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Phone: (919) 966-3411
Fax: (919) 962-5011 or (919) 962-3352
Email: resadminosr@unc.edu
RAMSeS Help desk: (919) 843-2594

Effort Reporting: The Bare Essentials for Faculty and Staff

The principal investigator (PI) is responsible and accountable for compliance with all federal regulations associated with sponsored projects awarded under his or her supervision (see Note 1). Effort certification is a compliance requirement of accepting federal awards. (see Note 2)
Effort is not based on a 40-hour workweek, nor is it based on full time equivalent (FTE). Effort is an employee’s total activity within her or his university appointment and includes all research, teaching, clinical service, and administrative duties the employee performs. Effort is comprised of all elements for which an employee is compensated in the form of institutional base salary. (see Note 3) Effort is expressed in percentage terms and must total 100%. (see Note 4 )
The individual signing an effort report confirms that the percentage distribution of activity on the report represents a reasonable estimate of the work performed by the listed employee for the documented period. (see OSR policy-pdf) At Carolina, an effort report is referred to as a PAR, an acronym for Personnel Activity Report.
In preparing their effort reports, employees are encouraged to refresh their memories by consulting available resources documenting their activities during the period. These documents may include other time or effort reports (e.g. clinical time reports) for the period, calendars, clinical schedules, correspondence, telephone logs, meeting documentation, etc. These documents are potentially very helpful in refreshing memories of a very full schedule. They also are types of resources that external auditors or other reviewers may consult to help resolve effort report questions if they arise.
Federal compliance requires adherence to University policies and procedures. Timely certification and return of PARs within University established deadlines is a federal compliance requirement.
Sometimes there are legitimate reasons to modify effort on a project subsequent to certification. These modifications are referred to as retroactive adjustments. Legitimate reasons DO NOT include manipulating funds for budget purposes or to charge one grant or contract to cover work activity actually expended for another project or work related duty.
Any request for a retroactive adjustment requires a Letter of Justification (LOJ) that clearly sets forth why previous effort was erroneously certified, and why the requested change is more appropriate within the context of law, federal requirements, or University policies and procedures. LOJs are submitted to the PAR Administrator in the Office of Sponsored Research (OSR).
Federal requirements allow up to 90 days after the project period end date for final reporting (see Note 5). Carolina's policy for processing approved retroactive adjustments is aligned with the federal 90 day reporting standard. Retroactive adjustments must be legitimate and requested via the LOJ within 90 days of recording the expenditure for which a reclassification is requested.
Federal regulations require the individual who certifies effort must have first hand knowledge of the employee's activities (see Note 6). At Carolina this requirement is met by administering a standing policy that the employee is to sign his or her own PAR (OSR Policy-pdf) except in pre-approved and clearly documented circumstances that warrant a departure from the standard procedure.
Remember, whether or not you agree philosophically with this structure for effort reporting, it is a federal requirement and a current focus of federal auditing programs. Recent noncompliance findings have resulted in multimillion dollar fines at major research universities.

For questions, please contact:

Karen Mansfield, PAR Administrator: mkm@email.unc.edu (962-4666)
Kevin Maynor, Director of Cost Analysis: kevin_maynor@unc.edu (962-4453)
Phyllis Petree, Director of Internal Audit: ppetree@email.unc.edu (962-7883)
Juliann (Juli) Tenney, Institutional Research Compliance Officer: juliann_tenney@unc.edu (843-8988)

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Note 1: Principal Investigator (PI)

Definition: An individual designated by the grantee to direct the project or activity being supported by the grant. He or she is responsible and accountable to the grantee for the proper conduct of the project or activity. (Source: NIH website)
Responsibility: The PI (also referred to as Program/Project Director) is the individual, designated by the grantee, responsible for the scientific or technical aspects of the grant and for day-to-day management of the project or program. The PI is not required to be an employee of the grantee. However, because the grant, if awarded, is made to the organization, the applicant organization must have a formal written agreement with the PI that specifies an official relationship between the parties even if the relationship does not involve a salary or other form of remuneration. If the PI is not an employee of the applicant organization, NIH will assess whether the arrangement will result in the organization being able to fulfill its responsibilities under the grant, if awarded.

The PI is a member of the grantee team responsible for ensuring compliance with the financial and administrative aspects of the award. This individual works closely with designated officials within the grantee organization to create and maintain necessary documentation, including both technical and administrative reports; prepare justifications; appropriately acknowledge Federal support of research findings in publications, announcements, news programs, and other media; and ensure compliance with other Federal and organizational requirements. NIH encourages the PI to maintain contact with the NIH Program Official with respect to the scientific aspects of the project and the Grants Management Official (GMO) concerning the business and administrative aspects of the award. (Source: NIH website)

NOTE: NIH staff members conduct official business only with the designated PI and Authorized Organizational Official (AOO).

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Note 2: Effort Certification

Educational Institutions:
Amounts charged to grant-supported projects for personal services must be based on an adequate payroll distribution system. Standards for payroll distribution systems are contained in the applicable cost principles. Briefly summarized, these approved systems are as follows:

A plan confirmation system for professorial or professional staff based on budgeted, planned, or assigned work activity, updated to reflect any significant changes in work distribution.
Activity records system reflecting an after-the-fact reporting of the percentage distribution of activity of employees. For professorial and professional staff, the reports will be prepared each academic term, but no less frequently than every 6 months. For other employees, unless alternative arrangements are agreed to, the reports will be prepared no less frequently than monthly and will coincide with one or more pay periods.
Multiple confirmation records system for professorial and professional staff, prepared each academic term, but no less frequently than every 6 months.
By mutual agreement, any other method meeting the criteria specified in paragraph J.6.b.(2) of OMB Circular A-21. (Source: NIH website)

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Note 3: Institutional Base Salary

Definition: The annual compensation paid by an applicant/grantee organization for an employee's appointment, whether that individual's time is spent on research, teaching, patient care, or other activities. The base salary excludes any income that an individual is permitted to earn outside of duties for the applicant/grantee organization. Base salary may not be increased as a result of replacing organizational salary funds with NIH grant funds. (Source: NIH website)

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Note 4: Effort Must total 100%

Personnel Activity Reports (PARs):
The University has elected to use a system of after-the-fact confirmation reports to document salary and wage charges, both of direct and indirect nature, as required by Section J10 of Federal OMB Circular A-21. These reports account for 100% of each individual's effort. The system is officially titled the Personnel Activity Reporting System (PARS). Individual Personnel Activity Reports (PARs) are created for each faculty and staff member either receiving direct salary support from a sponsored research or training award, contributing cost-sharing effort thereto, or engaged in general support or departmental administration activities which are allocable to all University activities through means of the Facilities and Administrative Cost pool. (Source: UNC Policies and Procedures web site)

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Note 5: Final Reports

Unless the GMO grants an extension, grantees must submit a final Financial Status Report (FSR), final progress report, and Final Invention Statement and Certification within 90 days of the end of grant support. Failure to submit timely and accurate final reports may affect future funding to the organization or awards with the same PI. (Source: NIH website)

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Note 6: Signature Certifications

To confirm that distribution of activity represents a reasonable estimate of the work performed by the employee during the period, the record for each employee will include: (i) the signature of the employee or of a person having direct knowledge of the work, confirming that the record of activities allocable as direct costs of each sponsored agreement is appropriate; and, (ii) the record of F&A costs will include the signature of responsible person(s) who use suitable means of verification that the work was performed and is consistent with the overall distribution of the employee's compensated activities. These signatures may all be on the same document. (Source: OMB website)