1. 1 Effort Reporting APM - 60.32 Effort Verification Reports Missouri University of Science and Technology January 29, 2009

2. 2 Learning Objectives Compliance requirements related to Effort Reporting University’s process for Effort Verification Reporting Responsibility of Fiscal Officer, Principal Investigator, and subject

3. Overview I.Definitions II.Compliance Requirements III.Responsibility IV.Effort Verification Report (Form) V.Common Issues VI.Concluding Points VII.Frequently Asked Questions (FAQs) 3

4. Definitions Effort Reporting – The process for employees to verify time spent and salary charged to a sponsored award. Modified Effort– An adjusted estimate of how an employee’s time was spent during the period. Subjects – Anyone who has time charged to an award. (PI’s, graduate assistants, administrators, lab techs) 4

5. Definitions Personnel Action Forms (PAFs) - The form used to create the payroll record for a University employee. Payroll Correcting Entry (PCE) – A correcting journal entry to redistribute payroll to a different funding source. Period of Availability - The official start and end dates of the sponsored award. 5

6. Roles in the EVR process UM System Controller’s Office – Produces EVRs and performs compliance oversight. Campus Sponsored Programs Office (OSP) – Reviews completed EVRs for compliance. Follows up on late or incomplete EVRs. Departments – Distributes and collects EVRs. Initiates PCEs at the direction of the PI. PI – Ultimate responsibility for ensuring compliance. Subject – Reviews, signs, and dates the EVR. 6

7. 7 Compliance Requirements Who sets the requirements? –Office of Management and Budget (OMB) – Oversight agency for the federal government: Federal monies are spent properly Programs are effective –UM System – Policies are established by the Controller’s Office and Management Services in collaboration with campuses. –Granting agencies - (NIH, NSF) – Individual sponsors may have additional requirements.

8. Compliance Requirements What compliance requirements apply to effort reporting? OMB Circular A-21 – Cost Principles for Educational Institutions (section J.10) OMB Circular A-133 – Compliance Supplement (Part 3, section G) UM System – APM 60.32 – Effort Verification Reports UM System – BPM 213 – Adjustment of Income and Expense Items 8

9. Compliance Requirements Why does the University have these requirements? –These are a result of the University accepting a sponsored award –PI has ultimate responsibility for ensuring compliance requirements are met 9

10. 10 Compliance Requirements Effort is verified to ensure all payroll costs directly charged to an award reflect actual efforts. Total effort is not based on a 40-hour workweek Total effort is not based on a full-time equivalent.

11. 11 Compliance Requirements Total effort must reflect 100% of all University compensated activity. This includes research, instruction, clinical service, and administrative duties. It is unlikely that a PI will devote 100% of his/her effort to sponsored activity.

12. 12 Compliance Requirements - EVRs EVRs should be: –Completed every 6 months at a minimum. –Signed by the subject of the effort or a person with “suitable means of verification that work was performed.” –Return original to the OSP within 30 days of distribution. –Support retained with other award documentation.

13. Compliance Requirements – PCE Enter a PCE if the difference between Payroll Data % and the Modified Effort exceeds 5%. PCEs must be entered timely - within 2 accounting periods after the month of the transaction. Documentation must support PCEs. 13

14. 14 PI Responsibility By accepting the award, the PI must: –Accept ultimate responsibility for the award –Possess knowledge and understanding of the compliance requirements. –Adhere to all compliance requirements. –Ensure individuals working on the award understand and adhere to all compliance requirements. See Roles and Responsibilities See Roles and Responsibilities – PI – Financial Compliance Training Website.

15. 15 PI Responsibility For effort reporting, the PI must: –Ensure the proposed effort was delivered. Aware of current and pending effort commitments –Contact the sponsor with significant changes in effort by the PI or key personnel. –Initiate timely processing of PCEs and PAFs. –Ensure all EVRs are reviewed, signed, and submitted by the due date.

16. 16 Fiscal Officer Responsibility Shares administrative management responsibility with the PI The Fiscal Officer should be aware of: Compliance requirements Unique restrictions by sponsor Budget Alert PI of potential or known compliance issues Contact OSP for assistance

17. 17 Subject Responsibility For effort reporting, the subject must: –Ensure the proposed effort was delivered. –Review his/her EVR and sign timely. –If leaving University, review actual effort with supervisor/PI to ensure accuracy.

18. EVR Form Effort Verification Report (EVRs) – Form used to verify an individual’s effort for a reporting period –Payroll for all funding sources –Planned Allocation % Allotted – estimated payroll distribution at beginning of the period –Actual Payroll Data during the reporting period ($ Amount and %) –Modified Effort – completed by employee if different than Payroll Data % 18

19. EVR Form The PI (or subject) must: –Complete Modified Effort if actual effort is different than Payroll Data %, –Review his/her EVR for accuracy and completeness of funding for the reporting period, and –Sign and date. Total effort must still = 100% 19

20. EVR What to Check Are these the right grants? 20 1) Estimate your effort. 2) Compare to Payroll Data %. 3) If different, complete Modified Effort From your most recent PAF 85 15

21. EVR Effort Always = 100% Ensure total effort = 100% Write in effort when different. If difference >5% enter PCE. 21 70 30

22. EVR Signature Completion Signing and dating are critical since this is a “certification” Compensation not related to effort— awards, incentive, allowance, etc. 22

23. Common Issues - EVRs Unavailable or incomplete EVRs EVRs not signed by subject or person with suitable means Late EVRs Actual effort per EVR not reflective of payroll charges 23

