Grants Accounting

Time & Effort Certification

 
Purpose: 
To comply with Federal requirements asserted by the Office of Management
and Budget’s 2 CFR Part 220 (OMB Circular A-21), “Cost Principles for
Educational Institutions” that require: 
  • The University have a system in place that verifies salaries and wages
    associated with federally sponsored agreements,
  • The responsible person (the principal investigator, department chair, or
    Dean) have a suitable means of verification of direct and indirect costs
    charged to the sponsored agreement, and
  • The system “provide for an independent internal evaluation to ensure
    the system’s effective and compliance”
    (2 CFR Part 220 -OMB Circular
    A-21), J10b(2)(f)) with the federal standards. 
Policy: 
The University utilizes an after-the-fact, Banner-based effort reporting system
to account for the effort of all faculty and staff (professorial, exempt and non-
exempt staff, graduate students) at Grand Valley State University that expend
effort on federally sponsored grants and contracts. These individuals must
complete and submit effort reports, whether paid: 
  • Directly from a sponsored agreement, or
  • From another GVSU fund for which the effort is re-distributed to a
    sponsored project.
Time and effort expended on federally sponsored grants and contracts by
non-exempt staff, paid bi-weekly, will be considered certified if the bi-weekly
time sheet is approved by the appropriate Department personnel and is
submitted using the Ultra Time reporting system. This policy is supported by
2 CFR Part 220 (OMB Circular A-21), which states that,
“Where the institution uses time cards or other forms of after-the-fact
payroll documents as original documentation for payroll and payroll
charges, such documents shall qualify as records for this purpose”
(J10b(2)(f)). 
Graduate students (research assistants) will be considered students
(i.e. non-exempt employees) for time and effort reporting purposes. This is
in accordance with the 2004 DOL Wage-Hour Administrator’s ruling that
schools may continue to rely on the 1994 DOL opinion letter that research
assistants performing research under the supervision of a faculty member
in a research environment will be considered students rather than employees
for purposes of the FLSA, even though the student receives a stipend for his or
her services under the grant or contract. A copy of the letter can be found in
Appendix A. 
 
GVSU has three effort reporting periods which loosely follow the University’s
semesterly schedule:
  • Late August – December (fall semester)
  • January – April (winter semester)
  • May – mid August (spring/summer semester) 
Time & effort certification reports are generated by the Grants Accounting Office.
Reports are sent directly to the Principle Investigator (PI), with a copy of the
reports sent to the PI being sent to the Dean of the responsible college. All effort
reports are to be certified by the individual or a person with suitable means of
verification (the principal investigator, department chair or Dean) of the work
performed. The official record of certified effort reports will be maintained
in the Grants Accounting Office.
 
2 CFR Part 220 (OMB Circular A-21) explains that University compensated effort
includes research, teaching, administration, clinical activity and any other activity
for which an individual receives compensation of salary, wages, supplementary
salaries and overloads paid by the University.

Any effort expended for sources providing compensation other than the University,
such as outside consulting fees, is excluded from total compensation for effort
reporting.  University compensated effort must be reasonable, allowable and
allocable to the sponsored research in order to be properly charged and certified
to the sponsored program. In general, GVSU’s compensated effort is based on a
normal work week of 40 hours per week.  
 
Effort Certification Process: 
  • Approximately 30 days after each effort reporting period, the Grants
    Accounting Office will generate and distribute effort certification reports. 
     
  • Reports detail by employee ID and grant FOP the amount each employee
    has been paid on a sponsored project and the percent of effort for the
    reporting period for each FOAP. The report also includes any re-distribution
    of effort for the reporting period. 
     
  • The effort certification report accounts for 100% of all effort for which the
    University compensates the individual. This includes effort reported to the
    sponsor as cost share (further information below). The certification reports
    must be reviewed by the employee and/or principal investigator or responsible
    official to confirm that all activities (sponsored and non-sponsored) are
    included and reported correctly and that the distribution of effort shown on the
    certification report reflects a reasonable estimate of the percentage of total
    effort that was spent on each activity.  
2 CFR Part 220 (OMB Circular A-21) does not clearly define the level of precision,
but it does state that “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”
(J10b(1)(c)). GVSU defines an acceptable
level of tolerance (variance) as less than 5 percent.  
  • Cost sharing describes the portion of the cost of a sponsored project that is
    borne by the University rather than by the external sponsor. Effort considered
    mandatory cost sharing will normally be included on the effort report and
    identified by a FOP beginning with “26”. Non-mandatory cost sharing will not
    be included on the effort report, but should be certified using the GVSU In-Kind
    Report for Labor (provided on a case by case basis by the Grants Accounting
    Office). 
     
  • The report must be certified online by the employee or the
    responsible individual that has first-hand knowledge of the employee’s total
    effort. 
     
  • The final certification must be completed within the certification period
    identified in the Banner Electronic Effort Certification notification.  
Corrections to the Effort Certification Report 
Actual effort should be closely monitored throughout the life cycle of each award and
significant changes to estimated effort calculations should be made as soon as they
become known. If at the end of a certification period, the effort percentage reflected on
the certification is not a reasonable reflection (5% or less variation from actual, as
defined in the previous section) of the employee’s effort, a payroll redistribution is
warranted.  Contact your responsible grants accountant to request a labor redistribution.

 
Retroactive Payroll Redistribution Requests (Salary Corrections): 
Special consideration is given to the timeliness of salary corrections in relation to
effort certification. University policy requires that the payroll distribution match the
effort percentages certified on the effort certification report. Salary corrections,
accompanied by appropriate explanations, are processed prior to the certification
of effort.

In the rare instance, should it be deemed necessary to process a salary
correction to correct a report that has already been certified; the employee and/or
departmental administrator must contact the responsible Grants Accountant and
request a payroll redistribution. Once the salary correction has been approved and
processed, a new effort certification report will be produced and notices will be sent
to the involved parties. 
 
Effort Certification Reporting Non-compliance: 
If effort certifications are not certified within the prescribed timelines,compliance
notifications will be issued as follows:
  • 1st –   Sent after 30 days to the PI;
  • 2nd – Sent after 45 days to the PI and the Department Chair;
  • 3rd –  Sent after 60 days to the PI, the Department Chair and the Dean
               of the College. 

If after repeated notifications effort is not certified , the salary charges will be removed
from the grant FOP and charged to the overseeing department’s general fund FOP. 

Independent Internal Evaluations of the Effort Certification Process: 
GVSU Accounting Office staff will periodically evaluate the effort certification process,
in order to ensure its effectiveness.   

Page last modified May 18, 2010