University of Kentucky
Review of Effort Reporting Processes and Systems
Subset of Final Report edited by Jennifer Miles
March 2015
Table of Contents
•
•
•
•
Executive Summary
Background and Scope
Current Process Overview
Observations and Recommendations
– Distribution of Effort (DOE)
– Effort Certification
– Related Compliance Topics
• Appendices
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Executive Summary – UK Effort Reporting
UK engaged Huron to assess its current effort reporting process, policy, systems and procedures
and how they meet the requirements of OMB’s new Uniform Guidance
 Areas reviewed encompassed:
• Distribution of Effort process and form (for faculty)
• Staff payroll distribution process
• Faculty and Staff Effort Certification forms
 In general, UK’s current process is consistent with federal requirements; however, the
following recommendations will help UK enhance compliance and improve efficiencies:

Distribution of Effort form/process
1. Separate the current DOE process into general effort planning and salary distribution.
2. Consider utilizing an electronic, web-based system and process for the effort planning and
salary charging process(es).
Effort Certification form/ process
1. Consider an electronic salary distribution confirmation system for faculty and staff with salary
charged to sponsored programs.
2. Modify timing of staff certifications so that they are only performed annually.
3. Investigate possibility of certifying non-salaried individuals via the existing time-keeping
process.
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3
Background
 The University of Kentucky (UK) engaged Huron Consulting Group (Huron) to
assess its current effort reporting process, policy, systems and procedures as it
relates to UK’s ability to efficiently meet the requirements of the Office of
Management and Budget’s new Uniform Guidance, CFR 200.430 – Compensation
for Personal Services, which went into effect December 26, 2014
 At UK, the following processes are used to meet these requirements:
• Distribution of Effort (DOE) – at least annually, used to plan effort for full-time
faculty, and identify accounts to which salary is distributed
• Staff pay allocation – accomplished directly in UK’s SAP Payroll system;
changed as necessary (a change in funding or an account closes)
– Includes both salaried and hourly employees
• Effort Certification – performed twice/year for staff and once/year for any
faculty with charges or commitments to sponsored programs
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Background
 Huron performed the following tasks in order to complete this
assessment
1. Reviewed relevant existing policies, procedures, processes
•
See Appendix A for documents reviewed
2. Met with central and departmental administrators to review actual practices
•
See Appendix B for interview listing
3. Analyzed the supporting technology
• The focus of the assessment was on compliance with OMB Uniform
Guidance (see next slide for requirements), but also on enhancing
efficiency and effectiveness in order to better utilize valuable UK
resources
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Faculty and Staff Salary Distribution and Effort
Certification Processes at UK
 The process maps on the following two slides provide details on UK’s
processes for faculty salary distribution (DOE), staff pay distribution,
and effort certification for faculty and staff
 Descriptions of the processes, along with the benefits and potential
issues, are outlined on subsequent slides
 In general, UK’s processes meet compliance requirements, but
enhancements could be relatively easily incorporated in order to
reduce current administrative burden associated with these processes
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6
Faculty DOE and Effort Certification Process
University of Kentucky Effort Certification Lifecycle
Process Flow
Distribution of Effort and Effort Certification
Schools/Colleges receive notice of new fiscal
year DOE for faculty members. Determination is
made to either carry percentages forward or
start from scratch
DOE percentages
are entered into FES
and payroll
distribution is
created
DOE is updated. Percentages are assigned to each
‘mission’ and account the faculty member expects
to charge or will be charging for the upcoming
fiscal year
Y
Carry
Forward?
N
Faculty members are
paid according to their
DOE and this continues
until the end of the
fiscal year
DOE is created with an original distribution.
Percentages are assigned to each ‘mission’ and
account the faculty member expects to charge or
will be charging for the upcoming fiscal year
Change in Plan?
New grant?
Cost Transfer?
