Effort Reporting/TEARS

An effort report is the official document used by the University to document all effort, whether treated as direct or indirect (F&A), for sponsored agreements.

As a recipient of Federal contract and grant funds, NC State must comply with OMB Uniform Guidance (UG). Because cost sharing is not identifiable in the financial accounting system, these costs are identified in TEARS. The effort report confirms how effort was spent on projects. The reports generated based on the effort report also are used in the development of the indirect (F&A) cost rates.

Commercial Sponsors and some Governmental Sponsors attempt to issue the University a “Labor Hours” type contract as opposed to a “Cost Reimbursement” type contract. When a Sponsor requests that our budget be expressed in terms of labor categories, labor rates and labor hours, we need to ensure that the sponsor recognizes that we have an effort reporting system consistent with Uniform Guidance and cannot account for effort or salary/fringe benefits in terms of labor rates and hours. An explanation essentially like the following must be submitted as part of a proposal or in an exception letter stating that any reference to labor rates or hours are only estimates.

University maintains an effort reporting system as prescribed in Uniform Guidance,  §200.430. All of the Faculty Investigators and graduate research assistants assigned to any sponsored research project are employees of the University and are paid a monthly salary. The allocable portion of any participant’s monthly salary chargeable to any given sponsored project is computed using the percentage of the investigator’s total available time that the individual certifies that he or she spent working on a given project.

There are no timesheets or hourly records on any of these salaried individuals. The University cannot certify to any quantity of labor hours on an invoice because there are no records to substantiate such a certification. In accordance with FAR Part 30 Cost Accounting Standards (CAS # 501), practices used for estimating costs in pricing proposals shall be consistent with cost accounting practices used in accumulating and reporting costs. Our proposal budgets must be prepared using the same methods that we are required to use in our cost accounting system. Our normal proposal budget shows the amount of effort associated with the salary proposed for each investigator. It may be expressed as a percentage or as a number of months of salary. All references to hours of work that may be stated in the proposal budget narrative are calculated estimates using the individuals’ certified percentage of effort, multiplied by the standard 2,080 hours per work year. Likewise, any references to hourly wages are a calculated estimate using the individual’s salary, plus benefits, and indirect costs divided by 2,080 hours per standard work year. These estimates are not part of the University’s official cost accounting system and therefore are not covered by the certification of accuracy that appears on each invoice.

Additionally, the University will request that the contract includes language explaining that the Sponsor will accept the University’s standard accounting system and invoices, substantially like the following:

“The contractor/subcontractor may submit invoices based on their standard cost accounting system. Salary, fringe benefits and indirect costs will be calculated using the percentage of individuals’ time applied to this project as prescribed in Uniform Guidance,  §200.430. The contractor/subcontractor is not required to keep hourly time records to support invoices.”

For specific guidance on this matter call SPARCS at 919.515.2444 or email sps@ncsu.edu.

Employees in the following circumstances are subject to effort reporting:

• Employees who work on sponsored projects for which the sponsor reimburses the University.
• Employees who work on sponsored projects but whose time on the project is funded by the University. The University’s contribution to the cost of the project is referred to as Cost Sharing.
• Employees who work in the Colleges of Agricultural and Life Sciences and Natural Resources and are funded from certain federal appropriations.

We are required to issue a separate summer effort report to capture and document summer work on sponsored projects from 5/16 through 8/15 that is paid directly (not included in the base salary for 9-month employees). This requires a signed statement that the work was performed and can be signed by the employee, principal investigator, or responsible official(s) using suitable means of verification.

The percentages represent only the amount of time spent working on sponsored awards during this summertime period. Any other work performed during this period will not be represented on the effort report.

If you do not certify your effort report, you will not be in compliance with OMB Uniform Guidance (UG). The University is then at risk of losing existing and future funding from sponsoring agencies. We are also required to report to The University of North Carolina System on effort reports that are not certified.

