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Policy: Time and Effort Certification 


Date: 01/19/10 Policy ID: FIN-027 Status: Final


Policy Type:  University
Contact Office:  Sponsored Programs
Oversight Executive:  Executive Vice President and Chief Operating Officer
Applies To:  Academic Division, the Medical Center, and the College at Wise.
Table of Contents:  

Policy Statement
Roles and Responsibilities
Principal Investigators/Faculty/Certifiers
School/Departmental Effort Reporting Coordinators
Labor Distribution/Scheduling Personnel
Department Chairs/Division Heads
Director of Education Outreach and Compliance (OSP)
Procedures

Reason for Policy:  

Recipients of federal funds must maintain an accurate payroll distribution system allowing for periodic after-the-fact certification of charges made to specific activities for the purpose of documenting reasonable estimations of acutal work performed on those specific activities. This is a requirement of 2 CFR Part 200.430 of the Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards.

Recipients of sponsored awards must exercise due diligence in the review of periodic effort reports to: 1) formally document effort commitments, including cost shared effort commitments; 2) ensure reasonableness in charging salary/wage costs to external sponsors; and (3) record other activities such as University and clinical duties.

This policy will facilitate compliance with these federal requirements by recognizing the ‘after-the-fact review ’ method, clarifying roles and responsibilities, defining authorized certifiers of effort, clarifying ‘University effort’ - included and excluded activities and actions to be taken in instances of non-compliance.
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Policy Summary:  
Definition of Terms in Statement:  

After-the-Fact Review Method: Method used by the University to certify the distribution of salaries and wages based upon a percentage distribution to various activities, supported by the generation of periodic activity reports. These reports should reasonably reflect the employee’s activities associated with each sponsored agreement as well as to each category of other University activities. Such reports require certification.

Periodic Effort Reports: The official and approved documents used in the certification of effort devoted toward Sponsored, University and Clinical activities. Sections of the effort report are separated by types of activities included in one’s 100% ‘University Effort’ as follows:

Section I – Sponsored Activities (All report types): Certification requirement = recording of effort by each specific sponsored project.

Section II – Other University Activities (All report types) (e.g., Instruction, Administration, Non-Sponsored Research, University Service, Competitive Proposal Preparation): Certification requirement = recording of effort as a subtotal of these activities toward one’s 100% ‘University Effort’.

Section III – Clinical Care and Medical Center-Related Activities – Time Allotment for Medicare Cost Reporting (ONLY Clinical Faculty report type): Certification requirement = recording an average number of hours worked during a week in addition to recording specific effort devoted in: 1) Direct Patient Care; 2) Instruction for Residents/Fellows/Trainees; 3) Administration of Residency/Fellowship Programs; and 4) Medical Center-Related Clinical Administration and Management.

Responsible Person: For purposes of time and effort certifications, an individual having firsthand knowledge or using a suitable means of verification of the work performed toward specific sponsored activities. Normally, this is the employee or Principal Investigator for whom the University effort report has been generated. In the event that the employee/Principal Investigator is unable to certify the effort report, a surrogate who having firsthand knowledge or using a suitable means of verification of the work performed may certify the report (e.g., the Department Chair, a Co-Investigator).

Firsthand Knowledge: Direct evidence of work performed. One may have this knowledge of work performance by either performing the work or through supervising the individual performing the work.

Suitable Means of Verification: The process through which one receives assurance that work was performed so as to provide a certification of effort on the periodic effort reports. This process must take into consideration other university records and provide for the documented review of such records in support of work performed. Some examples of these records might include: calendars, teaching schedules, logbooks, or sponsor budgets. Other means of verification may also suffice, including e-mails attesting to effort devoted based upon firsthand knowledge. Oral verification from the employee/Principal Investigator or others fulfilling the role of a responsible person to an administrator will not suffice as a suitable means of verification.

Total Professional Effort: All activities performed by a faculty or staff member regardless of how (or whether) the individual receives compensation. All such activities are comprised of both inclusions and exclusions in defining 100% ‘University effort.’ [Reference Appendix A of this policy for further details.]

