Procedure: 8-31

Effective: July 1, 2001

Owner: Office of Sponsored Programs

Latest Revision: October 22, 2009

Scope

As a recipient of federally sponsored projects, the University is required under guidance provided in the Office of Management and Budget’s (OMB) Circular A-21, Section J.10 to confirm, through effort reports, all effort contributed to each specific sponsored award and in doing so verify the accuracy of payroll charges to those sponsored programs. All effort spent on individual sponsored programs that was either 1) directly charged to the award (Sponsor supported) or, 2) was committed in the proposal as cost share from another funding source must be documented and certified.

Based upon guidance given in Circular A-21, the University has chosen to certify effort using the After-the-Fact confirmation method. This method requires that the distribution of salaries and wages will be supported by reports that will reasonably reflect the activities for which employees worked and thus are compensated. To confirm that the distribution of activities represents a reasonable estimate of the work performed during the period, the reports are to be signed/dated by the employee, principal investigator, or responsible official(s) having sufficient knowledge that the work was performed. Circular A-21 also provides guidance that for professorial and professional staff, these reports should be generated no less frequently than every six (6) months. (See UVa effort reporting periods described below under the Procedure Steps section of this procedure).

System References [Top]

Effort Report

Payroll Source and Amount List

Internal Proposal Approval Form/Cost Share Form - Goldenrod

SP-23 – Office of Sponsored Programs Change Request Form

Notice of Award

Definitions [Top]

A-21
Office of Management and Budget Circular describing “Cost Principles for Educational Institutions”. The Circular is applicable to grants, contracts and cooperative agreements. Section J.10 describes the requirements for effort reporting.

Committed Effort
Effort committed in a sponsored program proposal. Commitments are made when a percentage of effort or a specified dollar amount of salary/wage are devoted in the proposal. Such effort must be accounted for according to the terms of that commitment. These commitments can either be funded directly from the sponsored project or as “cost sharing” through other funding sources.

Institutional Effort
Effort expended on University-related activities (research, instruction, other sponsored activities and administrative activities) for which compensation is made. In the case of faculty with clinical appointments their total institutional effort includes both the portion of University related activities (described above) as well as their Health Services Foundation (HSF) clinical work. (See more on Institutional Effort below).

UVa Effort Reports
University certification forms for the periodic confirmation of individual effort of faculty, graduate research assistant, Medical Center professional staff, University and classified staff, and wage employees who work on sponsored awards.

Payroll Source and Amount List
A report detailing pay (subject to effort reporting) by individual and by source for the effort reporting period in process.

Cost Shared Effort
That portion of committed effort for which an individual is not compensated by a sponsoring agency but which the institution agrees to fund from other sources.

National Institutes of Health Salary Cap
A sponsor-imposed ceiling on salary charged directly to NIH sponsored awards. For example, if an employee earning $110k worked on an award full time (100%) having a salary cap (hypothetical) of $100k, only $100k or 90.9% of their salary could be direct charged to the award. The remaining 9.1% of the salary must be supported by the institution from non-sponsored program funding sources. Additionally, this ‘excess’ salary cannot be claimed or counted as cost share should there be such a commitment.

For current and prior NIH salary cap amounts visit the OSP website or http://grants2.nih.gov/grants/policy/salcap_summary.htm

Policy [Top]

VIII.C.1, "Compliance with Sponsor Requirements"
1-4A, “Monthly Review and Certification of Sponsored Program Project or Award Expenditures”

Responsibility [Top]

All employees involved in certifying effort should understand that severe penalties and cost disallowances could result from inaccurate, incomplete, or untimely effort reporting.

The Office of Sponsored Programs (OSP) Director of Education Outreach and Compliance is responsible for:

• Establishing procedures for effort reporting which are consistent with the requirements of Circular A-21,
• Generating and distributing effort reports and the corresponding payroll source and amount lists on a periodic basis,
• Monitoring School/Departmental responsibilities related to effort reporting to help ensure University compliance, including the timely certification of the reports,
• Providing assistance to School/Departmental administrators with the effort reporting process,
• Maintaining certified effort reports for review purposes.

School/Departmental Administrators and Fiscal Contacts are responsible for:

• Distributing effort reports in a timely manner to various groups within their organization units,
• Reviewing certified effort reports to ensure proper completion and signature/date in accordance with University procedures,
• Ensuring timely review, certification, and return of effort reports,
• Ensuring that cost shared effort on sponsored projects is properly reported on effort reports,
• Coordinating any payroll adjustments that are necessary based upon noted discrepancies by those certifying their effort reports.