24. Common Issues - PCEs PCEs not completed to reflect changes in effort > 5% Late PCEs PCEs without proper documentation Sufficient - < 60 days Substantial - > 60 days 24

25. 25 Impact of Noncompliance Questioned or unallowable costs Repayments to the sponsor Fines and/or sanctions Subject to additional external audits Jeopardize future funding opportunities Damage to reputation

26. Checklist for Success  Complete Modified Effort if actual effort is different than Payroll Data %  Initiate PCEs, if variance between Modified Effort and Payroll Data % >5%  Total of all Effort must = 100%  Complete PAFs to reflect future efforts  Sign and date the EVR  Mail original to OSP by due date 26

27. Concluding Points Payroll costs must reflect actual effort worked. Signature indicates the effort is reasonable. Failure to sign the EVR could lead to unallowable costs and repayment to the sponsor. The PI’s department is responsible for repayment of any unallowable costs. Do not wait until EVR verification to review effort! 27

28. 28 Frequently Asked Questions The following Frequently Asked Questions (FAQs) address practical application of this policy.

29. FAQs Why does the University have to do effort reporting? –The University accepts federal funding for awards that fall under OMB Circular A-21 –A-21, section J.10 sets forth the requirements for effort reporting and acceptable methods based on our payroll system. 29

30. FAQs What if the compliance requirements on an award conflict? The requirements which are most restrictive should be followed. This includes requirements by: –OMB –The UM System –The granting agency 30

31. FAQs Who must complete an EVR? –Anyone with payroll costs charged to an award is required to complete an EVR. –This includes any individual who: Works or cost shares on a sponsored award, Was a work study student, or Was paid from federal appropriations. 31

32. FAQs Who should sign the EVR? –The subject of the EVR should sign his/her EVR, or –If the subject of the EVR is not available, a person with “suitable means of verification that work was performed” should sign. 32

33. FAQs What if the subject leaves the University before the EVR process? –The subject should review his/her effort to date with the supervisor or PI. –For signing the EVR, a person with “suitable means of verification that work was performed” should sign. 33

34. FAQs What if an individual worked in 2 different departments and is not available to sign the EVR. Who should sign? –The person with “suitable means of verification that work was performed” in each department should sign the EVR to verify his/her proportion of work was performed by the individual. 34

35. FAQs What activities are included for purposes of EVRs? –All University compensated activities, including teaching, research, clinical service, and administrative duties. 35

36. FAQs What activities are NOT included for purposes of EVRs? –Activities not related to effort. –Examples include awards, allowances, or incentives. 36

37. FAQs Does an employee who works more than 40 hours a week on an award report additional effort? –No. Employees should report 100% of their total effort, regardless of how many hours per week they work. –These activities are NOT based on a 40- hour workweek. 37

38. FAQs Is a part-time employee required to complete an EVR for the effort on a sponsored award? –Yes. Part-time employees should report 100% of their effort, regardless of how many hours they work. –Effort is NOT based on a full-time equivalent. 38

39. FAQs When is the PI required to notify the sponsor for a change in effort? –Notified the sponsor when there is a: Change in scope or objective Change in a key person specified in award Absence of the PI for more than 3 months, or a 25% reduction in time devoted. –Work with OSP to notify sponsor. 39

40. FAQs Can a PI charge the sponsor for time spent preparing the proposal? –No. This is considered administrative time and is a cost of the University doing business. 40

41. FAQs Can a Co-PI charge the sponsor for 100% of his/her time? In certain instances, if the Co-PI is: –Named on the award documentation –Not spending any time preparing proposals –Expending all of his/her effort on the award –Documentation must be made of this effort. 41

42. FAQs When does the subject need to complete the Modified Effort column on the EVR? –If there is any difference in actual effort and Payroll Data %, the Modified Effort must be completed to reflect actual effort. 42

43. FAQs When is a PCE required to be completed? –Enter a PCE if the difference between the Payroll Data % and the Modified Effort exceeds 5%. 43

44. FAQs If the difference between the Payroll Data % and the Modified Effort is 5% or less, should a PCE be completed? –Although not required, a PCE should be completed for any differences to accurately reflect payroll charged to a project. 44

45. FAQs What are common reasons for actual effort to be different than payroll charged? –Actual effort starting before the award is set up in PeopleSoft. –Payroll was charged to the wrong project or funding source. 45

46. FAQs What are the record retention requirements for EVRs? –The EVR should be maintained for the same period as other award documentation. –3 years from the date of submission of final expenditures, or longer based on the award requirements. 46

47. FAQs Who is responsible for retaining EVRs and other documentation? –The Department is responsible for maintaining supporting documentation for expenditures charged to the award. –The original EVR should be sent to OSP for the central award file. 47

48. FAQs What is “sufficient” documentation? –Documentation should demonstrate: The charge is allowable, Why the transfer is necessary, and The charge directly benefits the award. 48

49. FAQs What is “substantial” documentation for cost transfers > 60 days? –Who - payroll, various departments –What - costs, vouchers, journals –When - original date transaction –Where – business units, departments –Why - reason for transfer –How will the error be prevented in the future? 49

50. References A-21 – Circular A-21, RevisedCircular A-21, Revised APM 60.32 – EVR PolicyEVR Policy BPM 213 – Adjustment of Income & ExpendituresAdjustment of Income & Expenditures Financial Compliance Training website – on-line EVR TrainingEVR Training Reference Guide for Sponsored Programs 50

51. 51 Contact Information Paula DeLong Compliance Officer 573-341-4134 delongps@mst.edu