University Effort: The portion of ‘total professional effort’ that comprises one's professional/professorial workload at UVa, including the Medical Center and UVa at Wise, for which the employee is compensated (through UVa and/or the University Physicians Group - UPG). (See definition of Institutional Base Salary). This includes research, instruction, other sponsored activities, administration, non-sponsored/departmental research, university service, competitive proposal preparation and clinical activities.  For the purpose of effort certification, ‘university effort’ totals 100%, regardless of the number of hours worked or the individual’s appointment percentage. (For activities included and excluded from ‘university effort,’ reference Appendix A of this policy.)

Institutional Base Salary (IBS): The annual compensation rate, as determined by the University, for an employee’s appointment (‘University effort’) devoted toward University-related activities as defined above. Institutional base salary includes both compensation for University-related effort, and compensation from the University Physicians Group (UPG) for clinical effort. However, some specific types of compensation are not included for the purposes of effort reporting. These types include bonuses, reward/recognition compensation, etc.

Overload Activity: That which is in excess of the normal for the individual, for which supplemental compensation is paid by the University. For purposes of time and effort reporting, such activities are excluded from effort certifications, provided that such activities are separately identified and documented in the University’s financial system. In general these activities are not related to sponsored programs and are not routine or regular in their occurrence.

Committed Effort: Any part of ‘University effort’ that is quantified and included in a sponsored program proposal and the subsequent award (e.g., two summer months, 12% time, one half of a year, three person-months, etc.). This quantified effort/time is associated with a specific dollar amount of the employee’s compensation.

Associated effort and funding to support this devoted effort/time can be in the form of:

Direct Charged Effort: Any portion of ‘committed effort’ toward a sponsored activity for which the sponsor pays salary/benefits.

Cost Shared EffortAny portion of ‘committed effort’ toward a sponsored activity for which the sponsor does not pay salary/benefits, which instead are paid using other, non-federal UVa sources.

Uncommitted Effort: Any portion of ‘University effort’ devoted to a sponsored activity that is above the amount committed in the proposal and the subsequent award. This ‘extra effort’ is neither pledged explicitly in the proposal nor included in the award documentation as a formal commitment.

Sponsored Activities: Externally funded programs under which the University is obligated to perform a defined scope of work according to specific terms and conditions and within budgetary limitations. These programs are to be budgeted and accounted for separately from other activities. Sponsored activities include grants, contracts, cooperative agreements, clinical trial agreements, Intergovernmental Personnel Agreements and other awarding instruments supporting research, instruction, public service, and clinical trials.  These activities are established as ‘G or Z’ awards in the University’s Integrated Financial System.

Sponsor Salary Caps/National Institutes of Health (NIH)Salary caps are limitations, sponsor-imposed ceilings, on the amount of an individual’s salary that a sponsor will directly support. When an employee’s institutional base salary (IBS) exceeds the effective salary cap the University must fund the difference from non-federal sources. This difference is considered cost share (this cost share is solely for purposes related to the Indirect/Facilities and Administrative – F&A- cost rate calculations and is not to be counted/claimed/reported toward mandatory or voluntary cost share commitments) to that sponsored activity. The associated effort is expected to be captured on the effort report for certification purposes (toward 100% ‘University effort’).  Annual salary caps can be found at the NIH or OSP website.
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Policy Statement:  

The University must assure that effort expended on sponsored activities justifies the salaries charged to those projects.  The University provides this assurance by requiring the generation of periodic effort reports for individual certifiers/principal investigators including each employee whose salary is charged (or cost shared) to one or more sponsored activity during the effort reporting period.  These effort reports indicate calculated percentages of the individual’s effort that are dedicated to the sponsored project(s) as well as to other University/clinical activities, and require a certification attesting to the fact that these effort percentages are reasonable.

Level of Support from Federally Funded Sponsored Activities: In addition to sponsored program activity, full time faculty, as part of their ‘University effort,’ generally have responsibilities for other University activities such as non-sponsored research, instruction, administration, advising students, University service or clinical activity that would generally preclude their devoting 100% effort solely to federally sponsored activities. Proposal preparation for future funding (competitive, new, renewal sponsored funds) also precludes full time faculty from committing 100% effort to federally sponsored activities. Salary support for these other University activities, including competitive proposal preparations, must come from non-federal UVa sources, except when the sponsored project is specifically awarded for those purposes. It may be appropriate for certain research faculty to be supported at 100% solely from federally sponsored activities in cases where other such responsibilities do not exist. Incidental work and de minimis activities, over and above or separate from those duties assigned to a faculty member, are not included as part of one’s 100% ‘University effort’ (e.g., on occasion teaching a continuing education course; rare, non-routine time spent in advising students).
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Level of Precision in Effort Certifications: The federal government recognizes that decisions made in the certification of effort percentages to individual sponsored activities are based on estimates. 2 CFR Part 200.430 of the Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards states: “…it is recognized that, teaching, research, service, and administration are often inextricably intermingled in an academic setting. When recording salaries and wages charged, a precise assessment of factors that contribute to costs is therefore not always feasible, nor is it expected.

