1. Effort Reporting and Certification on Sponsored Programs
What is it? Why is it?
Do I have to do it?

2. What is it?
Effort reporting is the process by which the salary charged to a sponsored project is reviewed after-the-fact to assure that the salary charged was reasonable in relation to the effort expended on that project.
Effective December 26, 2014, the OMB Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (the Uniform Guidance) regulates effort reporting requirements for recipients of federal funding. Like Circular A-21, the Uniform Guidance requires an after-the-fact review of charges made to Federal awards that were based on budget estimates. However, the new rules are not prescriptive, but instead focus on internal controls.

3. Effort
Effort is the portion of time spent on a given professional activity and expressed as a percentage of the total professional activity for which an individual is employed by CSU.
Important points:
The government recognizes that it is a “reasonable estimate”
Must be performed with “suitable means of verification”
Total effort must equal 100%
Effort is not based on a standard (e.g., 40-hour) work week, instead it is based on whatever time is worked
“100% Effort” considers all professional activities related to the individual’s CSU appointment (teaching, research, service)
Effort does not include outside activities (e.g., external consulting)

4. The Context of Effort Reporting
Appointing
Faculty & Staff
Preparing
the Proposal
Budget
Charging
Salary
Certifying
Effort
Employment terms are established.
Effort is proposed; a commitment is made to the sponsor.
Salary is charged (or cost shared), consistent with activity. Adjustments may be made, timely after-the-fact.
Effort is attested to, after activity has occurred (adjustments to salary distribution may be made if effort does not equal salary %)

5. In a Nutshell In a grant proposal, we PROPOSE effort
At award time, we make a COMMITMENT of effort by staffing on a project
Throughout the project, we usually CHARGE SALARY to the sponsor which represents the effort COMMITMENT
If we do NOT charge salary, we must show the effort in another way
Periodically, sponsors want to know:
Have we devoted enough effort to justify the salary charges?
Even in cases where we are not charging salary to the sponsor, have we fulfilled our commitments?

6. PI – Principal Investigator
The Principal Investigator is the steward of the sponsored project and accompanying funds.
The University is legally responsible to the sponsor, but the PI is held accountable for the proper fiscal management and conduct of the project. PI responsibilities include:
Scientific performance of the work related to the project.
Management of the project within funding limitations and in compliance with Federal regulations, sponsor requirements, and institutional policy. This includes effort certification for all personnel on the project.
Sponsor notification when significant conditions related to the project change.
Responsibility for the day-to-day management of project finances may be delegated to administrative or other staff. However, accountability for compliance with Federal regulations, sponsor requirements, and institutional policy, ultimately rests with the PI.

7. False Claims Act
Those who knowingly submit, or cause another person or entity to submit, false claims for payment of government funds are liable for three times the government’s damages plus civil penalties of $5,500 to $11,000 per false claim.

8. The Effort Ecosystem

9. Ecosystem: IBS IBS – Institutional Base Salary IBS and Effort
Institutional base salary (IBS) is the annual compensation paid by the University for all professional responsibilities of the position, including research, instruction, administration, service, or other institutional activities.
IBS is the annual salary of the employee’s base appointment, plus any additional supplements for recurring, long-term activities (e.g., department chair).
IBS excludes fringe benefits, reimbursed expenses, and supplemental compensation for additional work.
IBS cannot be increased as a result of replacing institutional salary funds with sponsored project funds.
IBS and Effort
IBS should be used when proposing, charging, and cost sharing salaries to sponsored projects.

10. Ecosystem: Effort Commitments
Proposal budget preparation
Sponsor salary caps
Mandatory cost sharing
Voluntary committed cost sharing
Financial reporting
Progress reporting
Project financial projections

11. Ecosystem: Cost Sharing
Payroll allocations
Sponsor approvals
Institutional approvals
Proving it all

12. Ecosystem: Salary Cost Transfers (PPDAs)
Timing is appropriate (before effort card signed)
Determination of appropriate funding sources
Robust justifications for transfers
Even MORE robust justifications for late transfers
Not acceptable:
‘To correct an error – should have been on another account’
‘PI has money left in this account and wants to spend it out’

