COST SHARING & TEARS Theory WORKSHOP

THE OFFICE OF CONTRACTS AND GRANTS COST SHARING & TEARS Theory WORKSHOP **This workbook was last updated in FY 2010, so there may have been new regulations that are now in effect. **

NORTH CAROLINA STATE UNIVERSITY OFFICE OF CONTRACTS AND GRANTS COST SHARING WORKSHOP TABLE OF CONTENTS TOPIC PAGE I. Workshop Objectives 3-4 II. Definition of Cost Sharing 5 III. Cost Sharing Types of Commitments & Funding Sources 6 IV. Myths Surrounding Cost Sharing 7 V. OMB Circular A-110: Requirements and Regulations 8 VI. Cost Sharing Commitments and Where They Begin 9 VII. Cost Sharing Categories and Support Documentation 9-15 VIII. Cost Sharing Roles and Responsibilities 16-17 IX. University Cost Sharing Procedures 18-19 X. Cost Sharing Key Points & Risk of Non Compliance 20-21 XI. Definition of TEARS & Roles and Responsibilities 22-23 XII. TEARS The Cost Sharing Set Up Process 23 XIII. The After the Fact Memo 24 XIV. TEARS Cost Sharing Reports 25-26 XV. TEARS Effort Reports 26-30 XVI. TEARS Important Points to Remember 31 APPENDIX Applicable Forms 2

OBJECTIVES: 1. DEFINE Cost Sharing 2. DISCUSS Types of Cost Sharing/Terms 3. DEFINE Funding Sources (internal and external) which Support Cost Sharing 4. UNDERSTAND the Myths Surrounding Commitments 5. DISCUSS Federal Regulations on Cost Sharing from Circular A-110 6. UNDERSTAND Commitments and Where They Begin 7. REVIEW Cost Sharing Categories/Including the F&A Pieces and the required Documentation for each. 8. UNDERSTAND the Roles and Responsibilities of Cost Sharing Commitments 9. REVIEW NCSU Cost Sharing Procedures 10. WORK Case Studies and Questions 11. DEFINE the TEARS system. 12. UNDERSTAND the TEARS roles and responsibilities. 13. DISCUSS the Cost Sharing Set up Process 14. UNDERSTAND when to use the After the Fact Memo 3

OBJECTIVES (Continued): 15. DISCUSS Cost Sharing Reports North Carolina State University 16. REVIEW AND UNDERSTAND the Effort Reports 17. CONSULT Appendices of Information 4

COST SHARING: By Definition: Cost sharing is the portion of total project costs not borne by the sponsoring agency. It is the reality that not ALL project costs will be absorbed by a single funding source. The most common costing relationship involves Sponsor and NCSU commitments. The term Cost Sharing should be used as an umbrella term for the sharing of costs from differing funding sources (to be defined on the next page of the notebook). Cost Sharing Terminology: Sponsor Share (Funded or Donated): Recipient Share (Internally Funded/In-Kind/Third Party): Matching: Cash vs. In-Kind: 5

TYPES OF COST SHARING: North Carolina State University 1. Mandatory/Involuntary (Sponsor Driven Requirement) - cost sharing mandated/required by the agency in the published program announcement and/or call/request for proposal AND which is included by the recipient in the proposal/budget. An involuntary commitment can be mandated by the agency in the form of a percentage, match ratio, or actual dollars (5% by recipient; Cash Match 1:1; $6K in equipment, etc.). 2. Voluntary Committed (Recipient) - cost sharing not mandated by the sponsor. However, amounts were included in the proposal narrative and/or budget that were approved by the Sponsor with the intention of the recipient providing funding for these costs. Acceptance of awards not directly reimbursing PI/Key personnel effort at all or beyond a 3-month period (i.e., NSF). Acceptance of awards at a lessor amount than proposed without a revised scope of work and/or budget. 3. Voluntary Uncommitted (Recipient) commitments not offered in the proposal narrative/budget but occur during the life of the award. All cost sharing whether voluntarily committed or uncommitted should be documented and verified by the Departments/Colleges throughout the life of the award. COST SHARING FUNDING SOURCES: Dean s Accounts Departmental Accounts Foundations or Gift Accounts Subcontractors Third Parties/Other Other Sponsored Programs F&A on Allowable Direct Costs Under-Recovered F&A (with Prior Approval) 6

