Budgeting Effort

Effort charged to sponsored projects must be allocable, allowable, reasonable, and consistently reported and tracked in the UMass effort reporting system – ECRT.

The Uniform Guidance Subpart E §200.430 contains the federal regulatory requirements for internal controls over certifying time expended on sponsored projects. The University’s practice is to utilize an after-the-fact effort reporting system (ECRT) to certify that salaries charged, or cost shared to sponsored awards, are reasonable and consistent with the work performed.

The individual’s effort is first assigned to specific awards in the payroll system based on anticipated activities.  Actual effort expended on each project is certified by a responsible person with suitable means of verification that the work was performed, generally the principal investigator, at the end of specified reporting periods. The effort certification should be a reasonable estimate of how time was expended. Uniform Guidance Section §200.430(c) states, “It is recognized that teaching, research, service, and administration are often inextricably intermingled in an academic setting.  When recording salaries and wages charged to Federal awards for IHEs [institutes of higher education], a precise assessment of factors that contribute to costs is therefore not always feasible, nor is it expected."

That said, a reasonable amount of precision should be exercised to insure that the following align with each other:

  1. Key person effort as proposed and budgeted (or cost shared) in the original proposal submitted to the sponsor
  2. Key person effort charged to the sponsored agreement (grant, contract, cooperative agreement, etc.)
  3. Key person effort reported in the University’s effort reporting system (ECRT)

The effort maxim to keep in mind: effort budgeted in the proposal = effort charged to the grant = effort reported.

Auditors review the accuracy of the University’s payroll charges by verifying that the percentage of the employee's salary charged to a sponsored project reasonably approximates the actual proportion of the employee's FTE effort devoted to that project. The Effort Reporting System is called upon to provide this verification to audits.

Failure to meet the maxim noted above in regard to effort reporting requirements puts the University at risk for audit disallowances resulting in significant financial penalties. In recent years, several major universities have been assessed large penalties and/or agreed to settlements due in part to effort reporting violations: Northwestern University for $5.5 million; University of Southern Florida, for $4.1 million; Johns Hopkins for $2.6 million; Harvard University for $3.3 million; and University of Alabama Birmingham for $3.39 million.

Policies and Resources Affecting the Budgeting and Reporting of Effort