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 is called their "effort." Effort Certification (EC) is the process Penn State uses to comply with the federal regulation of performing after-the-fact verification of personnel expenses. This is a mandated process by which the government and other sponsors verify that salaries charged to a sponsored award reasonably reflect the effort spent on that sponsored award during the reporting time frame. EC is required for certain position types who expense a portion of their salary to a sponsored award and/or committed cost-share account.
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 (IBS). 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 awards. 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 of those individuals working on the projects they sponsor. It provides the Principal Investigator (PI) means for certifying that the salaries charged to sponsored awards 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 RA2060 Labor Distribution for complete details on creating labor distribution plans). The LD system was designed using the Plan - Confirmation method of charging salaries to a clearing account and then assigning planned effort through the distribution of the salary. ECs are generated by sponsored program in two scenarios:
If no effort is charged during the period of review, the EC will auto-certify and not enter the workflow because there are no salaries to certify. The Research Administrator (RA) can view auto-certified documents by running the Effort Certification Due-OverDue Report in the System for Integrated Management, Budget, and Accounting (SIMBA) with a filter on the certification required as NO. If effort needs to be applied on a sponsored program that has been auto-certified, an exception needs to be requested via a ServiceNow ticket submitted to the Financial Analysis and Compliance Office (FACO) for consideration.
Employee salary components that are part of the IBS and graduate assistant stipends charged to a grant, contract, or committed cost-share accounts must be verified and certified. The RA verifies that "suitable means to validate" are included with the plan and that the effort percentages are accurate for their business area. The PI certifies that the EC has been reviewed by the appropriate research administrative staff and that the effort is accurate based on actual work performed on each award. The final verification and the certifications all occur within 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 its workflow. The RA assigned to the sponsored program receives notification in their SIMBA Inbox to approve (verify) or reject the EC. After verifying the information is accurate, the RA 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 is responsible for follow-up with appropriate personnel regarding any missing plan effort supporting documentation and/or corrections. Salaries that are not part of the IBS are not certified. Some examples of salary payments that are excluded from the IBS are Supplemental II compensation, overtime, holiday compensation and one-time payments.
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. The PI is ultimately responsible for confirming all effort for all individuals working on their project(s). Therefore, proxy approvals are not acceptable, except in the case where a PI leaves Penn State or is on an official extended leave. When a PI leaves Penn State prior to certifying effort, the certification may be performed by the PI's Department Chair, the PI's immediate supervisor, or a delegate. The individual certifying on behalf of a departed PI should have knowledge of the PI's work activities. This knowledge may be obtained during the offboarding discussions with the PI (see Policy Guideline HRG20 Separation and Transfer Protocol). In cases where Penn State is retaining a grant, the new PI will certify the effort for the project.
If a PI is having difficulty connecting to SIMBA they should reference the following knowledge base articles GlobalProtect Remote Access VPN - Allow agent to manually choose SSL and How do I clear Cookies and Cached Site Data?
If the EC is rejected at any point in the workflow, it is routed to the LD Planner who is sent a notification to fix the plan. The LD Planner must go to "My Inbox" within SIMBA and use the Open Tasks method to adjust the LD plan. Once the LD plan is fully approved the overnight process will run to update the EC. Once the EC is updated, it can be restarted into the workflow by the Research Administrator and the EC process starts 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 certification process must occur again. Business units will work with the Financial Analysis and Compliance Office (FACO) to complete the recertification process and must recertify the EC within a reasonable time frame.
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 General Ledger (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. Those with the appropriate security roles may view this report and subsequently request any necessary changes to the effort in a timely manner to the assigned LD Planner for the unit.
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 RA2060 Labor Distribution for complete details.
EC for sponsored programs closed during the fiscal year must be verified and certified within 90 days after the Period of Performance (POP) end date on the sponsored program. Exception: Sponsored programs with a POP end date that coincides with the end of the fiscal year (June 30) are excluded from this project-end certification requirement. These will be included in the fiscal year certification cycle instead and are due September 30.
The ECs are produced and stored by the LD system 30 days after the end of the Period of Performance date on the sponsored program. SIMBA automatically produces the EC and kicks off the workflow. A summary of salary amounts and related percentages by individual to the total IBS charged for each month must be verified by the RA. The RA for the sponsored program receives notification in the SIMBA Inbox to approve (verify) or reject the EC. After reviewing the plan effort, the RA 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. If approved, the PI is the final approval for the EC, and the plan is now certified. 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 generally not be reopened.
The ECs for each opened sponsored program are produced and stored by the LD system approximately 30 days after the end of the fiscal year based on July month end close procedures. SIMBA automatically produces the EC and kicks off the 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. The RA for the sponsored program receives notification in the SIMBA Inbox to approve (verify) or reject the EC. After reviewing the plan effort, the RA clicks the effort verification (see Exhibit A) button and workflow routes the effort plan to the PI.
NOTE: Sponsored programs with a Period of Performance end date of June 30 are included in this annual certification cycle rather than the project-end certification process.
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. If approved, the PI is the final approval for the EC, and the plan is now certified.
The PI has until the last business day in September (hereafter referred to as September 30th) to complete all sponsored program ECs.
If EC(s)s will not be completed by the mandatory September 30th deadline, the RA must provide the following information to FACO on the late effort certification form:
At the beginning of October, FACO works with the individual research offices to resolve any outstanding issues.
For a certified EC to be reopened, a ServiceNow ticket must be submitted to FACO for consideration. If the request is approved, the ServiceNow ticket will be assigned to the SIMBA LD/EC Assignment Group to reopen the EC. If the request is denied, notification will be provided to the individual who submitted the ticket.
Effort associated with Technical Service payments (earnings periods B01 and B02) will be certified in the following fiscal year when the effort is paid and reflected in the financial system. This exception ensures that effort certification aligns with the timing of payroll charges, while maintaining compliance with the requirements to certify all effort charged to sponsored awards.
Violations of University policy should be reported to the appropriate supervisor, unit manager, Human Resources representative, or the office responsible for the relevant policy or procedure. If these channels are insufficient or unavailable, individuals may submit an anonymous report through the Penn State University Hotline, accessible via the Reporting at Penn State website.
If any costs are, or have been, questioned as a result of an audit, review, or investigation (both internal and external), the college or business unit is responsible for providing additional justification and explanations. If the cost is deemed unallowable, the college or business unit is responsible for removing the costs from the sponsored award and onto a non-sponsored source of funding, such as general funds.
The RA 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 is responsible for working with Internal Auditing and Post Award Contractual Compliance 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 is also responsible for working with Post Award Contractual Compliance, 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 ECs. 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 Record Retention schedules.
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.
August 13, 2025