Myths Surrounding Cost Sharing λ Most Federal sponsors require mandatory cost sharing in the form of a % or match. λ Sponsors are more likely to make the award if the institution commits some cost sharing. λ Cost sharing dollars are not real dollars and have no effect on the University. λ Cost sharing commitments are most easily met through under-recovered F&A. λ Cost sharing dollars do not have to be supported. λ Cost sharing commitments do not have to be met. λ The University has a pot of gold that PIs can count on for cost sharing commitments. (What waiving F&A in the best interest of the University really means). 7

OMB A-110 REQUIREMENTS/REGULATIONS: (SubPart C -.23): Cost sharing dollars claimed must be: 1. Incurred during the award period. 2. Allowable in accordance with Federal/Sponsor regulations. The criteria for allowability include: a) necessary, b) reasonable, c) allocable, and d) timely. 3. Verifiable from various internal records. ( Internal /cash records would not support Subcontractor/Third Party cost sharing. These external entities are required to submit supporting documentation of their cost sharing commitments at closeout of the award). 4. Claimed/reported/used only once. If the cost sharing dollars benefit more than one project, pro-ration/allocation must be performed in an equitable manner (cost/benefit). 5. Approved in Advance by BOTH Federal sponsors if to be used as cost sharing against another Federal award. This is known as Federal-on-Federal cost sharing. 6. Able to meet the requirements of Cost Accounting Standards if used in support of a project subject to CAS. The definition of a direct charge must be met. These costs cannot be components of the Facilities & Administrative (F&A) cost proposal/rate. 7. To claim under-recovered F&A as cost sharing dollars, the agency must have approved this in advance. This means specific identification of these costs being used as cost sharing in the budget narrative and/or in the budget (returned as approved by the agency). 8

UNDERSTANDING COMMITMENTS AND WHERE THEY BEGIN: NCSU Principal: Limit Voluntary Cost Sharing Commitments! 1. Cost share ONLY when specifically mandated/required by the Sponsor (Call/Request for Proposal), 2. The Department/College should scrutinize cost sharing included in excess of the minimum mandate/requirement of the Sponsor, 3. If obligations are not mandated, they should NOT be listed on budget pages or noted in budget narratives to the Sponsors. COST SHARING CATEGORIES Salary/Effort Non-Salary Categories (MTDC) Equipment & Tuition/Fees Subcontractors Third Party/Other Multiple Projects under Prime Project F&A Costs on Cost sharing incurred Under-Recovered F&A Costs The College/Department is responsible for maintaining their sponsored award files INCLUDING all supporting documentation as described on the Cost Sharing Confirmation Memo and below (with the exception of certified TEARS Effort Reports maintained by C&G). It is critical that these documents are not destroyed prior to official notification from Contracts and Grants. Cost shared expense documentation supported from State funds should not be destroyed at the end of any given Fiscal year, but rather must be retained as long as the sponsored award file is kept. This is at a minimum 3 years beyond the termination date of most awards and can be longer. NOTE: A monthly destroy list is provided from C&G to your College Research Office detailing which projects can be destroyed. 9

SALARY/EFFORT CATEGORY Commitments in Effort can be made: In the proposal budget as direct salary to the PI, or In the budget justification or proposal narrative as a percentage of time the PI will spend on the project. Effort can also be committed by not including any PI Effort in the Proposal at all. WHY IS EFFORT REPORTING NECESSARY? Federal OMB Circular A-21, Section J (10) states that an institution must have a method to document all effort, whether treated as a direct charge, an F&A charge, or as cost sharing against another funding source for sponsored agreement activities. It also states that employees must certify this effort after-the-fact. Since July 1, 2000 NCSU utilizes the Planned Confirmation method and documents percentages of effort worked through TEARS (The Employee Activity Reporting System) for most all effort performed on and cost shared against sponsored research. Under this method, it is important that personnel assignments reflect anticipated work distributions and that changes to planned assignments are updated timely through the Human Resources system to avoid large numbers of payroll redistributions. Cost sharing commitments (% of effort) should be added and/or updated in TEARS through electronic set-ups as soon as possible after actual award/modification. Additionally, at least annually, Effort Reports will be signed by the individual employee, PI, or responsible official(s), using suitable means of verification that the work was performed. A suitable means of verification = person certifying effort report must have First Hand Knowledge of work performed. WHY IS COST SHARED EFFORT SUCH A BIG DEAL? The Presidential Review Directive of January 2001 clarified that sponsoring agencies EXPECT that Key Personnel/PIs are either paid directly from funded projects or are cost shared against other funds in the support of their time, expertise, and leadership on sponsored awards. This is true for the majority of funded programs with the exception of equipment awards and DOD student training awards. 10