Principal Investigators, those with sufficient knowledge of work performed, and Department Chairs are responsible for:

• Certification of all institutional effort (research, instruction, other sponsored activities, administration, clinical work) for which compensation is made,
• Noting any errors on the effort reports and ensuring, in collaboration with their local Labor Distribution personnel, that payroll and labor distribution adjustments are made accordingly where necessary in accordance with University policies and procedures with regard to Cost Transfers (Procedures 8-20 and 22),
• Ensuring that committed cost share obligations are met and properly reported on effort reports.

Distribution [Top]

Vice President and Provost, Vice President for Research and Graduate Studies, Vice President and Chief Financial Officer, Deans, Associate Deans, School/Department Administrators, Fiscal Contacts, Labor Distribution Specialists, Human Resources Administrators, Principle Investigators, Classified Staff, Students and Wage personnel involved in sponsored research.

Ownership [Top]

The Assistant Vice President for Research Administration is responsible for ensuring that this procedure is necessary, reflects actual practice, and supports University policy.

Procedure Steps [Top]

The following process is designed to account for University effort of faculty, professional staff, classified staff, graduate research assistants, and wage employees participating in sponsored programs in accordance with Circular A-21.

EFFORT REPORTING PERIODS AND DISTRIBUTION SCHEDULE

Circular A-21 stipulates that effort reports should be prepared “no less frequently than every six (6) months” for professorial and professional staff. A-21 identifies two groups of employees, (1) Professorial and professional and (2) Other.  For effort reporting purposes, those falling in the first group include all faculty, research professional staff (e.g., principle scientist, senior scientist, research scientist, research associates, postdocs, research assistants), graduate research assistants, graduate teaching assistants and Medical Center Professional staff. 

Accordingly, the University of Virginia’s Office of Sponsored Programs produces effort reports based upon employee classifications as noted in the following schedule:

EFFORT REPORT GENERATION

Actual generation of periodic effort reports is delayed for at least forty-five (45) days after the end of the applicable effort reporting periods noted above. This delay is to provide sufficient time for responsible units to conduct reviews of accounts and process any necessary labor distribution adjustments prior to the generation of effort reports.

EFFORT REPORT DISTRIBUTION

OSP will distribute effort reports according to organizational unit along with:

• Payroll Source and Amount List (for faculty only in the School of Medicine)
• Faculty Time and Effort Certification Checklist
• Departmental Administrator Effort Certification Instructions

To ensure continued timely delivery of these documents and delivery to the appropriate destination OSP should as soon as possible be informed of changes in personnel responsible for the distribution of effort reports. Once distribution occurs it is the responsibility of School/Departmental personnel to review completed reports for adherence to this procedure before returning them (in a timely manner) to OSP. 

INSTITUTIONAL EFFORT

Faculty generally have responsibilities for such activities as non-sponsored research, instruction, administration, service or clinical activity that would preclude their devoting 100% effort to sponsored activities.  Proposal preparation for new and competing renewals would also preclude full time faculty from devoting 100% effort to research. 
Salary support for teaching, administration, service, clinical activity, institutional governance and proposal preparation effort must come from non-sponsored funds, except for sponsored projects specifically awarded for those purposes.

Although all university activities must be included in a faculty member's effort for reporting purposes, not all of a faculty member's professional activities must necessarily be considered university activities. For example, outside consulting would normally be deemed as a non-university activity.  Service on review panels or other advisory activities for federal sponsors that include an honorarium and/or travel reimbursement are also considered outside of total institutional effort.

THE EFFORT REPORT

Effort reports are grouped as follows: Non-School Of Medicine Faculty, School Of Medicine Faculty (Non-Clinical), School Of Medicine Faculty (Clinical), Medical Center Professional Staff, Graduate Research Assistants, Staff, and Wage employees.

Effort reports for Medical Center Professional Staff, Graduate Research Assistants,  Staff and Wage employees are generated according to the PI under whose supervision they work and the reports roll up for certification purposes under that PI’s name.
For example, PI Smith, being responsible for five (5) GRAs, will find that they will be listed under his/her name, according to the number of his/her projects on which they worked, from which they expended effort and were paid.

