Time & Effort Reporting “Keeping Your Commitments”

Time & Effort Reporting “Keeping Your Commitments”

Steve LichtensteinCedars-Sinai Medical CenterDirector, Sponsored Research & Funds Administration

Ryan SchroederAttain, ManagerHigher Education & Academic Medical Centers

Lindsey DemerittSeattle UniversitySponsored Research Officer,Office of Research Services and Sponsored Projects

NCURA Region VI & VII Spring Meeting – Denver, CO April 3-6, 2011

Time & Effort Reporting

AgendaTime & Effort Reporting RegulationsOverview of T&E Reporting ModelsT&E Management ReportsCapturing and Managing Effort Commitments•Key Personnel vs. Non-Key Personnel

Tracking Commitment VarianceCompliance Resolution Strategies

Introduction to Time & Effort Regulations

What is Time & Effort Reporting?The percentage of effort that a Time & Effort (T&E) Reporter warrants as his/her reasonable estimate of actual effort spent on any reportable activity. Certified effort may not be determined on the basis of budgeted effort, committed effort, or dollars available. The purpose of Effort Reporting is to assure that benefit is received relative to salary expenditures on federal awards. Why do we have to do this? Time & Effort reporting is a federally mandated requirement regulated by Sec.

J.10 of A-21, NIH Grants Policy Statement dated 12/03, and OASC-3 (Appendix E of HHS CFR Title 45, Part 74).

Salary and wage charges, along with any associated Fringe and IDC costs, to sponsored agreements are allowable only if supported by an Effort Reporting System.

Key Personnel on federal awards must perform within allowable limits relative to their committed effort. T&E Systems should track performance against these commitments.

Compliance Management – Salary & Effort

Allowable/Allocable/Reasonable: Salary charged to federally funded grants must be allowable, allocable

and reasonable in accordance with federal cost principles and sponsor specific requirements.

Salary charged to federal projects must be fully supported by proper certification.

Effort % vs. Hours: It is important to understand that effort is not calculated on a 40-hour workweek. Effort reports must account for all activities in which an individual participates and, as such, will equal 100% regardless of FTE/assignment.

Who Certifies and How Often?

Who is required to complete effort reports?Under Federal regulations, all faculty and staff who are paid in part or in full by a federal grant, whose efforts are used to satisfy either a required or a voluntary match or are used in the determination of indirect costs, must report 100% of their effort.

How Often Must T&E Reporters Certify?Based on type of Research Institution and T&E System

Research Hospitals - Monthly Educational Institutions – Varies by Academic Term and/or

T&E System

T&E Reporting Models

T&E Reporting Models:There are 3 federal examples of Time & Effort Reporting models under A-21 which are limited by the category of employees who may use them: Plan Confirmation – Professional/Professorial After the Fact – All Multiple Confirmation – Professional/Professorial

Plan & Confirm

Plan & Confirm: Under this method, the distribution of salaries and wages of professorial and professional staff applicable to sponsored agreements is based on budgeted, planned, or assigned work activity, updated to reflect any significant changes in work distribution. Frequency: At least annually a statement will be signed by the employee, principal investigator, or responsible official(s) verifying 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.

Plan & Confirm T&E System – Life Cycle

Pay to $

Payroll

T&E ApplicationT&E User – Certification/Confirmation of Effort Relative to Salary Across All Activities/Cost Centers- Completed at

Least Annually

Research Accounts

Operational Accounts Donor Accounts

Externally Funded Commitment Data in $ & %

Salary Adjustments as Necessary

Human Resources Faculty Profile Data w/Operational Budgeted Effort in $ & %

Projected Salary Allocation Across All Activities/Cost

CentersAccounting System T&E Application

After The Fact

After the Fact:

Under this system the distribution of salaries and wages by the institution will be supported by effort reports and any unsupported salary will be adjusted accordingly.

Frequency: For professorial and professional staff, the reports will be prepared each academic term, but no less frequently than every six months. For other employees, unless alternate arrangements are agreed to, the reports will be prepared no less frequently than monthly and will coincide with one or more pay periods.

After the Fact T&E System – Life Cycle

Pay to $

Payroll Distribution

T&E Application

T&E User – Certification – Completed at the lesser of Academic Term or Every 6

Months

Research Accounts

Externally Funded Commitment Data

Operational Accounts Donor Accounts

Accounting System

Salary Adjustments as Necessary

After-the-Fact Effort Certification

Seattle University, along with many other institutions, uses the After-the-Fact certification model. • Quarterly, an effort report is populated for every salaried

employee charged to a sponsored agreement or cost share, taking payroll distribution, cost share distribution, and committed efforts into account.

• Anyone charged to a sponsored agreement is then required to certify their effort within 30 days of receipt of the report.

• Any certification that requires a transfer of funds (ie, payroll charged exceed effort expended) is done immediately upon return of report to ORSSP, if it has not already been completed.

After-the-Fact Effort Certification

Unlike many R1 Institutions, SU does NOT have an electronic effort management system.• Reports are populated by hand reflecting payroll, cost share, and committed

efforts; employee then must write in his/her actual effort. • Faculty receive effort reports individually from the SRO, and SRO uses

knowledge of individual awards and relationships with PI’s to reconcile reports.

