Retro Allocations: How to Handle Ever-Changing Effort

The landscape of research administration is dynamic and challenging, with a wide range of complexities. One of the complexities that can trip up teams is effort reporting. The concept of retro-allocations has become a pain point in recent years due to changes in Uniform Guidance.

During our Connect by Cayuse Conference in 2022, Project Support Specialist Brennan McMullen and Cayuse Professional Services Consultant Kathryn Simpson led an engaging webinar on the subject aimed at helping attendees understand pitfalls and best practices. 

In this article, we’ll shed light on the intricate topic of retro-allocations and effort reporting, highlighting common pain points and sharing best practices for effective retro-allocation management.

Uniform Guidance and an overview of effort

Uniform Guidance Rule 2 CFR 200.430 states that payroll systems must:

• Be based on records that reflect the actual work performed
• Have internal controls
• Provide reasonable assurance that charges are accurate

In the past, we saw more emphasis on payroll than internal controls, but that has changed in recent years.

The following are the most common potential audit issues related to effort:

1. Expenditures over 90 days. While this is allowed, you want to aim for a small number across the institution. If your institution has a lot of cost transfers or charges over 90 days, it shows there is not a good internal control practice in place. Auditors may look for staff members who don’t fully understand policies or internal issues driving these delays.
2. Consistent treatment of costs. A constant back and forth between Sponsored Projects or the grant and contract office over how costs are treated is another red flag to auditors. Documentation is key where treatment could be more consistent; if policies changed midstream, causing certain approvals to go through where previously they would not have been, it is critical to document why this is the case. 
3. Lack of documentation. On the subject of documentation, an email will not always suffice. It is up to you to ensure you have backup documentation in case of an audit. This documentation could be an agency approval, a chain of emails, etc. Store these pieces of evidence where they are easy to find and access. 

Additional red flags to auditors include: 

• Delayed notice that a PI started working on a project
• Lack of documentation regarding significant changes in effort
• Agency delay, not allowing funds to be encumbered
• Payroll policies that don’t align with the agency

Common challenges with retro-allocations

Organizational Knowledge

Organizational knowledge is defined as resources of expertise or information that can be realistically accessed. If organizational knowledge is not secured and accessible, there are likely to be effort concerns, as timelines will change when that knowledge is lost. 

Organizational knowledge includes repositories of data, documentation, and logged communications. This is accessible knowledge that is more explicit, declarative, and procedural.

Access to this type of knowledge is the guiding force to understanding a project’s history, status, and direction of effort.

Communication Methods and Strategies

Without proper communication methods, changes in effort can easily be lost. A delicate balancing act exists between preserving knowledge and keeping systems flexible enough to incorporate new information.

Proximity is key. Who has the knowledge, and how can you incorporate their experience into the systems and strategies that will keep information secured and accessible? 

Consider where valuable information comes from. Is it a shared software platform like Slack—something indexable, archivable, and organized? Or is it less formal, like one-on-one in-person meetings in the office? Determine which systems work for you, your investigators, and your team. 

Disparate Access Across Systems

Not having the necessary access makes investigating difficult. An effort management system rarely fits perfectly for every investigator and admin team, so focus on training, not just setting up log-ins. Incorporate the history, experience, and narratives needed to interpret the information gathered.

Approval Chains and Internal Controls 

If approval chains and internal controls are complicated, it can be challenging to make effort corrections promptly. Internal policies guide effort. Review research activity under contractual and legal regulations; these are important in protecting our researchers. Keep an eye on automated approval chains, including individuals with varying degrees of responsibility and available time, as they can inhibit proactive effort management.

Interdepartmental Collaboration

All of the above challenges can increase in correlation to the population of stakeholders. The same approval queues and responsible parties can find themselves intertwined across an institution. Collaboration is a worthy goal; just take care to determine how to make the most of a team effort. 

Best practices for changing effort and retro-allocations

Asking the right questions to get the requirements you need is the first step to finding success. 

Through these questions, you are tracing organizational knowledge and keeping key stakeholders informed. 

Here are some best-practice questions to ask:

1. Have effort correction practices been discussed with PIs?
2. Is the effort correction process clearly mapped?
3. Which parties have an understanding of the effort correction process, and how integral are they?
4. Are training guidelines available?
5. Are the unique requirements of agreements or institutional policies accessible?
6. Are there shared spaces to store information and history in perpetuity?

Furthermore, some justifications for the revision of budgets and program plans warrant additional questions about how the change meets the programmatic needs. 

Consider the following justifications like stop signs, prompting you to follow up and gather more information:

• “Spending Down”
• “I didn’t know”
• “They’re basically the same project”
• “Everyone’s working overtime”

Your object is to interpret the path chosen and why, not just the steps that were taken. Investigators are focused on the science and know more about what’s happening in their immediate environment. Asking the above questions helps close the loop, aligning administrators with their goals and objectives. 

Reviewing and investigating the data

The essential feature of a good system is its ability to capture and organize data in a way that tells an accurate story.

Most commonly, effort data is presented by person, by project. At a high level, this approach is straightforward. But in instances of multiple positions or partial employment, values can quickly run askew from expectations. Additional data like employee ID or links to other system tools can be a valuable aid to finding information, helping to better paint the entire picture. Notice these “tethers,” where the system can help you better prepare for investigating.

There may be times when you’re investigating what’s actually posted, what’s projected, and what was originally budgeted. Preparing the data and knowing the story behind it will help you prepare for any questions.

Finally, pay attention to file nomenclature, change logs, and obstacle tracking. Even if you only have a vague idea of when something was changed, keeping files dated with version control and unique naming conventions helps you find the data you’re looking for. Log changes independently to clarify what was processed and through which approval queue. This process helps build both a narrative and timelines for accomplishing tasks. Tracking obstacles builds a repository of organizational knowledge, increases sustainability, and leaves a legacy of growth for the team.