payroll certification: an alternative to effort reporting
DESCRIPTION
Payroll Certification: An Alternative to Effort Reporting. NCURA FRA Rich Andrews, UC Irvine Mike Laskofski, George Mason March 11, 2013. Why Monitor Effort/Salary?. Salary and wages account for approximately 60% of all sponsored expenditures - PowerPoint PPT PresentationTRANSCRIPT
1Where Innovation Is Tradition
Payroll Certification: An Alternative to Effort Reporting
NCURA FRARich Andrews, UC Irvine
Mike Laskofski, George MasonMarch 11, 2013
Where Innovation Is Tradition2
Why Monitor Effort/Salary?
• Salary and wages account for approximately 60% of all sponsored expenditures
• Certification of salary and wages on federal awards is required by the federal government
• Key area of focus by auditors to verify what was proposed was actually done
Where Innovation Is Tradition3
Effort Reporting: Why Change?
• Effort incurred across multiple activities is difficult to measure
• Effort reports provide limited controls• Administration is inefficient and costly
Where Innovation Is Tradition4
Federal Demonstration Partnership
• Federal Demonstration Partnership (FDP) began in 1986 and is a cooperative initiative among 10 federal agencies and 119 research institutions
• FDP is focused on reducing the administrative burdens associated with research
• 2005 FDP survey of over 6000 faculty reported that 42% time on federal awards spent on administrative tasks
• 2011 FDP survey of over 13000 faculty similar results
Where Innovation Is Tradition5
Payroll Certification: What is it?
Payroll Certification is an alternative to Effort Reporting that uses a project based methodology and utilizes the concept that “charges are reasonable in relation to work performed”
Where Innovation Is Tradition6
Payroll Certification: Benefits• Concept is straightforward and easy to
understand by faculty and administrators• Certification timeframe consistent with
project period and annual technical reporting• Smaller group of certifiers allows for more
effective outreach and training• More time to focus on key internal controls • Reduced administrative burden
Where Innovation Is Tradition7
George Mason University
• Public University located in Fairfax, Virginia• Established in 1972• Over 32,500 students on 4 campuses• Sponsored Expenditures FY12: $97M• George Mason became an FDP member in 2008
Where Innovation Is Tradition8
Payroll Certification: Approval
• Mason received approval from the FDP and the Office of Naval Research (ONR) effective January 1, 2011 to pilot Payroll Certification
• Three other pilot schools – UC Irvine (HHS), UC Riverside (HHS), Michigan Tech (ONR)
Where Innovation Is Tradition9
Pilot Proposal Conditions• All awards transitioned by January 1, 2012• Update policies/procedures, revise DS-2, deploy
training and provide ONR detailed milestone plan for implementation
• Provide feedback to FDP semi-annually• DCAA review of DS-2 for adequacy• Meet with ONR quarterly to review implementation• Review pilot progress regularly but no stated end date
Where Innovation Is Tradition10
Communication and Outreach• Research Council• Senior Administration (Provost, Deans)• Department Chairs• Faculty Meetings• OSP Advisory Group (Senior Unit Administrators)• Training Sessions (50+ attendees March/April 2011)• Website, Email, Newsletter• Individual support for PIs and Liaisons monthly
Where Innovation Is Tradition11
Payroll Certification vs. Effort ReportingDescription Effort Reporting Payroll Certification
System Focus Individuals Project (Grant or Contract)
Timeframe for Distribution
Consistent points in time End of Project Budget Year
Certification Frequency
Three Times per Year Annually
Types of Funding All Sponsored Funds Federal Funds
Annual # of Reports 2700 700
Approvers Individuals charged to projects
Principal Investigator
System Rationale Effort reasonable based on overall institutional effort
Salary and wage amounts reasonable based on work performed
Committed Cost Sharing
Shown as percentage of overall institutional effort
Shown as amount reasonable based on work performed
12Where Innovation Is Tradition
Payroll Certification Report Samples
Where Innovation Is Tradition13
Where Innovation Is Tradition14
Where Innovation Is Tradition15
Payroll Certification Process
• OSP generates reports 60 days after the last day of the month for the anniversary date or project end date, whichever is sooner
• Reports distributed to Payroll Certification Liaison
• Payroll Certification Liaison works with PIs to obtain approval
Where Innovation Is Tradition16
Payroll Certification Process cont.• Payroll Certification Liaison returns reports to
OSP within 45 days of distribution• Reports not received within 45 days sent to
Dean for follow-up and completion within 2 weeks
• Any reports not certified within 60 days will result in salary charges moved to a non-sponsored source of funding
Where Innovation Is Tradition17
Assessment of Payroll Certification
• Comparison to “old” effort reporting process• Survey completed February 2011 (150
respondents; majority faculty) to benchmark effort reporting process
• Payroll Certification follow-up survey will be completed Spring 2013
• Feedback from faculty and administrators continues to be very positive
Where Innovation Is Tradition18
Assessment of Payroll Certification
• DCAA DS-2 adequacy review completed Fall 2011 with no findings
• Through 20 reporting cycles (Jan 2011 thru Aug 2012)• 70% of reports received within 30 days compared to
33% under prior process in 2010• 95% of reports received within 45 days • 100% of reports received within 60 days
Where Innovation Is Tradition19
Monitoring Effort/Salary
• Include some level of PI effort on all projects• Request sponsor approval if PI is absent for more
than 3 months or 25% reduction in PI time • Avoid charging faculty 100% to sponsored funds
