Faculty &
Staff Input
Financial
Status Reports
Payroll Certifications as an Internal Control
Payroll and
Payroll
Distribution
Training
Policies and
Procedures
Human
Resources
Accounting System
Proposals
Federal Guidelines
Internal Audit
Internal
Controls
Whistleblower
Monitoring
Work Load
Records
Payroll Certifications
Faculty &
Staff Input
Financial
Status Reports
Unfocused Compliance
Costing Issues
Effort Reports
NIH Salary Cap
NSF Salary Limit
Etc.
Correct Signer
Timely
Etc.
Compliance
Payroll Certifications Focus
on Compliance
Establish Expectations
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Principal Investigator
Co-Principle Investigator
Project Accounting Support
Lab Supervisors
Contract and Grants Accounting
Sponsored Project Administration
Compliance
Pilot Proposal Conditions
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18-month pilot
All awards transitioned on April 1, 2011
Pilot initially ended September, 30, 2012
Pilot extended to December 31, 2013
Updated policies/procedures, revised DS-2
Training and new websites
Two Internal Audit Reviews at 9 & 18 months
Faculty and Staff survey
Email certifications allowed
Communication and Outreach
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Trained Payroll Certification Coordinators
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Faculty trained by Coordinators
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Notified senior management
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Emailed Faculty
Payroll Certification Reports
• Payroll Expense Reports
• Pay Certification Reports
• Instructions
Certification Rationale
OMB Circular A-21, J.10.c.(1)(e) Plan
Confirmation
“At least annually a statement will be signed
by the employee, principal investigator, or
responsible official(s) using suitable means of
verification 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.”
Payroll Certification Reports
• Around the 7th of each month, Contracts and
Grants Accounting notifies departments that the
PCS has certifications for them to download.
• PCS Coordinators work with the PI’s to obtain
certification.
• The completed certification is due back in
Contracts and Grants Accounting within 45 days.
Payroll Certification Reports
• If not certified within 45 days, assistant deans,
finance administrators, and the Vice
Chancellor for Research are notified.
• Policy allows for transferring uncertified
salaries off sponsored projects after 60 days,
but has not been enforced.
Number of Payroll Certifications
University of California, Irvine
MONTH
January
February
March
April
May
June
July
August
September
October
November
December
2011
81
97
201
145
266
130
25
56
89
Total
2012
72
76
103
84
90
208
139
246
133
18
46
85
1,300
Number of Payroll Certifications
University of California, Irvine
Month
January
February
March
April
May
June
July
August
September
October
November
December
2011
81
97
201
145
266
130
25
56
89
Total
2012
72
76
103
84
90
208
139
246
133
18
46
85
1,300
Effort
Reports
2,600
2,600
2,600
2,600
10,400
Reviews, Surveys and Audits
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UC Internal Audit Review @ 9 months
UC system wide survey
UC Internal Audit Review @ 18 months
Future HHS and NSF audits
Internal Audit Reviews
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Comply with proposal to HHS
100% coverage
Timely certifications
Acceptable cost transfers
Cost notes
Payroll Certification Survey
UC Riverside and Irvine
Overall
user
preference
Payroll Certification Survey
UC Riverside and Irvine
Support
staff
responses
about the
amount of
work
required
Payroll Certification Survey
UC Riverside and Irvine
Preferences
of Principal
Investigators
Payroll Certification Survey
UC Riverside and Irvine
Preferences
of support
staff
Payroll Certification Survey
UC Riverside and Irvine
Payroll Certification Survey
UC Riverside and Irvine
HHS/NSF Audit
Much National Interest in Payroll Certifications
• Joint HHS/NSF audit planned for all 4
demonstration sites
• Start audit: March or April 2013
• 5-person teams onsite for 2 weeks
• Typical financial audit
• Payroll Certifications to date & 1 yr. Effort Reports
• Individual reports to each university
• Probably a consolidated report to OMB.
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Final Comment
We like Payroll Certifications!!!!!
Questions?
Mike Laskofski
George Mason
mlaskofs@gmu.edu
Rich Andrews
UC Irvine
randrews@uci.edu
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