Systems and Procedures
A Division of The Office of Budget and Finance
A Division of The Office of Budget and Finance
Labor provided by an employee to a federal grant is called their "effort." Effort certification (EC) is the federally mandated process by which the government and other sponsors verify that salaries charged to a project reasonably reflect effort spent on that project during the reporting time frame. EC is required for employees who receive a portion of their salary from a sponsored project or cost-sharing accounts.
As a condition to receive federal funding, institutions must maintain records that are supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. These records must reasonably reflect the total activity for which the employee is compensated, encompassing both federally assisted and all other compensated activities on an integrated basis, not exceeding 100% of the Institutional Base Salary. In compliance with this requirement, the University has established a system for reporting the percentage of time (i.e., effort) that employees devote to federally sponsored projects. The University has chosen to apply this standard to all sponsors. See Policy RA64 Personnel Costs for complete details.
The University's effort reporting system assures external sponsors that funds are properly expended for the salaries and wages of those individuals working on the projects they sponsor. It provides the principal means for certifying that the salaries and wages charged to sponsored projects are consistent with the effort contributed. All employees responsible for certifying effort must understand that severe penalties and funding disallowances could result to the University from inaccurate, incomplete, or untimely effort reporting.
Finally, sponsors and auditors must also be able to verify that committed cost sharing has been provided. The effort reporting system is the mechanism the University uses to document cost shared salary expenses.
Labor distribution plans are created within the Labor Distribution (LD) System (see Procedure FN2015 Labor Distribution for complete details on creating labor distribution plans). The LD system was designed using the Plan - Confirmation method of charging direct salaries and the payroll distribution methods for wages.
All salaried effort on grant, contract, or cost-share accounts must be verified and certified. The Research Administrator or Financial Officer (RA/FO), if a business area does not have a Research Administrator, verifies that "suitable means to validate" are included with the plan and that the effort percentages are accurate for their business area. The Principal Investigator (PI) certifies that the EC has been reviewed by the appropriate research administrative staff and the effort is accurate. The Budget Administrator certifies that the budget and actuals are compliant with University and sponsor rules and regulations. See Policy FN18 University Approval Authorization for the roles and approval dollar thresholds. The final verification and the certifications all occur within the System for Integrated Management, Budget, and Accounting (SIMBA).
Verification of effort happens at various times during the fiscal year:
Certification of effort only occurs:
SIMBA automatically produces the EC and kicks off workflow. The RA/FO for LD receives notification in their SIMBA Inbox to approve (verify) or reject the EC. After verifying the information is accurate, the RA/FO reviews the effort verification statement (see Exhibit "A") and clicks the "Verify Effort" button. Workflow routes the plan effort to the PI's SIMBA Inbox for certification.
The RA/FO is responsible for follow-up with appropriate personnel regarding any missing plan effort supporting documentation and/or corrections.
The PI receives notification in their SIMBA Inbox to approve (certify) or reject the EC. After verifying the information is accurate, the PI reviews the EC statement (see Exhibit "B") and clicks the "Certify Effort" button. Workflow routes the document to the Business Area Budget Administrator in accordance with Policy FN18 University Approval Authorization.
The Budget Administrator receives notification in their SIMBA Inbox to approve (certify) or reject the EC.
If the EC is rejected at any point in the workflow, it is routed to the LD Planner who is given notification to fix the plan. The LD Planner must go to "My Inbox" within SIMBA and use the Open Tasks method to adjust the labor plan so that the EC workflow can be restarted again.
The Effort Certification Workflow Audit Report (see SIMBA: Effort Certification Workflow Audit Report) provides information on how to find who approved an EC report or where an EC report is currently in the approval process. Anyone who has LD/EC reporting access will have this tile, but the data is limited to the user's security access.
If an exception has been granted and an EC has been reopened, the entire effort verification and certification process must occur again.
Following each payroll cycle (bi-weekly and/or monthly), effort may be reviewed to ensure accuracy. The Effort Certification – Sponsored Program Report in SIMBA shows total dollar amount and percentage of effort of a person charged to a grant and sponsored program by GL account. See the SIMBA: EC - PI Plan Review knowledge base article for complete details on running this report. Access to the Effort Certification Sponsored Program Report is limited by security roles within SIMBA. Anyone with the appropriate security role may view this report to make any necessary changes in a timely manner.
If changes in the plan distribution are required, the adjustments must be processed via the LD plan in the LD system or a journal entry in SIMBA. See Procedure FN2015 Labor Distribution for complete details.
EC for sponsored programs closed during the fiscal year must be verified and certified within 60 days after the Period of Performance (POP) date on the sponsored program and within 30 days after the end-date of each sponsored program.
The Plan Effort Certifications are produced and stored by the LD system 30 days after the end of the Period of Performance date. SIMBA automatically produces the EC and kicks off workflow. A summary of salary amounts and related percentages by individual to the total salary charged for each month must be verified by the RA/FO within 30 days. The RA/FO for Labor Distribution receives notification in the SIMBA Inbox to approve (verify) or reject the effort certification.
