University of Massachusetts - DartmouthFebruary 17, 2011

EFFORT REPORTING

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Objectives

• Definition• Types • Principles• Regulations• Risks

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What is Effort?

• Proportion of time spent on professional activities (research, teaching, administration, and service)

• Expressed as a percentage of the total professional activity for which an individual is employed by the institution

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Key concept!!!

•Faculty effort not calculated on a 40-hour workweek

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Types of Effort

• Direct-charged effort

• Cost-shared effort

• Proposed effort

• Committed effort

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Direct-Charged vs. Cost-Shared Effort

• Direct-Charged Effort: charged directly to a Funding Agency through the payroll

• Cost-Shared Effort: expended towards a project, and the salary is not recovered from the project

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Proposed vs. Committed Effort

• Proposed effort: amount of effort (in %) that is proposed in any sponsored project application, regardless of whether salary support is requested.

• Committed effort: amount of effort (in %) promised by the institution in the proposal or the amended effort (in %) included in the award documentation.

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What is Effort Reporting?

• Method of documenting the proportion of time devoted to these professional activities as a percentage of total professional activity.

• Means that Federal agencies have to verify that salary dollars were charged properly, either direct-charged or cost-shared

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What kind of effort needs to be reported?

• All employees who have salary or wages charged or cost-shared to sponsored project

• All effort the University compensates the individual• Sponsored Activities

• All effort expended on sponsored projects and cost shared

• Institutional Activities

• Department Administration

• Instruction and unsponsored scholarly activity

• Academic setting for faculty (Teaching, research, service, advising)

• Clinical activity

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Principles of Effort Reporting

• Based on actual university activities, but can be reasonably estimated

• “After the fact”

• Timing

• Percentages of total time (100%) regardless of number of hours.

• Includes all effort expended to meet commitments as a faculty member (hours will vary from person to person!)

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Faculty Effort Reporting

• Faculty instructional effort and research effort are often inseparable (“inextricably intermingled”)

• Faculty “research” effort often includes administrative (indirect) activities, e.g., proposal development

• 100% effort is confusing

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Why do we have to have effort reporting?

• It is a Federal requirement!!• OMB A-21• OMB A-110• A-133 Audit• Indirect Cost Proposal

• Verify that salaries paid were warranted and effort commitments were met

• Provides support for salary charged to grants and contracts

• Labor is the largest percentage of direct research costs on proposal budgets

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OMB Circular A-21 Section J10.

• Distribution of activity expended by employees, as a percentage

• Reasonably reflect and a reasonable estimate of the work performed by the employee during the period

• Suitable means of verification

• Confirmation of personnel costs charged to sponsored agreements

• Certification of all employee activities on an integrated basis(i.e., 100% effort)

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What’s at risk?

• Audit findings/cost disallowances

• High-Risk Organization designation

• Corrective Action Plan required

• Temporary withholding of payments or future awards

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Significant Risks of Non-Compliance

• Impact on the university:• May owe direct cost refunds and payment of fines

• Affect future funding with sponsors

• Bad publicity

• Impact on the individual:• Possible criminal and civil charges

• Payment of fines

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University Audit Settlements

• University of Minnesota: $32 M

• Northwestern University: $5.5M

• Thomas Jefferson University: $2.6M

• Beth Israel Deaconess Medical Center: $920K

• University of Chicago: $650K (PI paid $400K)

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National Science Foundation

• Funds ~$1.3 billion annually for compensation at universities *

• NSF Office of Inspector General (OIG) audited 30 Universities

• NSF OIG’s goals were to:• Assess the adequacy of internal controls• Determine if salaries and wages were allowable, allocable,

and reasonable

*June 2007 “Report on Research Compliance”

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Common Themes from NSF Audits

• Timeliness

• Education and training programs

• “Suitable means of verification”

• “Independent internal method for ensuring the system’s effectiveness” (A-21 requirement)

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Common Themes from NSF Audits (cont’d)

• Significant changes and updates to payroll distribution

• 5% Variance threshold

• Key personnel – required minimum effort and imputing cost sharing for the F&A proposal

• Voluntary commitments in proposals

• Summer effort and salary

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How can we Minimize Risk and Audit Findings?

• Revise policy-keep it simple!!• Define “significant” change in effort

• Define roles & responsibilities

• Manage the high-risk areas• Avoid explicit cost sharing commitments in proposals

• Training is needed for administrators and PIs

• Implement an Independent Internal Evaluation of Your Effort Reporting Process

• Instructions & information must be more readily accessible

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Thank you!

• Contact: Amy Gustavsson Manager-Reporting, Cost Analysis and Compliance

• Phone 617-496-4771

• Email Amy_Gustavsson@harvard.edu