The faculty effort report contains a varying number of sections depending on the type of employee for whom it is generated. These sections are as follows:

• Non-Clinical Faculty: Sections I-III
• Clinical Faculty: Sections I-V

SECTION I - SPONSORED PROGRAMS

Direct Salary Payments from Sponsored Awards

When labor distribution (LD) schedules have been established directing payroll actions for salary to be paid from sponsored awards, the sponsored project number/award number as well as the project title will be listed. The Payroll percentage is also printed on the effort report. As a comparison, certified effort percentages must be recorded for each project-award combination listed on which effort was expended (See the Special Considerations section of this procedure for proper certification). Record the Certified Effort percentage for the effort reporting period in the space provided. Certify all effort in whole percentages.

NOTE: Certification must be completed and documented even if the Payroll percentage column reflects the same % as Certified Effort percentage column.

On rare occasions the effort report will not list a sponsored project/award against which actual effort has been expended and needs to be certified. In this case, the respective project-award combination, project title and Certified Effort percentage should be noted and affirmed on the effort report.
Subsequently, there may be a need for a labor distribution adjustment (through the Retro Cost Transfer process if older than 90 days) to correct payroll commensurate with certified effort.

Cost Share as Committed in Proposal
If cost shared effort has been made in a proposal, certification of this commitment takes place here with the comparison between the Cost Share percentage from the proposal and the certified effort percentage to be completed by the certifier. Certify all effort in whole percentages.

It is critical that those certifying effort reports make the necessary adjustments in the Certified Effort percentage column for each funding source to take account of committed cost share.
For example, if a project is listed reflecting 10% cost share effort in Section I (in other words, an award upon which effort is expended but for which no sponsored research funds have been charged), then another award in Section II, III or IV, should absorb that cost with a corresponding downward adjustment in the effort on that activity. This adjustment would typically be to a state or local award providing the cost shared funds.
NOTE: VOLUNTARY UNCOMMITTED EFFORT
Contributed effort that was NOT committed in a proposal is considered voluntary in nature, and should NOT be documented or certified as cost share.

The Sponsored Programs Total can now be completed toward the 100% total institutional effort certification for the period at hand.

SECTION II - UNIVERSITY INSTRUCTION/OTHER

Salaries paid from non-sponsored funding sources other than Health Services Foundation (HSF) pay are listed in this section of the effort report. Payroll percentages are printed on the effort report, as in the Sponsored Programs section above, the Certified Effort percentage must be reasonably estimated and recorded for the period in the space provided. Certify all effort in whole percentages.

Effort committed to teaching, service, administration and proposal preparation effort for new and competing renewals is recorded here as these activities must be paid from non-sponsored funds, except for sponsored projects specifically awarded for those purposes.
NOTE: Typically cost share certified in the Sponsored Programs section is paid from salary sources listed in this section. As applicable, decrease effort in this section to “fund” effort that has been cost shared to sponsored programs.

NOTE: Certification must be completed and documented even if the Payroll percentage column reflects the same % as Certified Effort percentage. 

SECTION III - UNIVERSITY ADMINISTRATION

Only faculty with administrative appointments (e.g., Deans, Department Chairpersons, and Center Directors) should record their administrative effort here. Though the funding sources supporting these activities appear in Section II, it is important to reflect actual administrative effort in Section III, noting the downward adjustment to the appropriate account in Section II that absorbs these costs. Certify all effort in whole percentages.

The Non-Sponsored Programs Total can now be completed toward the 100% total institutional effort certification for the period at hand.

SECTIONS IV and V - CLINICAL ACTIVITY: Direct Patient Care and Hospital Related Activities

Clinical effort reports contain two unique sections: Section IV, referring to Direct Patient Care, and Section V, referring to Hospital and Related Activities. Clinical activity generally refers to duties undertaken by MDs who see patients (Section IV) and/or who participate in other hospital-related activities (Section V).

Section IV, Direct Patient Care, refers to all patient services paid through the Health Services Foundation (HSF) and the School of Medicine. Effort in this section should accurately reflect the percentage of time expended on direct patient care. Certify all effort in whole percentages.

Section V, Hospital and Related Activities, refers to School of Medicine faculty who provide professional services to the U.Va. Medical Center. This includes the training of House staff and administration of such activities, as well as other Hospital committee and administrative responsibilities. Effort in this section should accurately reflect the percentage of time expended on hospital and related activities. Certify all effort in whole percentages.
The total number of hours worked per week should correspond to 100% of institutional effort and should be recorded accurately.

