I addressed the topic of avoiding grant award audits, as well as findings related to recent cases of fraud, at the March 2015 SRA International North Carolina Chapter Meeting. The presentation was entitled “Review of Recent Audits and Fraud Cases” and looked at many issues, including audit findings related to areas including unallowable expenses, late purchases/cost transfers and other areas.
A previous post looked at cases of unallowable expenses. The post made the case that each institution is responsible for ensuring that direct expenses charged to federally sponsored agreements are allowable under a set of strict cost principles. Today the focus is on audits stemming from Misrepresenting Effort.
Effort Certification Mandates
The Uniform Guidance https://federalregister.gov/a/2013-30465 requires recipients of federal funding to periodically certify that direct salary charges to sponsored projects are reasonable and reflect actual work performed.
Typically, salaries are the largest category of charges to federal grants by universities, representing roughly two-thirds of all direct charges. Because most faculty and staff who work on federal research grants might also be involved with other grants or other university activity, apportioning their effort among various activities ensures that the appropriate compensation is allocated to their federal grant work. The process that accomplishes this is referred to as effort reporting.
In many cases, effort reporting can be complex. Faculty and staff do not always fully understand the rules of effort reporting, and when handled manually or with complex systems, it can be cumbersome. Accurate effort reporting requires a full understanding of regulations.
Effort reporting has been the subject of federal audits in the university research area in recent years. Examples of recent audits include the following:
Weill Medical College of Cornell University
The audit revealed that the principal research investigator for the grants for which Weill Medical College sought funding failed to disclose to the Government the full extent of her various active research projects. These omissions deprived the Government of its ability to assess the researcher’s ability to perform the projects in the grant applications.
University of Nevada – Reno
Key audit findings included instances of noncompliance with Federal, NSF, or University effort reporting requirements including: faculty salaries exceeding NSF’s two-ninths rule, salary cost transfers processed without proper justification, and costs charged to NSF grants that did not directly benefit the research project.
University of Colorado Denver
An audit found that employees prepared personnel activity reports that included the total hours worked, but these reports did not identify the projects or activities on which the employees worked. For example, 100 percent of one hourly employee’s effort was charged to an award. The employee’s personnel activity report identified the hours worked but did not identify the project for which the hours were spent. Because the personnel activity report did not reflect the project or activity for which the employee expended effort, it did not provide adequate documentation to support the determination to distribute salaries and wages for this employee.
Next Steps: Avoiding Grant Award Audits related to Misrepresentation of Effort
For those research institutions looking to avoid audit findings such as the ones summarized above, it’s critical to accurately track effort reporting.
Noted here are some key tactics to prevent findings such as the ones summarized in the cases illustrated above. Those steps include:
- Maintain accurate Other Support pages. Other Support Pages provide summary information about the active and inactive sponsored projects supporting key personnel participating on a proposed project. Accuracy is key.
- Use an automated Effort Certification system Our web enabled Effort Certification Software is an internet-based solution that operates like an on-line banking system and automates manually-intensive, cumbersome record keeping.
- Thoroughly review effort distributions with responsible faculty for themselves and all personnel supported on their awards.
- Check guidelines for agency-specific effort rules.
- Provide training for faculty and staff involved in effort reporting functions.
As we noted, many institutions turn to effort reporting systems to help track and manage this process, and help avoid unfavorable audit findings. For further information, contact the IT Works team.
Keep on the lookout for additional summaries of the presentation about avoiding audits.