The Salary/Effort Category contributes millions of dollars to research projects whether as a direct charge or cost sharing. This cost category defines the amount of PI involvement and overall responsibility/leadership over the technical progress of the project. Direct Salary vs. Cost Shared Effort: There are three types of PI direct salary that can be charged to a sponsored project. 1. Other Salaries 51119 is the expenditure account used on the HR Personnel action Other salaries are directly charged to a sponsored project in lieu of the PI s departmental allocation of salaries. These available departmental funds can only be used as lapsed salaries. 2. Release Time 51118 is the expenditure account used on the HR Personnel action Release Time salaries are directly charged to a sponsored project in lieu of the PI s departmental allocation of salaries. However, release time can be returned to the department to be used for non-salary funds. Specific policies regarding the return of release time funds are at the College/Department s discretion. Release time is also referred to as the time the department releases the PI from normal departmental duties (teaching, public service, research, etc.) to perform research. 3. Summer Salary 51116 is the expenditure account used on the HR Personnel action Summer Salary is directly charged to a sponsored project for a 9- month PI who works during the summer period, 5/16 8/15. If Direct Salary (release time, i.e.) is not charged as budgeted on a project, you need to: 1. Obtain prior approval from the sponsor if there is a reduction in effort, or 2. Document PI effort in the TEARS system as Cost Sharing if effort was actually worked. These steps are taken to prevent compliance issues. There are two major compliance regulations that typically govern PI Effort: 1. The absence of PI effort for more than three consecutive months, and/or 2. A 25% reduction in effort on the project. 11

Documenting PI Effort in the TEARS system as either a direct charge or cost sharing ensures compliance with these regulations. HOWEVER, any effort documented should be a true representation of work actually performed. Cost Sharing of Effort May be Necessary When: Direct Salary is not charged as committed in the proposal/budget, If there is no PI Effort budgeted on the project. Points to Remember: Most federally funded research projects are expected to have some level of PI/Key Personnel effort, either paid or unpaid by the Government. If a research-sponsored agreement shows no effort by the named/senior researchers, paid or unpaid by the Feds, an estimated amount should be computed by the Institution. The amount of effort is at the PI s discretion and should be a true representation of time spent on the project. For example, 5% is equal to approx. 2 hours a week. THE 1% MINIMUM ISSUE 1% is the minimum effort that can be documented on a sponsored project. The amount of effort, however, should be at the PI s discretion and should be a true representation of actual work on the project. This is where the planned confirmation method is applied. The PI plans or estimates the amount of time he/she will be spending on the project. The PI will then certify, after the fact, at least annually, his/her effort in the TEARS system. OMB has recently clarified that some specific types of award programs do not require this voluntary commitment of PI effort, paid or unpaid by the Government. Such award programs include: o Equipment/Instrumentation Grants o Student Augmentation Awards DOD If there are to be personal expenditures associated with any NCSU employee and charged to the project, such as travel or tuition/fees, etc. that person s effort no matter how insignificant must be either charged directly or cost shared against that project and reflected in the TEARS system. 12