13. PPDA Justifications Must include documentation that clearly shows:
How the expense directly benefits the receiving account
How the expense is allowable
The reason the expense was charged incorrectly to the first account
That any systematic reasons which might cause this problem to be repeated have been addressed
The reason for any delay in the timely processing of the transfer
Large transfers, or transfers within the last 90 days of the project, or transfers that do not meet the timeliness criteria receive additional review and need even more justification

14. Tips for Writing the Justification
A good justification will allow anyone reviewing the cost transfer to understand how the expense benefits the receiving account. It should be easily understood by anyone reviewing the journal, and provide enough detail to inform approvers and auditors about the action taken. Think, "if I leave, will an auditor be able to understand this two years from now?" it should answer: who, what, where, when, and why. 
Who: the person, organization, or department name(s) that caused or played a role in the journal
What: what events or circumstances are causing the journal
When: the month of occurrence or the key date related to the cause
Where: the location of the event or occurrence (if it is significant)
Why: why a change is required
The trick to writing a complete justification is to try to answer all possible questions. It is important to state explicitly how the project which will pay this expense benefits from the transfer. Include a statement like: “The direct benefit to Project XXX of this expense was __.’ Indicate whether the sponsor approved the transaction. If you wonder if you have included enough information, you probably haven't. Do not use abbreviations or acronyms in a justification. Above all, remember, you cannot transfer expenses to a different account just because it has money!

15. Ecosystem: Certification Statements
Reasonable estimate of time spent
Period of performance considered
Certification period observed
Certification report verified by account manager (PI)
Effort funded by sponsor and committed cost share shown
Voluntary uncommitted cost share NOT shown
Changes made if needed before certification
Sponsored and non-sponsored effort shown
Person with suitable means of verifying signs

16. Ecosystem: Service Center Accounts
Personnel billed to proper accounts
Personnel billed at proper rates
5-3 accounts billed at least bi-monthly
Business plan reviewed and updated at least bi-annually

17. Top 10 Things a P.I. (and you) Should Know about Effort
Effort is your work on a project, whether the sponsor pays your salary or not.
When you write yourself into a grant proposal, you are committing your effort to the sponsor.
If you reduce your effort, paid or unpaid, on a federal grant by 25%, you must have agency approval. This is cumulative over the life of the project. If you reduce your paid effort, you may choose to document cost-sharing so that the total effort does not decrease.

18. Top 10 Things a P.I. (and you) Should Know about Effort
Many activities cannot be charged to a federally sponsored project. For example, the time you spend on these activities cannot be charged:
Writing a proposal
Serving on an IRB, IACUC or other research committee
Serving on a departmental or university service committee

19. Top 10 Things a P.I. (and you) Should Know about Effort
If you work on a federally sponsored project, you must currently certify your effort.
Certifying effort is not the same as certifying payroll.
Certification must reasonably reflect all the effort for all the activities that are covered by your University compensation.

20. Top 10 Things a P.I. (and you) Should Know about Effort
Effort is not based on a 40-hour work week. It’s not based on hours at all.
Effort must be certified by someone with suitable means of verifying that the work was performed.
Auditors look for indications that certification was based on factors other than actual, justifiable effort.

21. Effort Certification
Effort reports may pre-populate total percentages of payroll distributions to be used as a starting point, since it is often assumed that payroll distribution is monitored and revised based on effort expended.
However, these percentages may need to be revised during certification based on actual expended effort.
This after-the-fact confirmation is necessary for compliant effort reporting

22. How Does it Work at CSU?
Quarterly Certification reports are run in Oracle by Payroll approximately 1 month after each quarter end
Oracle feeds data to Vista reports
sent to effort coordinators via Effort Certification Listserv
Reports pulled from Vista and distributed (either electronically or paper)
If report is correct, Certifier signs and returns to Payroll
If report is not correct, department updates labor distribution in Oracle, creates PPDA and routes for signatures
HR updates process in Oracle
Quarterly report initiates recertification process

23. The Certification Process Follows a Schedule
The ‘grace period’ is to allow for any PPDAs prior to running the certification process The departments then have around 30 days to return the forms. Recertifications are not available in Vista and must be printed by Payroll manually

24. Regular Certification Process

25. Re-Certification Process

26. What Internal Audit says:
In a memo to a department that asked:
“Account review and reconciliation are required by CSU Financial Rule 1:
Review and Reconciliation: Routine examination and reconciliation of transaction records to official University records is required to verify the accuracy of the records, the appropriateness of the transactions, and their compliance with policy;
I agree that written guidance is not easily available as to the specific reports to use (or procedures to use) to comply with the Rule.  Keep in mind that the goal of financial reconciliation is to assure that official University records are accurate.  Your department may have specific expectations for the reconciliation and the documentation of it.  From the standpoint of Internal Audit, we look for a documented procedure that achieves the objective of ensuring accuracy, and timely completion and approval of the reconciliations.”