TIMELY CERTIFICATION AND RETURN OF EFFORT REPORTS

It is expected that Effort Reports are properly completed, signed and dated within ninety (90) days of distribution and thereafter promptly returned to The Office of Sponsored Programs Effort Reporting Coordinator.  Extenuating circumstances that prevent the timely certification or return of effort reports should be brought to the attention of the OSP Effort Reporting Coordinator.  OSP will help help ensure the return of Effort Reports.  Beginning sixty (60) days after distribution, initial contact calling for the return of Effort Reports will be conducted with the responsible School/Departmental contact. This reminder will be in the form of an email. An additional informal reminder will generally take place within 90 days of distributing reports as needed.
After this time, further communication can be expected and may be directed to both the School contact and the immediate supervisor of these positions. During this time it will be important for the school/department effort reporting contact to maintain an open line of communication with the OSP Effort Reporting Coordinator. If no response to OSP efforts for assistance is received or if additional deadlines are not adhered to, additional follow up and actions will escalate and could include communication to the respective Deans. Final OSP actions to situations involving continued delinquent effort reports can result in actions including: 1) movement of all affected salary/wage charges that have not yet been properly certified to School/Departmental F&A PTAEOs, or 2) placing the respective project-award in an “on hold” status, preventing any future financial transactions.

SPECIAL CONSIDERATIONS WHEN CERTIFYING EFFORT [Top]

SUFFICIENT KNOWLEDGE - AUTHORIZED CERTIFICATION
Effort reports should be certified ONLY by responsible officials with sufficient knowledge of the work performed. This is usually the principal investigator in charge of overseeing the project or collaborating faculty members who work on the project. In the event that the named investigator on the University-generated effort report is unabale ot certify the effort report, a surrogate who is knowledgeable of the work performed on the project will certify the report (e.g., the investigator’s Department Chair, a Co-investigator, Supervisor).  In any audit situation it would be the responsibility of the person certifying the effort report to support that all certification requirements were met.


LEVEL OF PRECISION IN EFFORT CERTIFICATION

The federal government understands that certification of effort percentages is an estimate. Circular A-21 states that “it is recognized that, in an academic setting, teaching, research, service, and administration are often inextricably intermingled. A precise assessment of factors that contribute to costs is not always feasible, nor is it expected. Reliance, therefore, is placed on estimates in which a degree of tolerance is appropriate.”

Therefore, if the printed Payroll percentage reasonably reflects ones effort within a tolerable range (plus or minus 4%), then the amount may be confirmed as a reasonable estimate. If the difference between the estimate of effort devoted and the Payroll percentage for a project is greater than the tolerable range of 4%, then record the correct estimate.

For example, if the Payroll percentage for the project was 25% and the estimate of effort devoted is in the range of 21% to 29%, THEN 25% MAY BE RECORDED in the Certified Effort percentage column.

For example if the Payroll percentage for a project was 25% and the estimate of the effort is outside the tolerance range,  20% in this case, then 20% must be recorded in the Certified Effort percentage column

NOTE: Any Certified Effort percentage for a sponsored project less than the Payroll percent, requires a labor distribution (LD) adjustment. The responsible certifier should alert the Department or Unit research administrator regarding the need for an LD adjustment.

COST SHARE - COMMITMENTS OF EFFORT MADE IN THE PROPOSAL

Section I of the Effort Report lists cost share commitments made in proposals. It is important that certifiers examine this information carefully and certify effort reports accordingly. The Certified Effort Percentage Grand Total must add to 100%. If, therefore, work is performed on a project for which X% of effort is cost shared, be mindful to reduce the amount of effort spent on other, non-research related activities, in order that effort totals 100%. This reduction will have an impact on activities listed in Sections II and/or IV.
NOTE: If effort is committed as cost share in a proposal, it is required that we record and document that effort. Cost share should only be committed as required or as necessary to meet the aims of the project. All cost share dollars have a negative impact on the F&A recovery rates. The more cost shared, the lower the F&A rate will be.

CHANGE IN EFFORT DEVOTED FROM WHAT WAS PROPOSED

In making any post-award adjustments to committed effort, review sponsor regulations specifically on reductions in effort from what was proposed and approved. Substantial reductions (normally 25% or greater from proposed commitments) will require prior sponsor approval. If devoted effort is reduced from what was proposed, then a labor distribution (LD) adjustment must be processed in order to bring payroll distributions in line with certified effort. Labor Distribution (LD) adjustments should be processed after monthly expenditure reviews allowing for future generation of more accurate effort reports. If adjustments are not processed within (ninety) 90 days of the transfer date, a retroactive transfer request must be submitted to OSP for approval.