Documentation Requirements for Salary/Effort Category: Direct Charge is documented in the TEARS system on the Effort Report. It is also documented in Labor Distribution in the HR system. Cost Sharing is documented in the TEARS system on the Effort Report. These percentages on the effort report are populated directly from the online TEARS system through the Cost Sharing Set Up Form. After the Fact Memos are an acceptable form of documentation for circumstances other than monthly employees and grad students. See below for specific circumstances. Effort Log is used in RARE cases for large skilled labor pools. They are necessary to complete technical goals of a project. In these instances, the length of service is very limited, infrequent, and there is no other manner in which to document the effort for this number of individuals. Further, it is cost prohibitive to hire an outside labor pool and no time is taken away from individual s regular assignment. Logs should capture the project #, nature of the project/tasks, names, address, dates/times worked, and individual signatures/certifications. After the Fact Memos: Certain cost sharing situations will not be accepted in TEARS and therefore will not be documented on an effort report. The following situations should be documented on the After the Fact Memo: Funded by another sponsored project (Check with CNG) Effort performed by Temp Employees Effort performed by 9 month EPA employees during the summer Supplemental Pay For a prior year in TEARS that has been closed out. 13

Non-Salary Cost Sharing Categories (Modified Total Direct Costs): The following cost categories may be claimed/reported as cost sharing and normally carry an F&A component (important later in the calculation of F&A on these allowable expenditures paid from other funds sources). Supplies Travel Fixed Charges Equipment and Tuition Category: The costs may be claimed/reported as cost sharing and DO NOT carry an F&A component (important later in the calculation of F&A on these allowable expenditures paid from other funds sources). Documentation: On Non-salary (incl. Equipment and tuitions/fees) items, documentation can include purchase orders, vendor invoices, Facility Center Use Logs, and travel receipts. The College/Department retains this documentation. Copies of this documentation should be kept with the sponsored project file since the retention period may be different from the cost sharing funding source (departmental account, i.e.). Reminder: an item must meet the definition of an allowable direct charge in order to be used as cost sharing. Subcontractors Category: Approved parties who have cited cost sharing in their statement of work/agreements. Documentation: Subcontractors are required to submit either on formal letterhead or as an addition to their periodic invoices actual cost sharing by cost category as would be supported in their financial transactions. Copies of all documentation from Subcontractors must be provided to Office of Contracts and Grants during the confirmation process and at project closeout. 14

Third Party/Other: Normally there is no formal agreement with these parties. Also known as In-kind contributions. Documentation: These contributors are required to document on official letterhead the types of costs that were contributed and the value placed on each. This value should be the fair market value for these goods and/or services. The value of someone s time should be reasonably estimated, as well. Copies of all documentation from Third Party must be provided to Office of Contracts and Grants during the confirmation process and at project closeout. Other Contracts and Grants: A technical relationship must be established and documented. If federal or federal flow-thru projects are involved, prior approval from both agencies are required. Documentation: The actual project # (and the specific account codes if the entire project will not be used as cost sharing) must be noted during the Confirmation process and at project closeout. Multiple Segments (Sub-ledger accounts) Under Prime Award: The lead College will be responsible for listing these project segments so that C&G can follow-up with a Confirmation Memo to the Colleges responsible for these additional/multiple tasks under the parent reference project. This is especially important in Multi-Disciplinary/Multi-Departmental awards. Documentation: Actual support documentation related to the cost shared expenditures should be retained and maintained by the individual Colleges involved. Facilities & Administrative Costs (Indirect): 2 Types C&G will calculate any applicable F&A costs that may be allowable as cost sharing dollars upon reporting and/or closeout 1) F&A can be claimed as additional cost sharing on direct costs used as cost sharing. 2) Under-recovered F&A costs can be claimed as additional cost sharing if allowed by the sponsor and specifically mentioned in the proposal/budget. There are no documentation requirements for F&A costs. 15

ROLES and RESPONSIBILITIES In an effort to remain compliant as a sponsored research enterprise, various roles and responsibilities are shared between the central office of Contacts and Grants and the College Business/Research Offices. It is important to know where these responsibilities lay. : Establishing/Communicating/Promoting Policies & Procedures while Providing Support to Campus Clients Assisting in the Proposal Budgeting (Upon Request) Determining Propriety & Reasonableness of Costs Exercising Budgetary Control Making Timely Deposits of Sponsored Awards Receipts Processing Prior Approval Requests Preparing Accurate & Timely Financial Reports/Invoices Maintaining the Effort Reporting System (TEARS) Monitoring all Payroll Reallocation Transactions Review/Approve Service Facility Use Rates Developing and Negotiating the University s F&A rates Coordinating formal audits/reviews of C&G projects 16