28. What it means….

30. MIP Staffing Sheet

31. Questions to consider What is the Institutional Base Salary (IBS)?
Are we capturing what we need to in this report?
Are we capturing things that don’t need to be in the report?
How do we know what the IBS is?
How much effort was committed in the awards?
Can we tell from this report how much effort is being committed?
Can we tell what was originally committed?
Do we know if agency approval was obtained?
Is there any cost-sharing that is not showing up?
Why would it matter?

32. Questions to consider
Is any of the certifier’s payroll coming through a 22 account?
How is it allocated back to the sponsored account?
Why would that matter?
Is there 100% total commitment/payroll on federal accounts?
Can we justify 100%?
What can or cannot a PI do with a 100% commitment?
Who should sign the report?

33. Questions to consider
What do you do if the effort form is incorrect?

34. Changes to the Uniform Guidance
In the UG, new standards for documentation of personnel expenses have been defined
Specific frequency and methodology requirements have been eliminated
Charges to Federal awards must be based on records that accurately reflect the work performed, including:
Encompass both federal and all other activities (100% of effort)
Support the distribution of salary and wages among specific activities or cost objectives (for multiple grants)
Comply with the institution’s accounting policies and procedures
Charges for cost sharing or matching must be supported in the same manner as the direct charges

35. Where are we headed – short term?
Ensuring that needed policies are developed or updated
Developing training (like this one!)
Redesigning current effort card to make more sense to the PI
Examining effort reports to make sure they are capturing what is needed
Determining who reviews and confirms effort statements
Moving responsibility of effort reporting from Payroll to OSP
Moving approval of PPDAs related to 5-3 accounts to OSP

36. Where are we headed – long term?
Move from quarterly effort certifications to project-based verification of expenses
Possibly a hybrid model whereby verification that expenses have been reviewed will be required quarterly but actual certification only 1x/year
PI verifies/certifies for all employees on a project at once
Changes to effort automatically trigger PPDAs
Greater use of cost-share accounts and advance start accounts
All PPDAs that affect sponsored projects approved by OSP

37. NSF Audit The NSF data analytics audit will be held to A-21 standards
This audit could lead to an audit specific to time and effort
NSF OIG expects 100% compliance on returned effort reports
Auditors expect that they can follow effort from:
IBS (Institutional Base Salary)
Proposal document
Awarding document
PPDAs
Effort Reports
Other internal fiscal reports
PI understanding of fiscal health of project
Technical and fiscal reports

38. Pop quiz An Effort Report is:
An accurate estimation of the effort someone devotes to their various activities based on payroll
A report only required by CSU for internal checks
An exact account of the time devoted to a sponsored project
A real pain

39. Pop quiz Inaccurate effort reporting affects:
The potential research opportunities for the PI
The future funding for the University
None of the above
A and B

40. Pop quiz
Individuals who are paid on a sponsored project are obligated to complete an effort report:
True
False
It depends

41. Pop quiz Per current CSU policy, effort reports are certified: Weekly
Monthly
Quarterly
Semester-ly
Yearly

42. Pop quiz
If you are paid in whole or in part from federal funds, a grant or sponsored project, or have part or all of your salary as cost-share:
CSU requires that you certify your effort reports
You are responsible for tracking and recording your hours
The Federal Government mandates that your effort is tracked
All of the above
A and C only

43. Pop quiz Effort reports are based on Actual CSU payroll data
Cost share only
Neither of the above
Both of the above

44. Pop quiz
If I am not paid on a grant but part of my time is contributed as cost share, I have to complete an effort report:
True
False
It depends

45. Pop quiz Currently, Effort Reports can be certified by: The employee
The employee or the employee’s direct supervisor
The employee or someone with direct knowledge of the project
OSP
Payroll
All of the above
A, B, and C

46. What if I have questions?
For assistance with Effort Reporting, contact one of us at the moment. If we don’t know the answer, we will make one up:
Diane Barrett
Doug Leavell