Payroll Certification Effort Reporting Faculty Briefing

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Payroll Certification(Effort Reporting)Faculty
Briefing

• Andrew B. Rudczynski
• Alice Tangredi-Hannon
• Yale University
• January 8, 2007

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Topics

• Why Effort Reporting?
• Principles of Effort Reporting
• Why effort reporting practices vary across
  institutions
• Ways in which PIs are held accountable
• Institutional responsibility
• How faculty and administrators should interact
  around effort reporting
• Effective practice for effort reporting that
  minimize administrative effort from the PI

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Why Effort Reporting?

• Allowability of salary charges to federal awards
  is conditioned by a requirement for a formal
  documentation process
• Federal audit personnel rely on effort reporting
  to evaluate whether the salary paid on an award
  is reasonable relative to the effort expended on
  the award
• Implies linear relationships between
  productivity, salary, and effort
• Federal agencies are accountable to Congress and
  to the public for the use of these funds
• Yet Effort Reports are not used by program
  officials (remain at institution)

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Principles of Effort Reporting

• General Principles
• Costs are allowable to the extent that the
  total compensation includes all amounts
  paidaccording to the established policies of the
  institution, consistently applied (i.e.,
  irrespective of source of funds), and
• provided that the charges for work performed
  directly on sponsored agreements are supported by
  documentation
• Activity reports must distinguish the employees'
  direct activities from their FA activities

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Principles of Effort Reporting

• Charges to sponsored agreements may include
  reasonable amounts for activities contributing
  and intimately related to work under the
  agreements, such as delivering special lectures
  about specific aspects of the ongoing activity,
  writing reports and articles, participating in
  appropriate seminars, consulting with colleagues
  and graduate students, and attending meetings and
  conferences, but NOT writing new funding
  applications
• A-21recognizes 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

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Why Practices VaryThe Cost Principles

• OMB Circular A-21, Cost Principles for
  Educational Institutions (2 CFR, Part 220)
• OMB Circular A-87, Cost Principles for State,
  Local and Indian Tribal Governments (2 CFR, Part
  225)
• OMB Circular A-122, Cost Principles for
  Non-Profit Organizations (2 CFR, Part 230)
• 45CFR74, Appendix E - Principles for Determining
  Costs Applicable to Research Development under
  Grants Contracts with Hospitals

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General Requirements for Effort Reporting

• The distribution of salaries and wages, must be
  based on payroll data
• The method for documenting must
• Reasonably reflect the activity for which an
  individual is paid by the University
• Reflect all of these activities performed by the
  individual
• Include after-the-fact confirmation to ensure
  that initial salary charges reasonably
  approximate actual effort
• Be performed by the individual or a responsible
  individual who uses a suitable means of
  verification that the work was performed
• Frequency of reporting based on type of employee
  and method of reporting used (e.g.,
  after-the-fact)

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Army Grant
NSF Grant
Sponsored Projects Activities
NIH Grant
Total University Effort
Non-Sponsored Project University Activities
(Teaching, Administration, Committee Service,
Clinical Activities, Writing New Proposals, etc.)
Consulting, VA, Other Externally Compensated
Activities (Study Section?)
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Essential ConceptsTotal Work Effort

• 100 Effort Total Time Estimated for all
  University Activities, i.e., only those
  activities compensated by the Institution
• Excluded from effort reporting is any
  compensation received from sources other than the
  University, such as compensation from the VA, or
  outside consulting work permitted by the
  University
• 100 Effort ? 40 hours ? 60 hours ? 10 hours, etc
• No fixed work week (for faculty and certain
  exempt staff)

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Essential Concepts

• Effort and payroll distributions are not the same
  thing.
• The effort reporting process is a method for
  certifying charges made to sponsored awards and
  for certifying that the effort expended is at
  least equal to the salary paid.
• Payroll distributions are used initially as a
  proxy for effort distributions and serve as a
  reminder about activities on which the individual
  worked.
• Payroll-based effort reports must be adjusted to
  report effort distributions that are less than
  the shown payroll distributions. Appropriate
  salary reallocations must be made in concert with
  the changed effort report.

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Essential Concepts

• The effort report form must be certified by the
  individual whose effort is being reported or by a
  responsible person using a suitable means of
  verification that the work was performed.
• Usually a PI or written after-the-fact
  verification from someone with direct knowledge
  that the work was performed.
• Typically secretaries and business administrators
  do not qualify absent written verification.

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Essential Concepts

• Mandatory and voluntary committed cost sharing
  must be reported/accounted for.
• In general, cost shared salary is reported on the
  effort report.
• Faculty receiving summer months salary from
  sponsored projects must work during the summer.
• 3/9 Summer Salary No Vacation

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Activities Included in Effort Reports

• Sponsored Projects Activities Includes effort
  devoted to grants, contracts, and cooperative
  agreements sponsored by non-University entities,
  i.e., state, local, federal governments,
  foundations, corporations, etc., for purposes of
  training, clinical trials, and research
• Non-Sponsored Activities (FA Activities)
• Administration Includes effort devoted to
  departmental business activities, curriculum
  development, proposal and bid preparation,
  sponsored projects administration, serving on
  committees, and supervising administrative staff
• Instruction and Unsponsored Scholarly Activity
  Includes effort devoted to teaching and training
  activities where the employee is the instructor.
  Includes effort devoted to a sponsored
  instructional project, i.e., training grant.
  Unsponsored Scholarly Activity is effort for
  research, development and scholarly activities
  that are not paid for by an external organization
• Clinical Activities Includes direct treatment of
  patients for which a professional bill would be
  rendered.

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Effort Reporting(Staying Current)

• The effort process begins well before the effort
  report is generated..

Pre-Award
Post-Award
Appointing Faculty Staff
Preparing the Proposal Budget
Relating pay to the effort
Charging Salary
Salary is charged contemporaneous with
activity. PI Monitors salary distribution monthly
Employment terms are established including
months (contract period), full time, salary base
Effort is proposed, a commitment is made to the
sponsor
Effort is attested to after activity has occurred
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Effort Reporting

• Questions Discussion
• ?