College Business/Research Office: Ensuring Consistency/Compliance in Budgeting/Charging of Costs Obtaining/Retaining Unlike Circumstance documentation Conducting Pre-Audit Review of ALL Expenditures (before they post) Ensuring Adjustments to Expenditures are Timely (monthly reviews) Preventing Budget Overdrafts on Projects Completing Prior Approvals/Obtaining Adequate Justification Meeting Cost Sharing Commitments & Retaining Adequate Support Documentation Maintaining & Monitoring Committed Levels of Effort on Projects Ensuring Conscientious Certification of Effort Reports Reviewing Subcontractor Costs for Compliance and Cost Sharing Commitments Ensuring Timely/Accurate Closeout of Projects Ensuring Technical Reports are Completed and Forwarded Timely Providing Necessary Training Within the College 17

University Cost Sharing Procedures A) Confirmation Process: 1. Contract and Grant Fiscal Managers review all new awards, including supplements/continuations/renewals/no-cost extensions for any cost sharing commitments on the part of the University as the recipient. NOTE: Confirmation memos are NOT completed on Memorandum of Agreements ($25K and under), equipment awards, DOD student training awards, REU s (Research Experience for Undergraduates), or on Fixed Price projects (as determined by the University AND coded as D, E in the WOLF reports). 2. If cost sharing commitments are noted (mandatory or voluntary), a Cost Sharing Confirmation Memo is forwarded to the College for completion. If the actual cost sharing dollars by cost category can be determined from the award documentation, C&G will complete these amounts in the left-hand column of the memo. If actual amounts cannot be determined, but a commitment is present, C&G will place an * by the proper cost category. 3. The College/Department/Unit is to complete the right-hand column of the Confirmation Memo with the ACTUAL dollar amounts by cost category along with other required information. The College amounts will either confirm or be in disagreement with the C&G assessment. 4. The completed Confirmation Memo should be returned to C&G within 30 days of receipt. 18

B) Follow-Up Process: North Carolina State University 1. If the Confirmation Memo is not returned to C&G within the 30 days, an exception list is generated on a monthly basis and forwarded to the College business contact. 2. If the Confirmation Memo is returned with conflicting information, the C&G Fiscal Manager will contact the College to resolve the issue(s). The Director of Contracts and Grants, the College business contact, and the PI will handle unresolved differences. 3. For awards with project periods of greater than a year, C&G generates a semi-annual report for distribution to the College. No response to C&G is required upon receipt of this monitoring tool. It is for internal College/Departmental/Unit use only. C) Closeout/Reporting Process: 1. The College will be asked to complete Interim Cost Sharing Memos/Reports (with actual verifiable TOTAL project-to-date amounts by cost category) when required of the Sponsor to accompany interim financial reporting. These requirements are often sponsor/award specific. 2. College completion of the Final Cost Sharing Report is required (with actual verifiable TOTAL project-to-date amounts by cost category) upon project closeout. The report should also be completed and returned in the event that there was no cost sharing incurred. 3.The Colleges/Departments/Units are responsible for providing all supporting documentation in specific cost categories (TEARS, After the Fact Memos, Subcontractors, and Third-Party) to C&G upon either interim or final reporting. 4. Contracts and Grants will calculate the amount of any direct or underrecovered F&A to be claimed/reported based upon the submissions of final cost sharing figures by the College. 5. Contracts and Grants is responsible for reporting cost sharing to the sponsoring agencies. 19

Cost Sharing Key Points: 1) You do not incur/recognize cost sharing until actual funds are expended. 2) Costs claimed as cost sharing must meet the A-110 criteria as well as the allowability test and the definition of a direct charge (for CAS covered awards). Do not claim as cost sharing unless you could have charged the costs. 3) Cost Sharing amounts are not tracked/recorded by the University s financial accounting systems. 4) It is the College s/unit s responsibility to document, track, and meet cost sharing requirements. 5) It is the College s/unit s responsibility to update the effort reporting system (TEARS) in order to capture/certify cost sharing in the effort cost category. 6) If your College is the lead on a collaborative effort, ensure that the other Colleges/Units involved in the cost sharing commitment understand their responsibilities and roles in capturing this information. 7) Cost Sharing affects the University s research cost base in the development of the Facilities and Administrative Cost Rate. 8) Revised budgets and statements of work should be submitted and accepted by the agency for any differences between the original proposal and the actual award amount if not to be considered as committed cost sharing. 20