When the DOE is submitted
and percentages are entered
a labor debit/credit is
submitted for every account
listed on the DOE for the
entire fiscal year
FER contains percentage of
effort charges to each
account for the previous
fiscal year
A new DOE is created
with the new account
line items. Up to 12
DOE’s may be created
each fiscal year
DOE is signed by the
faculty member,
chair, dean, and
department
administrator
Hard copy DOE is
returned to
sponsored program
accounting
Faculty Effort Report
is produced by SPA
Fiscal Year Ends
When the DOE is submitted
and percentages are entered
a labor debit/credit is
submitted for every account
listed on the DOE for the
entire fiscal year
SPA distributes the faculty effort
certifications to the departments
with instructions on how to
complete the certification
Effort report is
delivered to faculty
by department
representative
Faculty reviews and signs
effort report with
percentage of effort worked
for themselves and their
staff (in most cases)
Distribution
of Effort
(DOE)
Effort
Certification
Changes to
effort report?
N
Faculty Effort Report
is complete
Y
Cost transfer is
created – Effort
Report is recertified
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7
Staff Salary Distribution & Effort Certification
Process
University of Kentucky Effort Certification Workflow - Staff
Phase
Staff Salary Allocation and Effort Certification Process
Salaried
Payroll distribution for salaried
staff employee is received by a
department administrator
Non-salaried
Hourly staff clock in/out
using Kronos or SAP
Department
administrator enters
payroll distribution
into SAP
Payroll Distribution
carries on into
perpetuity
Payroll distribution for
hourly staff employee is
received by a department
administrator
Department
administrator enters
payroll distribution
into SAP
Semi-Annually – an effort certification report
is created containing all payroll charges on all
accounts incurred up to that point
Effort Certification is
reviewed by the employee
or an individual with suitable
means of verification and
signed
Account reaches end
date. New distribution
is needed
Changes to
effort report?
N
Payroll distribution
is updated
Payroll Distribution
carries on in
perpetuity
Staff Effort
Certification is
complete
Y
Cost transfer is
created – Effort
Report is recertified
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Current Process: Distribution of Effort (DOE)
(See Appendix C for sample DOE form)
 Since 1993, UK has used the DOE form, generated from the Faculty Effort System
(FES), to record faculty*’s professional activities; the Effort Summary section of the
form indicates planned effort in the following categories:
• Instruction
• Research
• Service
• Administration
• Professional Development
 Accounts to which the faculty member’s salary is to be charged are identified in a
the Payroll Distribution Block of the DOE; the form is used for data input to UK’s
SAP Payroll system
 A DOE is generated for all faculty members at the beginning of the fiscal year, and
only tracks academic appointment effort (not summer)
 DOE forms must be signed by the faculty member, the department chair and the
dean each year
* Only full-time faculty (>50% FTE) are included in the DOE process
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Current Process: DOE (cont’d)
 The DOE results in two key subsets of data, used UK-wide:
a) Planned workloads, by general category of effort
•
b)
Reports to UK executives have been generated from this data
Salary distribution between pay/funding sources (accounts)
•
Used as the official payroll record for faculty salary distribution
 Data from the DOE may be used by departments and schools to summarize faculty
activity for various purposes:
• Tenure/promotion review
• Annual or bi-annual performance reviews
• Bonuses/incentives
 DOE expectations are often set by the department or college
• Faculty generally allocate effort on the DOE to Research, Instruction, or Service
• As an example, some colleges recommend splitting the percentage 45 Research
(funded and/or unfunded), 45 Instruction, 10 Service
– Commonly this split is only adjusted after the 1 or 2 year performance review
– May be adjusted sooner if there is a significant increase in funded research
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DOE – Benefits
•
Enables UK to meet several OMB requirements associated with documenting
personnel expenses
•
•
•
•
Supported by a system of internal control which provides reasonable assurance that
the charges are accurate, allowable, and properly allocated
Reflect the total activity for which the employee is compensated by the institution, not
exceeding 100% of compensated activities
Encompass both federally assisted and all other activities compensated by the
institution on an integrated basis
Support the distribution of the employee's salary or wages among specific activities if
the employee works on multiple activities
 Requires at least an annual review and planning of individual faculty members’
activities
 Identifies all sponsored projects, including cost share, that an individual is
committed to or has planned to expend effort on for the upcoming
 Provides key performance metrics to UK colleges, departments, and executives
• However, if DOEs are only completed based on department expectations and not
actual plan/activity, the metrics may be inaccurate
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DOE – Potential Issues
 Administratively cumbersome – paper-based, requires multiple signatures
• Initial form requires at least three signatures
• Updates during the year typically require at least two signatures, and occur
frequently for faculty with sponsored programs starting and ending
– DOE updated when a grant account number changes (e.g., continuation)
– Potential for 12 different DOEs over the course of a fiscal year
 No oversight or ownership of the form or the process
• Sponsored Projects Accounting (SPA) is viewed by campus as having
responsibility for administering the DOE process, although the data relevant
for SPA is only that associated with sponsored program effort (pay distribution,
accounts, timing).