• Effort reports are submitted hard copy and saved in ORSSP.• This system has a series of downfalls as there is a heavy burden on SRO to do

weighted averages, know specific grant information, and do reconciliation of payroll and effort, and approve any payroll distribution changes that affect effort. Calculations for payroll must be taken directly from payroll registers, and effort commitments pulled from award budgets or mods.

• Commitment variances, however, are recognized fairly quickly in this model as there is a close collaboration on this model.

After-the-Fact Effort Certification

The Ever-Present, “Previous Institution”• At previous institution, also used “after-the-fact” confirmation, though system

was designed and implemented by Huron.• E-CRT merged information from payroll systems and from internal database

system that tracked commitments.• Semesterly, faculty were required to sign into web-based system and certify

their effort for the previous term. Faculty members could see payroll, cost share, and committed efforts, and were required to “type-in” their actual effort.

• Departmental administrators were responsible for processing certifications, noting where transfers needed to be completed. Journal transfers were not automatically done by the system. Commitments were tracked, but the system flagged cost transfers, not commitment variances.

• In this model, much of the burden is on the processor to know when commitment variances are an issue, which can be a problem if that person is more than arm’s length away from the project.

Seattle University Sample Effort Report-All Grant Funding; No Variances

Certifier Name: Jane SociologyTitle: Ms.Department: EducationEmail: [email protected]

Accounts Payroll Cost Share Committed Effort Certified Effort InitialSponsored

1122-1111 New Principals Program (WAMU) 0.00 0 0

1122-1112 New Principals Program (Stuart) 50.00 0 50

1122-1113 New Principals Program (Allen) 50.00 0 50

Sponsored Total 100 0 100

Non-Sponsored0 0 0 0 0

Non-Sponsored Total 0 0 0

Grand Total 100 0 100

I certify that the information contained above is a true and accurate representation of my professional effort during the period listed. I certify that any salary direct-charged, transferred, cost-shared, or otherwise committed towards any externally funded project wasfor the benefit of that project, and consistent with proposal and award requirements. I further certify that I have first-hand knowledgeof all effort certified herein.

Print Name: Signature: Date:

Comments:

Effort Certification Report Fall 2010

9/15/2010-12/15/2010

Seattle University Sample Effort Report-Cost Share Funding

Certifier Name: John MatchTitle: MrDepartment: LibraryEmail: [email protected]

Accounts Payroll Cost Share Committed Effort Certified Effort InitialSponsored

NHPRC 0 2 2

Sponsored Total 0 2 2

Non-Sponsored1133-1111 Library 98 0 98

Non-Sponsored Total 98 0 98

Grand Total 98 2 100

I certify that the information contained above is a true and accurate representation of my professional effort during the period listed. I certify that any salary direct-charged, transferred, cost-shared, or otherwise committed towards any externally funded project wasfor the benefit of that project, and consistent with proposal and award requirements. I further certify that I have first-hand knowledgeof all effort certified herein.

Print Name: Signature: Date:

Comments:

Effort Certification Report Fall 2010

9/15/2010-12/15/2010

Seattle University Sample Effort Report-Federal Funding w/ Commitment Variance

Certifier Name: John SciencyTitle: DrDepartment: ScienceEmail: [email protected]

Accounts Payroll Cost Share Committed Effort Certified Effort InitialSponsored

1111-1111 NIH Grant 20 0 45

1111-1112 NSF Grant 0 0 0

Sponsored Total 0 0 0

Non-Sponsored1111-4111 Science Department 80 0 55

Non-Sponsored Total 100 0 100

Grand Total 100 0 100

I certify that the information contained above is a true and accurate representation of my professional effort during the period listed. I certify that any salary direct-charged, transferred, cost-shared, or otherwise committed towards any externally funded project wasfor the benefit of that project, and consistent with proposal and award requirements. I further certify that I have first-hand knowledgeof all effort certified herein.

Print Name: Signature: Date:

Comments:Payroll distribution was not done as of 2/1/2011, however a JE and a PDF are both being done to correct payroll costs NOT being assigned toNIH Grant, though effort is being performed. Dr Sciency is committed to .45FTE for year 2 of his grant. This commitment will be spread outover the Academic Year (9/15/2010-6/30/2011), though assignments vary at .18FTE, .71FTE, and .77FTE for Fall, Winter, Spring, respectively.

LMD 2/10/2011

Effort Certification Report Fall 2010

9/15/2010-12/15/2010

After-the-Fact/Plan & Confirm – Scorecard

Pros: Less frequent certification requirements depending or organization type and academic term (monthly/quarter/semester/every 6 months/annually).Number of commercially available products based on After-the-Fact reporting.