if they have other responsibilities• Process funding change forms timely
Where Innovation Is Tradition20
Monitoring Effort/Salary cont…• Include complete explanations and necessary
approval signatures• Track committed cost share with activity code• Complete payroll certifications timely• Avoid funding adjustments after project period
previously certified• Review project expenses regularly
Where Innovation Is Tradition21
Next Steps for George Mason Pilot
• Complete follow-up survey Spring 2013• Regular updates to FDP on pilot progress • Meet with ONR quarterly• Internal Audit report March 2013• IG Audit 2013 Spring 2013
Where Innovation Is Tradition22
Questions
Mike Laskofski George Mason
Rich AndrewsUC Irvine
Payroll Certification:An Alternative to Effort Reporting
Rich Andrews
University of California, Irvine
March 11, 2013
University of California, Irvine
• Public University located in Irvine, California• Part of a 10 campus system• Founded in 1965• About 28,000 students• FY 2011-12 research expenditures: $245M• A Medical Center• No football team
Payroll Certification: Approval
• UC Irvine received approval from the FDP and the Department of Health and Human Services (HHS) effective April 1, 2011 to pilot Payroll Certifications
• UC Irvine implemented the system in August 2011
Control Benefits
• Focuses on special costing rules• NIH Salary Cap• NSF Salary Limit• Clerical and Administrative Salaries• No proposal preparation charges• 90% to 100% federal funded salary = minimal
other activities• Easier to understand• Integrates with other controls
Payroll andPayroll
Distribution
Human Resources
Effort Reports
Monitoring
Proposals
Work LoadRecords
Faculty & Staff Input
Internal Controls Supporting Effort Reporting
Internal Audit
Training Whistleblower
Accounting System
Policies andProcedures
Financial Status Reports
InternalControls
Federal Guidelines
Payroll andPayroll
Distribution
Human Resources
Monitoring
Proposals
Work LoadRecords
Faculty & Staff Input
Payroll Certifications as an Internal Control
Internal Audit
Training Whistleblower
Accounting System
Policies andProcedures
Financial Status Reports
InternalControls
Payroll Certifications
Federal Guidelines
Unfocused Compliance
Compliance
Costing Issues Effort Reports
NIH Salary CapNSF Salary Limit
Etc.
Correct SignerTimely
Etc.
Payroll Certifications Focus on Compliance
Principal Investigator Co-Principle Investigator Project Accounting Support Lab Supervisors Contract and Grants Accounting Sponsored Project Administration
ComplianceCompliance
Establish Expectations
Pilot Proposal Conditions
• 18-month pilot• All awards transitioned on April 1, 2011• Pilot initially ended September, 30, 2012• Pilot extended to December 31, 2013• Updated policies/procedures, revised DS-2• Training and new websites• Two Internal Audit Reviews at 9 & 18 months• Faculty and Staff survey• Email certifications allowed
Communication and Outreach
• Trained Payroll Certification Coordinators
• Faculty trained by Coordinators
• Notified senior management
• Emailed Faculty
Payroll Certification Reports
• Payroll Expense Reports
• Pay Certification Reports
• Instructions
Certification Rationale
OMB Circular A-21, J.10.c.(1)(e) Plan Confirmation
“At least annually a statement will be signed by the employee, principal investigator, or
responsible official(s) using suitable means of verification that the work was performed,
stating that salaries and wages charged to sponsored agreements as direct charges, and to residual, F&A cost or other categories are reasonable in relation to work performed.”
Payroll Certification Reports
• Around the 7th of each month, Contracts and Grants Accounting notifies departments that the PCS has certifications for them to download.
• PCS Coordinators work with the PI’s to obtain certification.
• The completed certification is due back in Contracts and Grants Accounting within 45 days.
Payroll Certification Reports
• If not certified within 45 days, assistant deans, finance administrators, and the Vice Chancellor for Research are notified.
• Policy allows for transferring uncertified salaries off sponsored projects after 60 days, but has not been enforced.
Number of Payroll CertificationsUniversity of California, Irvine
MONTH 2011 2012January 72February 76March 103 April 81 84 May 97 90 June 201 208July 145 139 August 266 246September 130 133October 25 18November 56 46December 89 85 Total 1,300
Number of Payroll CertificationsUniversity of California, Irvine
EffortMonth 2011 2012 ReportsJanuary 72February 76 2,600 March 103 April 81 84 May 97 90 2,600June 201 208July 145 139August 266 246 2,600September 130 133October 25 18November 56 46 2,600December 89 85 Total 1,300 10,400
Reviews, Surveys and Audits
• UC Internal Audit Review @ 9 months• UC system wide survey• UC Internal Audit Review @ 18 months• Future HHS and NSF audits
Internal Audit Reviews
• Comply with proposal to HHS• 100% coverage• Timely certifications• Acceptable cost transfers• Cost notes
Payroll Certification SurveyUC Riverside and Irvine
Overall user
preference
Payroll Certification SurveyUC Riverside and Irvine
Support staff
responses about the amount of
work required
Payroll Certification SurveyUC Riverside and Irvine
Preferences of Principal Investigators
Payroll Certification SurveyUC Riverside and Irvine
Preferences of support
staff
Payroll Certification SurveyUC Riverside and Irvine
Payroll Certification SurveyUC Riverside and Irvine
HHS/NSF Audit
• Much National Interest in Payroll Certifications• Joint HHS/NSF audit planned for all 4 demonstration
sites• Start audit: March or April 2013• 5-person teams onsite for 2 weeks• Typical financial audit• Payroll Certifications to date & 1 yr. Effort Reports• Individual reports to each university• Probably a consolidated report to OMB.
Final Comment
We like Payroll Certifications!!!!!
Questions?
Mike Laskofski George Mason
Rich AndrewsUC Irvine