 Forms are often returned late
 Initial DOE form due in September and is used for SACS reporting – late initial
forms could result in inaccurate information reported to SACS
 Forms reflecting changes to effort distribution during the year are also often
late, resulting in late charging and/or cost transfers to accounts
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DOE – Potential Issues (cont’d)
 Percentages indicated on form for pay distribution can be confusing to
faculty
• Percentages are annualized for the UK fiscal year, which is often inconsistent with
how grant effort is proposed
• Ex.: if a sponsored project starts January 1st and the awarded effort is 10%, the
percentage on the form is only 5% because the DOE covers July through June
 Metrics are not used consistently across the colleges and
departments, and the data may not be accurate
• Each “interested party” (Provost, Deans, Chairs) uses the data differently
• If DOEs are only completed based on college/department expectations and not
actual plan/activity, the metrics may be inaccurate
 Reporting is limited
• Reports not readily available to the university community
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Current Process: Staff Payroll Distribution
 Payroll distribution for salaried staff and non-salaried staff/students (“Cost Distribution” in
the UK system) is entered into UK’s SAP Payroll system by department administrators
 Payroll distribution continues unless:
• An account ends
• A new account is added to the distribution
• A change in distribution is initiated by the department
• For non-salaried staff/students, hours worked per period interface from Kronos (hospitalbased employees) or are entered directly via Time Management in SAP Payroll
Benefits
 Payroll distribution is entered on the front end, electronically, reducing the risk of lost
paperwork of incorrect account codes being used
 There is no need to update/create a new distribution annually
 Department administrators indicated that this more streamlined process (compared to
the faculty process) resulted in fewer retroactive cost transfers
 Distribution entered at the department level reduces additional administrative steps
No significant issues were identified with staff payroll distribution
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Current Process: Effort Certification Reports
(See Appendix D for sample form)
 Generated for all individuals with pay charged or cost shared to a
sponsored program; must be certified and returned to a departmental
administrator.
a)
Faculty Base Salary Certification Report (IBS/academic year pay)
–
b)
Faculty Non-Base Salary Certification Report (usually summer salary)
–
c)
once/year for the July-June period, displays accounts funding salary with a
percentage assigned to each account funding base salary, based on the pay
distribution
–
–
–
once/year for the July-June period, displays only the pay associated with each
sponsored account
Staff Certification Report
initial report for the July-December period displays accounts funding salary with a
percentage assigned to each account funding base salary, based on the pay
distribution
second report is generated for the July-June period with the pay distribution for the
entire fiscal year, including retroactive cost transfers not on initial report
Requires one signature, however, many units require a second signature by the PI
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Effort Certification Reports – Benefits
 Enables UK to meet several OMB requirements associated with documenting
personnel expenses
•
•
•
•
•
•
Supported by a system of internal control which provides reasonable assurance that the
charges are accurate, allowable, and properly allocated
Reflect the total activity for which the employee is compensated by the institution, not
exceeding 100% of compensated activities
Encompass both federally assisted and all other activities compensated by the
institution on an integrated basis
Support the distribution of the employee's salary or wages among specific activities if
the employee works on multiple activities
Include salaries/wages for those employees used to meet cost sharing requirements on
Federal awards
All necessary adjustment made such that the final amount charged to the Federal
award is accurate, allowable, and properly allocated
 Training and detailed instructions are provided and the effort statements are
generally understood by the individuals that are signing them
 Statements are generally certified in a timely manner
•
Few late or outstanding statements
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Effort Certification Reports – Issues
 Administratively cumbersome
• Electronic certifications are not allowed, reports must be printed and signed
• For units requiring it, staff reports for those working on several PIs’ projects
require signatures from each PI
 Differences between actual effort and payroll distribution may not be adequately
reflected
• Effort percentages are pre-printed – there is no field for actual effort to be
indicated
