1. FDP PAYROLL CERTIFICATION PILOT UPDATE NACCA CONFERENCE October 15, 2015

2. PAYROLL CERTIFICATION PILOT UPDATE PILOT GOALS Improve oversight over direct salary/wage charges to federal awards by simplifying the salary certification process for federal awards Enable universities to focus resources toward the efficient and effective oversight of federal awards. The goals aligned with the FDP Mission and focus of Phase V, which is to improve the productivity of research without compromising its stewardship through pilots that enable the PI to spend more time on research.

3. PAYROLL CERTIFICATION PILOT UPDATE DescriptionEffort ReportsPayroll Certification Pilot Certification focusIndividualsGrant/Contract (award) Certification Cycle Academic semesters or semi/annual fiscal periods End of each award budget year (every 12 mos.) and at the end of the award ApproverIndividual or PIPI Confirmation focus Individual’s percentage of effort is reasonable based on overall effort All salaries/wages directly charged to the award are reasonable based on work performed Type of fundsAll sponsored fundsFederal funds EFFORT REPORTING VS. PAYROLL CERTIFICATION

4. PAYROLL CERTIFICATION PILOT UPDATE EFFORT REPORTING VS. PAYROLL CERTIFICATION University Individual Effort Reports (approx) Individual project Payroll Certification Reports (approx) George Mason Univ.2,700 / yr700 / yr Michigan Tech Univ.6,700 / yr700 / yr Univ. of CA - Irvine10,500 / yr1,400 / yr Univ. of CA - Riverside5,058 / yr.752 / yr

5. PAYROLL CERTIFICATION PILOT UPDATE ACHIEVEMENTS AT PILOT INSTITUTIONS Improved PI oversight of direct salary/wage charges to federal awards because the review is aligned with the award annual financial reporting and budget cycles. Enhanced efficiency by certifying all direct salary/wages charged to an award instead of certifying individual employee charges. – Significant reduction in certification volume – Significant improvement in timely certifications – Simplified process reduces administrative burdensome for PIs, departments and central offices

6. AUDIT UPDATE UC Irvine: – Report issued December 2014 – DHHS IG did not express an opinion regarding the payroll certification process UC Riverside: DHHS IG draft report pending Tentative Date for issuance – Fall 2015 George Mason: NSF IG Final Report Issued – Aug 2015 Michigan Tech: NSF IG Final Report Issued – Sep 2015 PAYROLL CERTIFICATION PILOT UPDATE

7. NSF IG FINDING - GMU: 1)Enforce its written policies for the pilot payroll certification system. Areas needing enforcement include: a)Ensuring that annual SPPERs are completed and returned in a timely manner. b)Ensuring that costs associated with late SPPERs are transferred to non-sponsored accounts. c)Ensuring that bimonthly reconciliations are completed and returned in a timely manner GMU RESPONSE: The late reports referenced in the report were related to pilot implementation issues that were corrected once identified Payroll certification report distribution delayed during university closings (winter break), times of heavy workload, competing priorities and staff leave PAYROLL CERTIFICATION PILOT UPDATE

8. NSF IG FINDING - GMU: 2) Enhance internal controls over information technology GMU RESPONSE: New CIO hired in December 2013 with an organizational restructuring in February 2015 Information Technology Governance Group formed to review IT projects and priorities with the IT Security Office closely involved in the process A two-factor authentication project is underway. It has been implemented for Systems Engineers and will be expanded to all Internet Native Banner users. All other findings have been addressed or are in process of being addressed and risk assessments are current PAYROLL CERTIFICATION PILOT UPDATE

9. NSF IG CONCLUSION – GMU AUDIT: Meets requirements of OMB Circular A-21 Issues identified “not as a result of inadequate design of pilot system controls” Strong internal controls are important to ensure payroll charges are adequately supported Having direct visibility to full payroll allocation “could be an important control” Less frequent certification requires diligence in communicating and adhering to control procedures GMU CONCLUSION: We do not feel that late certification is an issue; the programming and procedural implementation issues impacting report distribution for a small number of projects have been addressed No findings or errors with funding change forms No substantive unallowable costs identified Unclear what caused the suggestion that full payroll allocations available to PIs would be useful to ensure accuracy Resources will continue to focus on the payroll distribution process and bimonthly reconciliation IT security has been and will continue to be an area of importance and focus for George Mason Payroll Certification has helped us to reduce administrative burden with improved oversight George Mason plans to continue using Payroll Certification PAYROLL CERTIFICATION PILOT UPDATE

10. NEXT STEPS FOR GMU Audit Resolution for GMU Audit – NSF will proceed with normal/routine audit resolution process ONR will issue GMU notice of completion – The pilot successfully demonstrated its goals – No significant audit issues with concept – Payroll certification method is acceptable under 2 CFR 200 PAYROLL CERTIFICATION PILOT

11. NEXT STEPS FOR FDP GMU Audit provides both FDP member and non- FDP institutions helpful insight on implementation at your institution Payroll Certification is permitted under 2 CFR 200 – Approval from the cognizant agency is NOT required – Guidance on internal controls should be considered in your implementation PAYROLL CERTIFICATION PILOT

12. NEXT STEPS FOR FDP 2 Remaining Audits will be reviewed by FDP upon receipt – Michigan Technological University Sept 2015 – University of California, Riverside Fall 2015? Capstone Report – Will present “overall results” – Summarize “issues identified at all four universities” – FDP will review the Capstone report upon receipt PAYROLL CERTIFICATION PILOT

13. Consolidated data based on three year average Data is based on the average numbers for FY 12, FY13, and FY14 Range# of transactions$ of transactions $0-2,99952.40%14.01% $3,000-4,99945.25%12.73% $5,000-9,9991.05%4.68% $10,000-14,9990.36%3.02% $15,000-24,9990.33%4.44% $25,000-49,9990.28%6.58% $50,000-74,9990.10%3.96% $75,000-99,9990.06%3.11% $100,000-149,9990.06%4.18% $150,000+0.12%43.30% Number of Participants: 55 Cumulative Federal Awards for Participants - $13,212,291,665 Number of transactions associated with the perc. - 22,285,684 Procurement dollars associated with the perc. - $30,326,755,937 Procurement FTE - 872.1 Estimated Increase in procurement FTE due to UG - 164.35 Percent increase in FTE - 18.8% PROCUREMENT WORKING GROUP