Effort 101This guide provides an overview of effort, effort reporting and certification, including an explanation of why such processes are necessary and the minimum requirements for these processes at UTSA.
- What is effort
- The Effort Lifecyle
- How do PIs certify effort?
- The difference between effort reporting and payroll distribution
- Federal requirements regarding effort reporting
- Risks of not complying with Circular A-21's effort reporting requirement
Individual effort is expressed as a percentage of the total amount of time spent on work-related activities (teaching, research, service administration, etc.) for which the University compensates an individual.
Effort is not calculated based on a 40-hour workweek. If a person works 80 hours a week, and spends 20 hours a week on her grant, then her sponsored effort is 25% (20/80=0.25) back to top
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Once the award is set up and the PI obtains his sponsored project ("26") account, and effort was proposed and awarded, the PI's home department must appoint him/her on the grant. (If effort was cost-shared, then separate cost sharing procedures should be followed to track effort). Appointing people on a grant ensures that effort can be tracked and monitored: the salary sources should clearly track with the effort commitments in place and the work that PIs and support staff do. Getting paid on a grant account cannot pay for non-sponsored work. Effort should be charged at the moment that it is performed; a PI that works on her grant over the academic year cannot charge the grant over the summer. If changes must be to effort commitments, PIs and their departments must communicate this with the Office of Sponsored Programs.
Remember, sponsored project funds, especially those budgeted towards salaries and wages, should be used for their intended purposes. They are not fungible slush funds that can be transferred with abandon.
Lastly, PIs will certify effort on their sponsored programs every six months. If changes must be to effort commitments, PIs and their departments must communicate this with the Office of Sponsored Programs. back to top
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Effort is not just a verification of the salary or payroll distribution. Cost-shared or contributed effort must be included in effort reports. back to top
OMB Circular A-21 (Section J.8) sets forth criteria for acceptable methods of charging salaries and wages to federally sponsored projects. A-21 requires a payroll distribution system that directly charges salaries to appropriate projects.
In addition, Circular A-21 requires that institutions develop a mechanism to determine or confirm how individuals actually expend effort during a specified time period. These effort reports must be performed on a regular schedule and must be certified by individuals who have first-hand knowledge of 100 percent of the employee's compensated activities. In most cases, that would be the employee or the employee's direct supervisor. back to top
Northwestern University paid $5.5 million to settle issues related to problems with effort reporting, on a contracts and grants base of $325 million; South Florida returned $4.1 million to the federal government to settle a number of charging issues, including effort reporting; University of California paid a total of $2.1 million to settle an NIH salary cap limitation disallowance for the period July 1, 1995 through June 30, 2002.
An effort reporting system must provide records on how individuals participating in federally funded sponsored agreements actually spend their time. Because the federal government mandates effort reporting, it is incumbent upon institutions that receive federal funding to maintain accurate and auditable systems and records.
Documentation on how individuals spend time on federally sponsored projects is subject to federal audit and can be cause for institutional or individual disallowances.
Institutional disallowances can result if:
- The effort report was certified by an individual other than the employee or someone who has "first-hand" knowledge of 100 percent of the employee's time;
- The effort report does not encompass all of the activities performed by the employee under the terms of their employment;
- The levels of effort reported do not appear reasonable, given the responsibilities of the individual.
Individual disallowances can result if:
- The effort report certified by the individual is found to be falsified;
- The levels of effort reported do not appear reasonable.
As evidenced above, federal audit disallowances can result in serious financial penalties for institutions. In addition, criminal charges may be brought against an individual certifying to falsified effort. Current audit plans for federal auditors include effort reporting as a specific audit focus. back to top