• Payroll cost transfers occurring after the certification has been printed and prior to
certification will not automatically be reflected on the effort certification (although a
new report can be requested and generated if the fiscal year has not yet closed)
 Changes as a result of effort certification will not be reflected at a detailed level in the
Payroll system
• Changes after the fiscal year end or the “Earliest Retro Date” require a journal
entry in the General Ledger; there is no detail in the Payroll system
 Staff mid-point effort certification is effectively superseded by the end-of-year report
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DOE - Recommendations
1. Separate the current DOE process into two separate, but coordinated
processes
Effort Planning
• Change “ownership” of this process from SPA; consider assigning responsibility
to an office with a more vested interest in the overall allocation of faculty effort
• Establish a unified metrics procedure for effort allocation
Salary Charging
• Segregating this process from effort planning and the FES should enable a more
intuitive approach to salary distribution data
–
Eliminating the current requirement to annualize the percentages (which is needed
because of system limitations) should address many faculty concerns
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DOE - Recommendations
2. Consider utilizing an electronic, web-based system and process for
the DOE (effort planning and salary charging) process
– Online approvals, workflow and electronic signatures; enhanced reporting
capabilities would be available
– Effort commitment information could also be more easily incorporated into the
process
o Commitments to research sponsors could be uploaded from a sponsored program
proposal/award database
– Data from the separated processes could be easily reconciled, especially if a
common system is used for the two processes
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DOE - Recommendations
If the process remains paper-based, UK should consider:
• Creating a worksheet or a form that can allow for simplistic data entry and upload
into FES; would result in more timely and efficient faculty payroll distributions
–
College of Medicine and Behavior Sciences templates could serve as initial models
• Exploring the option of developing edit checking functionality in the SAP payroll
module, so that faculty and staff cost distribution adjustments can be processed
efficiently and effectively utilizing one consistent method
• Allowing specific dates to be associated with payroll distribution instead of an
annualized average, or provide a view that shows a monthly delineation of effort
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Effort Certification - Recommendations
1. Consider an electronic salary distribution confirmation system for faculty and
staff with salary charged to sponsored programs.
•
•
•
•


Would significantly expedite the process and ease administrative burden
Ideally, the system would allow individuals to review salary distribution pro-actively in order
to determine if the allocation of salary is consistent with effort (UK could still only require
an annual certification, but could strongly encourage periodic reviews)
Could enable better reporting of information such as salary cap cost sharing, sponsored
and non-sponsored research effort, mandatory and voluntary cost sharing by department,
and (assuming effort commitments are captured) comparisons of certified to committed
effort
Would enable automatic identification of salary journal entries (currently, the JV is noted
on the paper form)
Data from the distribution of effort, salary charging, and salary confirmation processes
could be easily reconciled, especially if a common system is used for all processes
UK could also consider certification by project in addition to or in place of current
certification,, which is by individual
 Could further reduce administrative burden by coordinating certification with end-ofbudget period reviews currently performed by PIs
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Effort Certification - Recommendations
2. Modify timing of staff certifications so that they are performed
annually
• Will reduce administrative burden and be aligned with faculty certification cycle
• Consistent with federal regulations - new Uniform Guidance removes previous
requirement on timing of certification
• UK should ensure that individuals review their payroll distribution more often than
once a year
• UK should revisit the “Earliest Retro Date” for staff
3. Investigate whether certification of non-salaried staff can be done via
the existing time-keeping mechanisms (Kronos and SAP)
• Determine if the supervisor approves the hours worked
• Determine if the labor distribution account(s) can be provided and confirmed with
the same process as the supervisor’s approval of hours
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Contact Information
Jim Carter
Managing Director
(312) 799-9171
[email protected]
Jennifer Hubert
Director
(312) 731-5185
[email protected]
Marty Bergerson
Manager
(312) 731-5714
[email protected]