No, the effort reporting process wasn’t eliminated. Rather there was an attempt to simplify it while still maintaining documentation of appropriately expended federal funds. During the iterations of the Uniform Guidance both federal and higher education research managers held several discussions focused on streamlining the effort reporting process. The Council of Governmental Relations and the Federal Demonstration Partnership, among others, worked closely with federal officials to attempt to ease the administrative burden and cost of compliance for faculty and administration. These burdens were formerly in effect under the highly prescriptive requirements for certifying effort at entities that receive federal awards, including Institutions of Higher Learning.
Under the current Uniform Guidance, 2.CFR.200, the broader regulations no longer list examples of a compliant effort reporting process. Instead, organizations are expected to rely on internal controls to ensure compliance. The Uniform Guidance 200.303 states an institution must have robust internal policies in place that meet the “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. These requirements must be met to receive federal funding. As such, it is often best to automate the process and use an effort certification software to monitor the progress and accuracy of the internal controls.
The emphasis on internal controls
The Uniform Guidance focuses on an organization’s internal controls to assure high standards for the effective management of personnel expenditures on federal projects. Personnel costs are often the largest expenditure pool on a sponsored project, hence, the emphasis on appropriate costing within this budget line. Uniform Guidance (VI.621.C.10) sets the standards (not the procedure) for documentation of personnel expenses as “…will be based on documented payrolls approved by a responsible official and the payroll system will be:
- Incorporated into the official records of the recipient
- Reasonably reflect the activity for which the employee is compensated (not to exceed 100%)
- Encompass both Federally assisted and all other activities compensated by the recipient on an integrated basis
- Payroll documentation will comply with the established accounting policies and practices of the recipient
Let’s take a closer look at those words in bold.
- Official record: An institution is expected to maintain official records, normally stored within the institution’s financial record system.
- Reasonably: This is not a precise science but it can’t be a wild guess either. Remember the “reasonable man” reference to allowable costs.
- Both Federally assisted and all other activities: The effort reporting process must include all activities for which the person received institutional payment. Incidental work is excluded and covered under section 8.
- Established accounting and practices: An institution is required to have established, published and easily available policies and practices.
Additional effort reporting process standards
- The report must provide after-the-fact certification that the reasonable estimate of salary and cost sharing obligations conforms to the payroll records.
- The certification period must not exceed twelve months. It can be shorter, such as monthly or by semester/summer. Many institutions choose to certify on a semester/summer schedule to reflect the changes in release time, teaching responsibilities and summer work. This is the institution’s decision, but if an annual certification is chosen, there are additional caveats: These include:
- Reviewed and revised at least quarterly,
- Prompt updates to payroll with significant changes in effort
- Reporting may reflect categories of activities, but each project needs to be identified for specific certification of effort. When separating non-grant effort by categories, estimates as to teaching, service and administration, and reasonable estimates are permitted.
- Effort must be certified either by the individual employee or by an individual responsible (note, this language has changed) for verification that the work was performed. If an employee is supported by multiple grants, each certifier is responsible for that specific project.
- Nonprofessional (non-exempt) certification must be supported by a timesheet in conformance to the Fair Labor Standards Act.
Managing effort certification
For the Sponsored Program Office, trying to coordinate the effort reporting process is difficult when taking into account faculty traveling, students graduating, multiple projects with the same Principle Investigator, grants expiring and new grants being received. With the new Uniform Guidance placing the emphasis on internal controls, there is no longer a prescribed process that can be followed. Many institutions have to automate the effort reporting process through the implementation of software. Having a customized system for routing, signature, maintaining records, changing of commitment, tracking compliance and follow up can streamline the process. This automation provides the internal controls to increase compliance and, once implemented, free staff to focus on other compliance issues.