See Policy RA90 Finalization and Closure for complete details pertaining to the Close-Out timeline and checklist. Confirmation of final effort must be done within the period prior to the "Budget Validity To" date. Once a grant is closed, the associated sponsored programs will NOT be reopened.
The Plan Effort Certifications, for each open sponsored program, are produced and stored by the LD system 37 days after the end of the fiscal year (June 30th), which is approximately August 6th (dependent on the calendar). SIMBA automatically produces the EC and kicks off workflow. A summary of salary amounts and related percentages by individual to the total salary charged for each month must be verified by the RA/FO within 30 days (by approximately September 6th, dependent on the calendar). The RA/FO for LD receives notification in the SIMBA Inbox to approve (verify) or reject the EC. After reviewing the plan effort, the RA/FO clicks the effort verification (see Exhibit "A") button and workflow routes the effort plan to the PI.
The PI receives the notification in their SIMBA Inbox to certify or reject the EC. After reviewing the plan effort, the PI clicks the effort certification (see Exhibit "B") button and workflow routes the effort plan to the Budget Administrator.
The Budget Administrator receives the notification in their SIMBA Inbox to certify or reject the EC. After reviewing the plan effort, the Budget Administrator clicks the effort certification (no exhibit available) button. The plan effort is now certified.
The PI and the Budget Administrator have until the last business day in September (hereafter referred to as September 30th) to complete all effort certifications.
On, or about, September 15th (dependent on calendar dates), the Director of Research Accounting sends out a reminder email (Exhibit "C") to the Administrative Committee on Research (ACOR) reminding them of the September 30th deadline. If EC will not be completed by the mandatory September 30th deadline, the RA/FO must provide the following information to the Director of Research Accounting:
At the beginning of October, Research Accounting notifies the Director of Research Accounting of all uncertified plan effort certifications. The Director of Research Accounting works with the individual research offices to resolve any outstanding issue.
For a certified effort certification to be reopened, an email including a justification for the reopening must be submitted to Research Accounting (researchaccounting@psu.edu) for consideration which will create a ServiceNow ticket. If consideration is granted, the ServiceNow ticket will be assigned to the SIMBA LD/EC Assignment Group to reopen the effort certification. If the request is denied, notification from Research Accounting will be provided to the requester.
Violation of a financial policy should be reported to your supervisor, unit manager, Human Resources representative, and/or office responsible for the policy and/or procedure. Where those resources are inadequate, you may choose to make an anonymous report through the Penn State University hotline by calling 1-800-560-1637.
If any costs are, or have been, questioned as a result of an audit, review, or investigation, none of these costs shall be transferred between any federally funded grants unless and until expressly approved by a Federal Contracting Officer after a formal Government determination as to the allowability of those questioned costs.
The RA/FO is responsible for ensuring that procedures pertaining to the accountability and safeguarding of all cash receipts, cash funds, and other assets are established and followed in accordance with approved University policies and procedures. Regular audits relating to advances, cash, travel, equipment accountability, and other expenditures provide a means to protect University assets. The RA/FO is responsible for working with Internal Auditing when audits are being performed in the administrative area. Audits pertaining to sponsored activities or other audits performed by external auditors may also be performed. The RA/FO is also be responsible for working with the external auditor and/or a central University office related to these procedures.
Uniform Guidance 200.334 Retention Requirements for Records states the minimum retention requirements for plan effort certifications. The University has enacted stricter retention requirements (see the Grant and Contracts Records (Sponsored Awards) section of the Financial Records Retention Schedule).
University Records retention must be managed in accordance with Policy AD35 - University Archives and Records Management, and retention schedules approved by the Records Management Advisory Committee, the Office of General Counsel, and Senior Vice President and Chief of Staff. These records retention schedules are derived from - or based upon - federal, state, and local statutes or regulations, University Policy, industry standards, and business needs. All University Records must be maintained in such a manner to provide ease of access, establish a suitable audit trail for all transactions, and to be reviewed prior to disposition.
University Records and Transitory/Disposable Record are defined below. See Policy AD35, Definition of Terms for additional information.
Upon completion of the retention period, University Records must be disposed of via secure destruction or transfer to University Archives, unless an exception to the disposition process set forth below applies. If the disposition method for University Records states "Review by Archives" on the records retention schedule, the employees responsible for those records should consult the University Archivist for a final determination of disposition. For University Records that must be securely destroyed, units may arrange for shredding services by either contacting the Blue/White Shredding Program or the Inactive Records Center.
Exceptions to the disposition process are as follows:
To safeguard the privacy of individuals, records that contain Personally Identifiable Information (PII), as defined in University Policy AD53 Privacy Policy, or student records, as defined in University Policy AD11 Confidentiality of Student Records, must be destroyed beyond recovery. For additional information regarding privacy and the protection of an individual's personal information, see Policy AD53 Privacy Policy.
Additional questions may be directed to the Office of Records Management.
For questions or additional details, please contact the Business Area Research Administrator or Financial Officer, if the business area does not have a Research Administrator.
To request changes to this procedure, please contact the Office of Systems & Procedures by submitting a GURU Technical Support Request Form.
March 21, 2024