Effort Reporting

1
Effort Reporting

• Understanding the Effort Certification Process

2
Why Do We Have to Do Effort Certifications?

• OMB Circular A-21
• State of Arkansas Series 22 report
• DHHS Indirect Cost Proposal
• Other Federal, State, and Accreditation reports

3
OMB Circular A-21

• Section J. General provisions for selected items
  of cost
• Item 10
• Compensation for personal services

4
OMB A-21 Section J.10 General Rule

• Compensation for personal services (salaries,
  wages, and fringe benefits) paid for services of
  employees rendered during the period of
  performance under sponsored agreements are
  allowable to the extent that the total
  compensation conforms to established policies of
  the institution, consistently applied, and
  provided that the charges for work performed
  directly on the sponsored agreements are
  determined and are supported by an acceptable
  method of payroll distribution.

5
What?

• Salaries, wages, and fringe benefits are
  allowable expenses on a grant, only if you have a
  system in place that supports an acceptable
  method of distributing payroll expenses to a
  grant.
• The government recognizes 3 acceptable methods of
  payroll distribution.

6
3 Methods of Payroll Distribution

• Plan-Confirmation
• After-the-Fact Activity Records
• Multiple Confirmation Records
• The effort reporting system at UAMS meets the
  requirements of the Plan-Confirmation method.

7
What is Plan-Confirmation

• The plan-confirmation method of payroll
  distribution mandates that a grant is charged
  personnel costs for an individual, based on a
  plan, and then the individual certifies
  (confirms) that the amount charged is correct.
• This is what our payroll and effort certification
  systems do.

8
UAMS Effort Definitions

• 100 Effort Total University-compensated
  effort. Includes teaching, research, public
  service, administrative, and other
  University-related activities. 100 effort does
  not equate to any set number of hours. Expense
  associated with effort is based on institutional
  base salary.
• Institutional Base Salary The guaranteed salary
  paid to the employee in 1/12th increments for the
  12 months of the fiscal year.

9
How does the effort system support the expenses
on the grant?

• Every employee has an institutional base salary
  that supports 100 of their University
  compensated time.
• The effort reporting system identifies the
  portion of that 100 that was contributed to a
  grant.
• That portion of time, multiplied by the
  institutional base salary, determines the
  allowable charge to the grant.

10
How does that work?

• Employee John Smith has an annual salary of
  100,000. His salary distribution shows that 25
  of his time should be assigned to grant
  G1-10001-01.

11
Allowable Cost Example

• Therefore, the payroll system will have charged
  12,500 to the grant for the six month period.
• Inst. Base Salary (6 mos) 50,000
• effort .25 Amount to charge grant
  12,500

12
Allowable Cost Example (cont.)

• However, if John Smith certifies on his effort
  reporting form that he only worked 15 on the
  grant, then the payroll charges to the grant
  cannot be supported.

13
Allowable Cost Example (cont.)

• Amount charged to grant - 12,500
• Effort contributed by John Smith
• Institutional Base Salary 50,000
• effort spent on grant .15
• Allowable charges to grant 7,500

14
Allowable Cost Example (cont.)

• The grant was charged 12,500 for the six month
  period, however, there is only supporting
  documentation for 7,500.
• The institution will have to make payroll
  corrections to reduce the charges on the grant.

15
What if the effort changes during the six month
period?

• Our effort certification forms are based on a six
  month reporting period. If the percentage of
  effort changes during the six months, the effort
  certification form will show an average
  percentage for the six month period.

16
Change in example

• Investigator A works on a project at 20 for
  January and February. On March 1, he changes his
  effort to 50. For the six month reporting
  period ending in June, his effort to certify will
  be 40.
• (JanFebMarAprMayJun)
• (.20.20.50.50.50.50)/6 months
• 2.40/6 .40

17
Change in example (cont.)

• To show how this works with the allowability of
  the expense, lets assume Investigator As annual
  salary is 120,000.
• For January February the grant was charged
  2,000 each month. (120,000/12).20
• For March-June the grant was charged 5,000 each
  month. (120,000/12).50

18
Change in example (cont.)

• The total expenses charged to the project for the
  six month period were 24,000.
• The certification period is for six months, (1/2
  of a year) so the six month institutional base
  salary calculation is 120,0001/2 60,000.
• 24,000 / 60,000 .40.