Retro Cost Transfer Request Form: http://www.virginia.edu/sponsoredprograms/RetroRequestForm.doc

Procedure 8-22 Transfer:
http://www.virginia.edu/finance/polproc/proc/8-22.html

SALARY CAP - NATIONAL INSTITUTES OF HEALTH

Faculty members who received salary support under at least one NIH award and whose TOTAL University compensation (UVA base pay and HSF pay for Clinicians) exceeds the NIH salary cap limitation should pay special attention to the completion of their effort report.

For several consecutive years there has been a legislatively mandated provision for the limitation of salary charged to NIH awards. The Department of Health and Human Services (DHHS) Appropriation Act for each fiscal year restricts the amount of direct salary an individual can receive from NIH awards to the rate for Executive Level I of the Federal Executive Pay scale. Please see the OSP website or check with OSP effort reporting personnel to verify the appropriate salary cap amount for the respective fiscal year or the time period in which you are certifying effort. Visit the NIH website at http://grants2.nih.gov/grants/policy/salcap_summary.htm to receive historical and current cap amounts.

On the effort report, the value listed under Payroll percentage is that portion of TOTAL compensation that was paid by an award. Therefore, for all NIH awards, an entry in the Certified Effort percentage column that is less than or equal to the value under the Payroll percentage implies that you have been paid at a rate that exceeds the salary cap limitation.

The following example and calculation tools help to clarify the scheduling of payroll dollars and/or and LD percentages to projects when the NIH cap is in play (For ease of explanation the salary and NIH cap dollars are not actual):

Dr. Smith commits 20% effort toward work on a particular NIH award. Dr. Smith’s annual compensation is $300,000, but the salary cap for the fiscal year at hand is $200,000. Therefore, $40,000 is allowed as the maximum amount of direct salary to be paid from the NIH project. The payroll percentage reflected on the Effort Report will be 13%, even though Dr. Smith likely contributed 20% effort to that project. In this example, the correct percentage of Certified Effort to enter on the effort report would be “20%”.

MAXIMUM PAYROLL AMOUNT: 20% x $200,000 = $40,000 (Effort Percentage x Salary Cap)

CALCULATED PAYROLL PERCENTAGE $40,000/$300,000 = 13% (Payroll amount/UVa only compensation base)

CERTIFIED EFFORT PERCENTAGE TO THE EFFORT REPORT = 20%
NOTE: Always certify the effort percentage that was expended, comparing this percentage to what was committed in the proposal.

It is then recommended that the resulting percentage from use of this formula be rounded slightly downward to avoid any potential for overcharging the Federal projects when the salary cap is present.

K AWARDS - NATIONAL INSTITUTES OF HEALTH

NIH “Career Development Awards” (commonly known as K Awards) normally require that recipients commit/devote a minimum percentage of effort toward the objectives of the award. This is often defined at 75% effort. This requires the recipient to devote a minimum level of effort in conducting health-related research. Mentored K award recipients in the last two (2) years of support may reduce effort allowing for concurrent salary support from both the K award and a competing NIH research grant if recognized as a Principal Investigator or as Subproject Director. Regarding salary payments, the University may supplement the NIH salary contribution up to a level that is consistent with the institution's salary scale; however, supplementation may not be from federal funds unless specifically authorized by the federal program from which such funds are derived.

For additional information on effort requirements and salary costs related to K awards, visit the NIH web site at: http://grants.nih.gov/training/careerdevelopmentawards.htm

KEY PERSONNEL - NATIONAL INSTITUTES OF HEALTH GRANTS

The National Institutes of Health (NIH) require that “key personnel” on NIH awards commit “measurable effort” to any sponsored project on which they are named. In other words, it is not acceptable to list mentors and similar personnel on research proposals with 0 % effort. Any persons listed as key personnel must have at least 1 % of committed effort on the award in question, regardless of whether funds are being requested for those personnel.
If salary for these types of personnel is not paid directly from the award, it should be cost shared support from other funding sources. See NOTE above under COST SHARE – COMMITMENTS OF EFFORT.

COORDINATION OF EFFORT REPORT CERTIFICATION AND LABOR DISTRIBUTION ADJUSTMENTS

Since payroll costs represent the vast majority of sponsored program costs incurred, it is important to consistently monitor the scheduling and charging of these costs. In order to prevent the need for labor distribution (LD) adjustments, monthly account reviews should be performed in accordance with University procedure 1-4A, “Internal Controls, Monthly Review of GM Project or Award Activity” located at http://www.virginia.edu/finance/polproc/proc/1-4a.html.  Additionally, a minimum of forty-five (45) days from the end of each effort reporting period is provided for final review of salary/wage expenditures to better ensure the accuracy of printed effort reports and avoid labor distributions (LD) adjustments.

End of Activity