Prior to 2016, the federal government issued new mandates regarding documenting personnel compensation. Effort on federal awards must be certified by the employee or an individual having firsthand knowledge of the contributed effort on a periodic basis. In an effort to streamline the process and reduce the administrative burden, the Office of Management and Budget, or the OMB, published new guidance pertaining to effort reporting in the Uniform Guidance (UG). The UG simply indicates that the compensation must be reasonable for the services rendered and follows the appointment of the individual in accordance with the institutional laws and/or rules or written policies and is documented in accordance with the Standards specified in the guidance.
One important point addressed by the UG is Budget Estimates. Under Standards of Documentation of Personnel Expenses, section (viii) budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed and (B) The non-Federal entity’s system of internal controls includes processes to review after-the-fact interim charges made to Federal awards based on budget estimates.
For entities choosing to use this process for documenting personnel compensation, the challenge is establishing a payroll or effort certification and reporting system to efficiently and accurately track estimates vs actual costs. An effective system will allow the entity to identify all budgeted effort on an award for personnel, this could simply include percent of effort, anticipated dollars or both. The system must then also be able to tie this budget estimate to actual payroll costs in order to effectively meet the Standards of Documentation defined in the UG.
Documenting personnel compensation does not end there though. A truly effective system will be able to manage this process electronically and comply with the internal controls established by the institution.
The combinations of IT Works’ Grant Management System, Effort Certification System, and Reporting System can handle these specific regulations. At the budgeting and submission stage, IT Works can track the committed personnel compensation/effort on the proposal. This personnel compensation can then be carried forward once funded and compared to the actual pay data to ensure an effective internal control for reviewing after-the-fact charges based on budget estimates.
For more information about how IT Works can help your entity meet the requirements of the UG in regards to documenting personnel compensation, contact us today.