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Page 3
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
Page 5
Types of Effort
• Direct-charged effort
• Cost-shared effort
• Proposed effort
• Committed effort
Page 6
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
Page 7
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.
Page 8
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
Page 9
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
Page 10
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!)
Page 11
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
Page 12
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
Page 13
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)
Page 14
What’s at risk?
• Audit findings/cost disallowances
• High-Risk Organization designation
• Corrective Action Plan required
• Temporary withholding of payments or future awards
Page 15
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
Page 16
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)
Page 17
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”
Page 18
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)
Page 19
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
Page 20
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
Page 21
Thank you!
• Contact: Amy Gustavsson Manager-Reporting, Cost Analysis and Compliance
• Phone 617-496-4771
• Email [email protected]