1. Effort Reporting: Time for Discussion Casey J. Murray September 15, 2004

2. 2 Why Do Effort Reporting? Sec. J10 of A-21 requires it Salary and wage charges to sponsored agreements are allowable only if they are supported/documented by an Effort Reporting System

3. 3 What is Effort Reporting? Accounting for salaries and wages and certifying to time/effort by: – Individual sponsored agreements – All other activities

4. 4 Accounting vs. Certifying Accounting tracks the detailed payroll accounting transactions to accounts created for individual sponsored agreements and for other University activities

5. 5 Accounting vs. Certifying Certifying is attesting that salaries and wages charged to sponsored agreements (including mandatory and voluntary committed cost sharing) and to other university activity categories (including uncommitted voluntary cost sharing) are reasonable in relation to the work performed

6. 6 Accounting vs. Certifying The % of salary charged to sponsored agreement accounts is reasonable if it is approximately = to the % of effort expended on those agreements

7. 7 Accounting vs. Certifying The % of salary charged to non-sponsored agreement accounts is reasonable if it is approximately = to the % of effort expended on those activities

8. 8 Accounting vs. Certifying % of Salary≈% of Effort Sponsored agreement Funded Mandatory & Voluntary Committed Cost Sharing ≈ Sponsored agreement Funded Mandatory & Voluntary Committed Cost Sharing Other activities Sponsored Agreement Uncommitted Voluntary Cost Sharing Nonsponsored research Teaching Patient Care Administration Etc. ≈ Other activities Sponsored Agreement Uncommitted Voluntary Cost Sharing Nonsponsored research Teaching Patient Care Administration Etc.

9. 9 Who Has to do Effort Reporting? Any employee that has some part of their “regular” or “extra service” salary charged to a federal or non-federal sponsored award

10. 10 Total Effort Definition Total employee’s time spent on University activities for which he/she is compensated What constitutes a University activity? When is it compensated, when is it not? – There are no black and white answers. But here is some guidance Formal activity assignments are always compensated But if it is an activity that the employee believes they are not obligated to provide as part of their employee responsibilities, then that activity should be excluded from their definition of “total effort”

11. 11 Sponsored Agreement Effort Definitions Sponsored agreement effort categories: – Accounted for as sponsored agreement effort Sponsored paid effort Mandatory and voluntary committed cost sharing effort – Accounted for as other University activity effort Voluntary uncommitted cost sharing effort – Employee is obligated to provide – Not accounted for as University effort Voluntary uncommitted cost sharing effort – Employee is not obligated to provide

12. 12 Sponsored Agreement Effort Certifications Sponsored paid and mandatory and voluntary committed cost sharing effort must be certified at the individual sponsored agreement level – It is not necessary to certify the paid and cost sharing categories separately Voluntary uncommitted cost sharing effort that the employee is obligated to provide to the University is included in the certification of the “other” University activity category Voluntary uncommitted cost sharing effort that the employee is not obligated to provide to the University is not included in the effort that is certified

13. 13 A-21 Effort Reporting Systems A-21 describes three acceptable effort reporting systems: – After-the-Fact Activity Record System is used for biweekly employees – Plan-Confirmation System is used for monthly employees – Multiple Confirmation Records

14. 14 University Effort Reporting Systems Biweekly Employees – Covered by an after-the-fact activity system Time card is the certification document Monthly Employees – Covered by a plan confirmation system Annual Certification Statement is the certification document

15. 15 Plan Confirmation Systems A-21 states that plan confirmation systems must: – Record the initial work plan by: Individual sponsored agreement Other activities – Monitor the work plan – Record changes to the work plan – At least annually, certify the reasonableness of the salary charges in view of the work performed

16. 16 UC’s Plan Confirmation System Initial work “plan” is developed and entered into the payroll system – Personnel Action Form is the input vehicle – PIs, with the assistance of administrative staff, develop the work plan – The plan is shown as $ and % of salary to be charged against individual sponsored agreement accounts and accounts used for all other activities

17. 17 UC’s Plan Confirmation System Initial work “plan” is developed and entered into the payroll system (cont’d) – Cost sharing: Plan is entered for mandatory and voluntary committed cost sharing. However, no plan is entered for mandatory cost sharing caused by NIH salary caps; instead, the system automatically calculates the % of cost sharing effort dictated by the caps A separate plan is not entered for voluntary uncommitted cost sharing effort; it is part of the “all other” activity plan

18. 18 UC’s Plan Confirmation System Work plan is “monitored” – Departmental personnel develop means to monitor actual activities against the planned activities – Comptroller Office provides two monthly monitoring reports: List of employee payroll distributions to sponsored agreement accounts that are ending. List of most current payroll distributions by employee, by account.

19. 19 UC’s Plan Confirmation System Work plan “changes” are entered by departmental personnel into the System via: – Personnel Action Forms – Salary cost transfers

20. 20 UC’s Plan Confirmation System Certification of effort – Annual Certification Statements are generated in November for any individual who has some part of their salary charged to sponsored agreements in the previous fiscal year – Separate reports are generated for the academic year (“regular” salary payments) and “summer” quarter (“extra service” payments) – An employee’s report is signed by that individual or someone who has suitable means of verifying that the work was performed.

21. 21 UC’s Certification Statement “I certify to the best of my knowledge and belief that the salary percentage distribution for the sponsored projects shown above is reasonable in relation to the work performed.”

22. 22 A-21 Guidance on Certification J10b(2)(b) states, “... activities may be confirmed by responsible persons with suitable means of verification that the work was performed. Confirmation by the employee is not a requirement... If other responsible persons make appropriate confirmations.”

23. 23 A-21 Guidance on Certification J10c(1)(e) states, “... 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... and to other categories are reasonable in relation to work performed.

24. 24 Suitable Means for Verifying Work Performance Contact the employee via email or phone Contact the employee’s supervisor Establish a protocol with employee for communicating changes in effort

25. 25 Suitable Means for Verifying Work Performance Certifying “incidental pay” – If the pay is truly incidental, for example, total Extra Service Lump-Sum payments of less than $5,000, the “Monthly Extra Service Payment Request”, UPP Form No. 172 can serve as the “suitable means for verifying work performance”

26. 26 A-21’s Guidance on Precision B3 states that, “Allocation means the process of assigning a cost... to one or more cost objective, in reasonable and realistic proportion to the benefit provided or other equitable relationship.”

27. 27 A-21’s Guidance on Precision J10b(1)(b) states, “The apportionment of employees’ salaries and wages which are chargeable to more than one sponsored agreement or other cost objective will be accomplished by methods which will produce an equitable distribution of charges for [an] employee’s activities....”

28. 28 A-21’s Guidance on Precision J10b(1)(c) states, “In the use of any methods for apportioning salaries, it is recognized 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.”

29. 29 University Issues/Exposures Do certification signers have suitable means for verifying that salaries and wages charged to sponsored agreements... and to other categories are reasonable in relation to work performed. Is the amount of reported non-sponsored agreement effort sufficient to meet other University obligations (teaching, administration, patient care, etc.)? Tardiness in returning annual certification reports

30. 30 Number of “Regular” Salary Effort Reports FY 2003

31. 31 Number of “X-Service” Salary Effort Reports FY2003