Cons: Efforts may change at any time when an individual’s account distribution changesAssumptions made when new projects come in that may not be accurate since they are going off requested start and end datesReporting sent out that show current effort but is not certified until a future date (sometimes nearly a year later) Delays due to reconciliation and approval of cost transfers (plans sent out on a set basis certification done on a yearly basis)Commitment Variance reconciliation impacted by delay in corrections and certification doneControls, if they exist, in the system are challenging to monitor

Features to look for: Automated Notifications Internal Controls Automated Effort & Salary Reconciliation Commitment Performance Monitoring

Cedars-Sinai – Effort Based Payroll Distribution

Cedars-Sinai Medical Center:Cedars-Sinai has developed a Time & Effort Reporting Application based on the After the Fact model. However, unlike other models, Effort Certification drives payroll distribution, assuring no variance between certified effort and allocation of labor charges.Frequency: Weekly

Effort Based Payroll Distribution – Life Cycle

Pay to $

Payroll

T&E ApplicationT&E User - Certification

Labor Suspense Accounts – Non-

Certification

Research Accounts Donor Accounts

Operational Accounts

Payroll Distribution

PeopleSoft Commitment/Accounting Data T&E Corrections

Human Resources (Lawson) Faculty Profile Data (Dept/Div/FTE%)

Salary Adjustments as Necessary

Effort Based Payroll Distribution – Scorecard

Pros: No discrepancy between effort certified and salary charged.

High certification frequency. Requires Labor suspense accounts with reconciliation and

monitoring.Features/Highlights:

Automated Notifications Internal Controls Automated Effort & Salary Reconciliation Automated Journal Creation for Effort/Salary Variances Automated Effort Correction and approval routing Commitment Performance Monitoring

Cons:

T&E Management Reports

Simply having a Time & Effort System in place does not guarantee compliance. Research institutions must have adequate Time & Effort systems, policies, procedures, training and monitoring in order to effectively manage the confirmation of activities. The development and distribution of critical reporting tools is primary to effectively monitor Time & Effort.

Certification Completion Reports – It is essential that Time & Effort Reports are completed and collected within established deadlines and that institutions have a process to monitor submission.

Commitment Variance Reports – The Commitment Variance Report is a critical tool for monitoring the variance between effort committed for Key Personnel and actual effort certified.

Over-Committed Effort – There should be controls in place to track whether total commitments are greater than 100%. An individual who is 100% committed may be required to seek reductions of existing commitments if/when new awards are granted.

Compliance Management – Effort Commitments

Which Commitments are Monitored?

Key Personnel: Only those named in the federal Notice of Award (NOA) or named specifically in the contract/subcontract as key to the project, (requiring approval for replacement) shall be considered “Key Personnel.”

Non-Key Personnel: These are faculty members who are not specifically named in the NOA or the contract/subcontract, but have made effort commitments to the sponsor funded portion of the award and/or to the internally funded cost sharing activity within the proposed budget.

Effort Committed vs. Effort Certified

Effort Committed:Committed effort is the amount of effort proposed in a grant or other project application that is accepted by a sponsor, regardless of whether salary support is requested for the effort. Allowable Variance:For federal projects, Key Personnel must receive prior approval for reductions to proposed effort commitments of 25% or more from the level in approved application, as stated in the NIH Grants Policy Statement dated December 2003. Variance equal to or less than 25% of committed levels is a compliance issue.

No Cost Extensions: It’s important to note that commitment levels during a No-Cost Extension period are equal to the awarded commitments unless a formal request is presented to and agreed upon by the sponsoring agency to reduce the commitment.

Original Commitment Allowable Variance Unallowable Variance20% > 15% ≤ 15%

Commitment Variance Report - Example

Employee Commitment Variance Report by Individual                                    

Department Chair: Smith, Elizabeth Department: Medicine   Employee Division: HemOnc                                  

Employee Name: Jones, David PPE(s): 05/08/2010 to 01/15/2011   Run Date: 04/01/2011

Employee ID: 55555 Employee Go Live Date: 8/2/09                        

Effort Reporting Risk Exposure

In recent years, the federal government and its auditors have become more active in the review of effort reporting requirements. A number of institutions have paid large settlements as a result of whistleblower complaints or voluntary disclosures: Northwestern University received audit disallowances related to

problems with effort reporting of $5.5 M in FY01. University of South Florida returned $4.1 M to the federal government

to settle a number of charging issues including effort reporting. Johns Hopkins agreed to pay back $2.6 M to settle an effort reporting

finding in 2004. Harvard voluntarily paid back $3.3M in 2004 to resolve accusations

related to effort and other accounting management issues.

Compliance Resolution Strategy

Audit/Documentation: Perform internal audits to document issues and extrapolate findings to total population. If applicable, collect supporting data to show that benefit was received.Disclosure: Work with counsel (internal and/or external) on disclosure strategy with sponsoring agency to show a good faith effort to notify and correct weaknesses within Institution’s T&E policies, procedures and/or systems.Corrective Action Plan: Develop a comprehensive corrective action plan with sponsoring agency to correct all identified areas of weakness.On-Going Audit/Monitoring: Once implemented, ongoing monitoring and status updates with sponsor to confirm successful implementation of corrective action plan.

Questions?

Steve LichtensteinCedars-Sinai, Director - SRFA (323) 866-6885 [email protected]

Ryan SchroederAttain, ManagerHigher Education & Academic Medical Centers(415) [email protected]

Lindsey DemerittSeattle U, Sponsored Research Officer, ORSSP(206) [email protected]