9) If you note that Cost sharing commitments may not be met, contact the Fiscal Manager in C&G for assistance PRIOR to the end of the agreement. On occasion, some Sponsors may, with written and adequate justification, release/reduce the recipient s cost sharing commitment. VERY RARE! 10) F&A Costs may be claimed/used (if not prohibited by the Sponsor) as added cost sharing on any F&A-bearing direct costs used as cost sharing (normally all costs except equipment, tuition/fees, & Subcontractors). In addition, under recovered/waived F&A costs, if approved in advance by the sponsor and specifically noted in the proposal/budget, can be calculated on the modified total direct costs and claimed as additional cost sharing. Contracts and Grants will calculate the amount of any under-recovered/waived F&A to be claimed/reported at project closeout based upon submission of final cost sharing figures by the Colleges. NON-COMPLIANCE: Failure to meet cost sharing obligations Failure to adequately document cost sharing Consequences: Cost disallowances by the Sponsors Risk to Future Funding Opportunities Audit findings 21

TEARS THE EMPLOYEE ACTIVITY REPORTING SYSTEM What is TEARS? TEARS - is The Employee Activity Reporting System. Meets A-21 requirements (Planned Confirmation Method) Web based through the HR pagelet in the Administrative Portal Captures all effort expended on Sponsored Research Projects (Direct or Cost shared) College Roles and Responsibilities: Establish Timely Personnel Actions Coordinate Retroactive Payroll Adjustments with Effort Report Certification Monitor and Maintain Committed Levels of Effort Serve as liaison between C&G and the college, department, and/or business unit Ensure cost sharing is set up in TEARS Timely review, adjustment, and certification of effort reports Monitor the effort report certification process (Certify within 90 days after end of survey period) 22

Principal Investigator Roles and Responsibilities: Work on projects according to commitments Keep TEARS coordinator informed of changes in work effort Review and certify effort report Contracts and Grants Roles and Responsibilities: Ensure that the effort reporting system and policies are in compliance Produce and distribute effort reports Retain certified effort reports Provide assistance to the campus Monitor delegated responsibilities Serve as system administrator The Cost Sharing Set Up Process: Cost Sharing set ups should be entered when there is a commitment of cost shared effort or effort not reimbursed by the sponsor. Cost sharing set ups should be entered at the beginning of an award and reviewed periodically to reflect any changes. These set ups are entered in the TEARS online system under the HR menu on the Administrative Portal. Cost sharing set ups are used to establish cost sharing in the system before effort reports are created. Cost sharing set ups must be in the system in order for the cost sharing reports to be accurate. 23

The following Effort cannot be documented in TEARS: This effort must be documented on After the Fact Memos. See appendix for a copy of the form. Effort funded by another sponsored research project Effort funded by federal appropriations (CALS & CNR ledger 4 accounts) Effort of Temp/Biweekly Employees Summer effort of 9-month Research Faculty Effort from a prior year that has been closed out in TEARS. Fiscal Years are generally closed in January following the end of the FY. After the Fact Cost Sharing Memo Instructions The After the Fact Cost Sharing Memo is the method that should be used to document cost sharing situations that cannot be documented within the University's official effort reporting system (TEARS). The college/department/business unit is responsible for identifying the circumstance in which cost shared effort must be documented on the After the Fact Cost Sharing Memo and is responsible for completing the memo. Completed memos should then be sent to the Office of Contracts and Grants. The now has two After The Fact Cost Sharing Memos. Copies of these memos can be found in the APPENDIX of this manual. The Regular Monthly After the Fact Cost Sharing Documentation memo allows for reporting of cost shared effort for an employee after TEARS for a FY has been archived. The Non-TEARS After the Fact Cost Sharing Documentation memo should be used for reporting: Bi-Weekly Employees Summer Effort Supplemental Pay Cost sharing from one Ledger 5 to another Ledger 5 As always, if you have any questions or concerns, your first point of contact is your College TEARS Coordinator. 24