Employees should certify their own reports, but in unusual circumstances Deans, Department Heads and designees can certify for others. One person should never certify for the entire unit. As the employee or designee certifying the effort report, you are certifying that the information on the report is an accurate representation of the percentage of actual effort expended during the reporting period. Certifying an effort report that is inaccurate or incomplete is unlawful and could result in legal and/or disciplinary action up to and including dismissal.

The cost sharing set-up is for the period of time the cost sharing is anticipated to occur. The effort report is for an entire survey period based on whether the employee is a 12-month or a 9-month employee. The percentage indicates the percentage of time of the entire survey period for the specified categories on the effort report.

If the survey period on the record is a short survey period (i.e. less than the full survey period), then the system will perform a calculation to equate the short period to the equivalent of its percentage of the total survey period.

When the system calculates the cost sharing percentage for the effort, it is being calculated based on the cost sharing set-up percentage from the set up form multiplied by the proportionate number of days the cost sharing set-up represents of the entire survey period.

The percentages used on the Cost Sharing Set-Up is the percentage of time employees believe they will cost share their effort during the period indicated. This period may be less than a full survey period. If the set-up is for a period of time less than a full survey period, the percentages will be converted to the percentage of the full survey period on the actual effort report.

The percentages shown on the effort report should reasonably approximate how much an employee actually worked during a full survey period. The survey period will vary depending on whether the employee is a 9-month or 12-month employee.

The “from” account or “funding account” is the project that is actually funding the cost sharing. The “to” account is the ledger 5 project that is actually being worked on by the individual.

Cost Sharing reports are created after each payroll has been processed. If you completed the Cost Share set-up after the biweekly or monthly payroll lockout date, the updated information from the set-up will be reflected on the next cost share report. An email notice is sent to all TEARS Coordinators when the reports have been created for each payroll.

The set-ups need to be deleted and reentered. When you go into the system to create the new cost sharing record, the employee’s record should reflect the new employee type. If the record is not recreated, it will not show up on the employee’s effort report.

Cost sharing should be documented when the Principal Investigators and other University employees spend a significant amount of time on sponsored projects that is not reimbursed by the sponsor. What is considered significant is ultimately left up to the judgment of the Principal Investigator(PI).

The significance of time (unless specifically committed to in the award) spent on any given project should be based upon the facts/circumstances/prior commitments of that project and is ultimately the PI’s decision when judgment is called for.

Cost sharing should be entered at the beginning of an award and updated as needed.

The Cost Sharing Set-Up Form must be used to establish cost sharing percentages in the effort reporting system for:

• Employees working on sponsored projects but whose time in the project is funded by a non-sponsored project.
• Cost sharing performed in order to maintain committed levels of effort on sponsored projects.
• Cost sharing performed in order to meet committed dollar amounts or % of award amounts.
• Any award where there will be direct charges associated with an individual (travel, tuition, etc.).

The purpose of the Cost Sharing Set-Up Form is to establish cost sharing percentages in the system before effort reports are printed so that the anticipated percentages are reflected on the effort reports. Additionally, cost sharing set-up forms must be in the system in order for the cost sharing reports (monthly or otherwise) to be accurate.

An after-the-fact memo must document cost sharing by EPA 9-month faculty during a summer period and bi-weekly paid employees. After-the-fact memos documenting cost sharing must be submitted to the Office of Contracts and Grants.

Cost sharing is the portion of total project costs not borne by the sponsoring agency. It is the realization that all of the project costs may not be absorbed by a single funding source.

Cost sharing represents resources provided by other funding sources that directly benefit the sponsored projects. In most cases the cost sharing source will be from University Funding.

Cost shared effort is defined as work performed by employees on sponsored projects that are not paid by the sponsor. (In other words, cost sharing on sponsored projects for employees who work on the sponsored project, i.e. the salary is funded by the University or by some other funding source.) Cost shared effort should be included on the effort report as it is a component of the total effort that an employee works.

The following situations involving cost shared effort cannot and should not be documented on effort reports:

• Cost sharing funded by another sponsored project.
• Cost sharing funded from federal appropriations.
• Cost sharing performed by bi-weekly paid employees.
• Cost sharing performed by 9-month EPA employees during the summer period May 16 through August 15.