Therefore in considering a level of precision in effort certifications toward sponsored activities, if the ‘calculated effort’ percentage on the effort report reasonably reflects one’s effort within a tolerable variance threshold (plus or minus 4%), then the ‘calculated effort’ percentage may be confirmed as a reasonable estimate. If the difference between the certifier's estimate of effort and the ‘calculated effort’ percentage for a sponsored project is greater than the tolerable variance threshold of 4%, then the correct estimate of effort should be documented.

For example, if an individual’s ‘calculated effort’ percentage is 50% to a sponsored activity, it is permissible to certify 50% effort for that activity if the effort devoted to that project could reasonably be determined to fall between 46% and 54%.

Certification Method: Based upon guidance in 2 CFR Part 200.430 of the Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards, the University certifies effort using the ‘After-the-Fact Review ’ method. These regulations also stipulate that effort reports should be prepared “…no less frequently than every six (6) months” for professorial and professional staff. Further, two groups of employees are identified, (1) Professorial and professional and (2) Other.  For effort reporting purposes, those included as professorial and professional staff include faculty, research professional staff (e.g., principal scientist, senior scientist, research scientist, research associates, postdocs, research assistants), graduate research assistants and graduate teaching assistants. For Others, periodic reports are prepared on a quarterly basis.
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Authorized Certifiers: Periodic effort reports must be certified by a responsible person having firsthand knowledge of work performed or by using a suitable means of verification of the work performed toward specific sponsored activities. Normally, this certification is performed by the employee or Principal Investigator for whom the University effort report was generated. In the event that the employee/Principal Investigator is unable to certify the effort report, a surrogate who having firsthand knowledge or by using a suitable means of verification of the work performed may certify the report (e.g., the Department Chair, a Co-Investigator).

Sanctions: If the periodic effort reports are not certified timely and properly, the Office of Sponsored Programs will take actions to assist with compliance with Federal requirements. These actions may include, but are not limited to:

  1. withholding submission of proposals, other project applications or other documents such as material transfer agreements;
  2. placing active projects/awards ‘on hold;’ and/or
  3. adjusting uncertified labor distributions and the effort they represent to non-sponsored accounts.

Non-compliance with this policy and related procedures may result in penalties levied against the departments, divisions, schools and/or the University. Individuals with roles and responsibilities in the certification process are held responsible for any instances of non-compliance.
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Roles and Responsibilities:
Each individual with responsibilities in University time and effort certification practices must thoroughly understand the proper method of reviewing, completing and certifying the effort reports to ensure that documented effort percentages reasonably reflect effort expended toward individual sponsored activities and to clinical activities during the report period.  

The following offices and positions have roles and responsibilities in the effort reporting process. For greater detail on these roles and responsibilities, refer to Procedure 8-31.
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Principal Investigators/Faculty/Certifiers are responsible for:

School/Departmental Effort Reporting Coordinators are responsible for:

Labor Distribution/Scheduling Personnel are responsible for:

Department Chairs/Division Heads are responsible for:

The Director of Education Outreach and Compliance in the Office of Sponsored Programs is responsible for:

Procedures:  

Time and Effort Certification, Procedure 8-31
Cost Share Contributions to Federally Funded Sponsored Activities, Procedure 8-32

Related Information:  

VIII.C.1, Compliance with Sponsor Requirements
FIN-028, Minimum Effort on Federally Funded Sponsored Research Activities
OSP Record Retention Guidance
Policy on Consulting by Faculty of the University of Virginia
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Policy Background:  
Major Category:  Finance and Business Operations
Category Cross Reference:  Research Administration
Process:  
Next Scheduled Review:  07/13/14
Approved By, Date:  Executive Vice President and Chief Operating Officer, 01/19/10
Revision History:  Updated 4/2/14, 1/8/14, 11/11/11, Revised 7/13/11.
Supersedes (previous policy):  
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