TEARS Cost Sharing Reports North Carolina State University Types of Cost Sharing Reports in TEARS: Monthly Grads (Biweekly) Annual It is important for the cost sharing reports to be accurate for two main reasons: 1. These dollar amounts are reported to the sponsors in our Financial Reports and/or invoices 2. These dollar amounts become components of total direct costs used in the development of NCSU s F&A cost rate. Things To Keep In Mind with regard to the Cost Sharing Reports: Monthly Cost Sharing Reports If cost sharing is set up for a month and the funding source used is not funded (i.e. there were no earnings for that particular month) the monthly report will show $0. When entering multiple cost sharing setups for the same funding source, make sure there are enough dollars in the funding source for all cost sharing setups. The monthly report is looking at the funding source on a setup-by-setup basis, not overall. For a 9-month employee, on the monthly report only, we are annualizing the monthly amounts. For a 9-month employee, there will be no monthly cost sharing report for those employees during the months of June and July because theoretically, they are paid from 08/16/xx 05/15/xx. Therefore, cost sharing for the month of May (05/01 05/15) and August (08/16 08/31) may seem a lot smaller that it will at the end of the year. This is due to the way the calculations are handled (prorated) in the different reports. Make sure that cost sharing dates reflect actual cost sharing. If a project ends on 03/15/04, the setup should reflect the 03/15/04 date. 25

Fiscal Year Cost Sharing Reports If at the end of the Fiscal Year there was enough money in the funding source to fund the cost sharing, there will be a dollar amount for that account in the Fiscal Year cost sharing report. Keep in mind: the annual reports are updated as redistributions in the HR system are processed, so the annual report is the most accurate report. The monthly reports show only the amounts through that particular month and do not reflect any subsequent redistributions that may have processed. Effort Reports: The effort report serves as the confirmation in the Planned Confirmation Method. The effort report is the official document used by the University to verify all effort, direct or cost shared, for sponsored agreements and is certified after the fact as required by OMB Circular A-21. Who will Receive Effort Reports? Employees whose salary is funded by sponsored projects (Direct Charges) Employees who have effort cost shared on sponsored projects and set ups established in the TEARS system. Work in the College of Agriculture and Life Sciences and Natural Resources that are funded from certain Federal Appropriations or Ledger 4 funding. *****Biweekly Employees DO NOT receive effort reports since the signed time sheets serve as certification of effort. *****If there is a change in distribution, the time sheet should be updated to reflect the change and re-signed by the person requesting the change / employee s supervisor. 26

Effort Reporting is Necessary because of: Compliance Requirements As a recipient of Federal Contract and grants funds, NCSU must comply with OMB Circular A-21. Audit Considerations State Auditors review effort report certification annually. Auditors from specific sponsoring agencies may review effort report certifications during audits. DHHS Auditors may review effort report certifications during any audit. Audit Reviews may include tests such as: Was certification completed by set deadline? Does certified effort match actual work? Do payroll charges support effort certified? Were payroll adjustments processed timely? Are there projects not listed on the effort report that should be? Survey Periods: Under the Planned Confirmation method there is only one survey period: July 1 st through June 30 th Summer effort reports are only generated for 9-month Research Faculty who receive summer salary on sponsored research projects during the summer months. This is identifiable by the following earnings codes: 601 (5/16 6/30) 602 (7/1 8/15) 603 (Any Retro LI Adjustment from period 7/1-8/15) 27

EXAMPLE OF AN EFFORT REPORT North Carolina State University North Carolina State University Tears Effort Report Employee ID: 000246810 Employee Name: Ball,Lucille A Department: 110701 Animal Science (husbandry) Survey Period: Fiscal Year 2003 (12/12) 07/01/2002 thru 06/30/2003 FY 2003 This form must be electronically signed by 09/30/2003. Review 'Projected %'. If it approximates actual effort expended during the survey period, sign, date and certify the form. (Click on 'Certify' button.) If actual effort differed significantly from 'Projected %', see your TEARS coordinator to make the necessary changes. The TEARS coordinator should indicate the correct percentage in the 'Adjusted Effort %' column. If necessary, new accounts may be added in order to adjust effort. Type Of Effort % per Labor Distribution CS or DA Setup% Projected % Adjusted Effort % A. C&G Funding Sources: 5213481119 BALL/ARNAZ US Dept of Agricultu 74% 74% B. Cost Sharing (From Section D to A): From 2013541319 to 5206241119 1% 1% From 2013541319 to 5218391119 1% 1% From 2013541319 to 5218401119 1% 1% From 4440501119 to 5200841119 2% 2% From 4440501119 to 5214061119 1% 1% From 4440501119 to 5224151119 1% 1% From 4440501119 to 5449701119 1% 1% C. Departmental Admin (From D): D. All Other Activities: 2013541319 ANIMAL SCI (HUSBAN 4440501119 ANIMAL SCIENCE (HU 16% ( 3)% 13% 10% ( 5)% 5% Total Effort 100% 0% 100% 0% * Effort was expended on this project during the survey period however the time spent represented less than one-half of one percent over the whole survey period. I CERTIFY that I have first-hand knowledge that this distribution of effort is a reasonable approximation of actual effort expended during this survey period. Lsball Ball,Lucille A DATE: 09/08/2003 28

SOURCES OF INFORMATION FOR THE EFFORT REPORT EMPLOYEE ID& NAME DEPARTMENT: SURVEY PERIOD: Obtained from PeopleSoft HR System Should be Employee's assigned OUC in PeopleSoft however if the employee has multiple employee records, this may cause a problem with placement. Please notify the University TEARS Coordinator Immediately if you have misplaced employees. Will show the appropriate period based on employee type. There are three different survey periods as follows: Fiscal Year (7/1/03 6/30/04) used for twelve month employees Fiscal Year (8/16/03 5/15/04) used for academic year effort for nine month employees Summer Survey Period (5/16/04 8/15/04) used for summer salary paid on sponsored projects for nine-month employees DEADLINE: Federal deadline for certification (normally 90 days after the end of the applicable survey period). % PER LABOR Percentages are calculated based on accumulated DISTRIBUTION: payroll charges during the survey period. Labor charges can be reviewed and verified against monthly labor distribution reports. Only earnings in earnings codes subject to TEARS will be included in the figures. CS SETUP %: PROJECTED %: ADJUSTED EFFORT %: Percentages derived from cost sharing set-up forms based on the information obtained from the agreement/pi. Note that the percentage that is listed on the effort report is rounded to the nearest whole percentage. Additionally, it represents the cost shared percentage for the entire survey period. If the cost sharing setup was for a period of time different than the survey period this percentage will be prorated to the entire survey period. % PER LABOR DISTRIBUTION plus CS SETUP% Revised effort distribution entered by the college/ departmental TEARS coordinator to reflect actual effort if significantly different from PROJECTED EFFORT % 29

SECTION A - C&G FUNDING SECTION B COST SHARING SECTION C - ALL OTHER ACTIVITIES: CERTIFIED BY: Percentage of time directly funded by sponsored projects. PeopleSoft project and account code, and Principal Investigator name(s) is listed. Percentage of time cost shared on sponsored projects. From is the account that funds the cost sharing. The To is the Project worked on and 1119 as the cost sharing indicator code. Percentage of time spent on activities not reported in Sections A and B. Includes teaching, advising, departmental research, & Professional development. Signature of the employee or department head, represented by electronic stamp of the employee's name and unity ID. 30

Important Points to Remember: The Percentages of effort certified should be a true representation of how an employee actually worked during the survey period. Employees certifying effort on research projects can be interviewed and questioned by Auditors about all of their activities in a given survey period, including what constitutes a full teaching load in their department and consulting activities. TEARS Coordinators are available to assist employees in understanding their effort reports. Personnel actions and redistributions directly affect effort reports. When an effort report doesn t match actual labor distribution, a variance is created and must be corrected. If the employee is unable to certify his or her own effort report, it is important to remember that whoever performs the certification is held responsible for the action and should have first hand knowledge of the effort being certified. 31

Appendix 32

Sample Cost Share Report 33

Other Resources There are two After the Fact Memos and they are located at: http://www.ncsu.edu/cng/tears/after_fact_cost_sharing_guidelines.php The manual for Cost Share Setups is located at: http://www.ncsu.edu/cng/tears/tears_user_manual.pdf The manual for redistribution is located at: http://www.ncsu.edu/cng/redistributions/index.php 34