Compensation and Sponsored Projects Michael Ritz CIA CPA

Compensation and Sponsored Projects Michael Ritz, CIA, CPA Research Compliance Officer Office of Research and Project Administration

Topics • 9 Month Faculty Summer Compensation • Monitoring Commitments • Total University Concept • Extra Compensation • Changes in Effort • Administrative and clerical salaries

9 Month Faculty - Summer Compensation January 11, 2020 Summer Salary Guidelines “During a month in which 100% of a faculty member’s time is charged to a federal grant, 100% of his/her time must actually be devoted to research covered by the grant. Some activities that are disallowed are: ”

9 Month Faculty - Summer Compensation January 11, 2020 Summer Salary Guidelines • Vacation • Teaching • Academic administration • Proposal preparation • Business or conference travel, except when exclusively related to work supported by the grant to which the salary is being charged.

9 Month Faculty - Summer Compensation “Since none of the activities [on the prior slide] are permitted during a summer month…it has long been…policy to permit no more than 2. 5 months of summer effort to be charged to federally sponsored programs…. …this policy will be applied on a monthly basis: faculty may not charge more than 5/6 of any summer month to government sponsored research grants, except in truly exceptional circumstances. ”

9 Month Faculty - Summer Compensation “Under most research awards, the University has rebudgeting authority and can rebudget salary from summer to the academic year without explicit agency approval… Faculty must actually work on research supported by grants paying any fraction of their salary during a particular period. It is essential that a faculty member’s payroll allocation accurately reflect his/her activities during any given period. ”

Monitoring Commitments • Departments and divisions must have an internal control system in place that effectively monitors the effort/payroll allocations of faculty members, staff members and other individuals working on sponsored projects. • The objective of monitoring effort is to help ensure effort/payroll allocations to sponsored projects are reasonable reflections of the actual work performed and that individuals are not overcommitted.

Monitoring Commitments • Administrators maintain a spreadsheet for each faculty member who is a key person on at least one sponsored project. • The spreadsheet compares committed effort (i. e. the effort promised in the proposal) to the reported effort (i. e. the effort/payroll allocation in HRMS) and to the actual effort (i. e. the actual work performed according to the faculty member/investigator or other responsible person with suitable means of verifying effort).

Total University Effort Concept • UR salary is allocated on the basis of a distribution of “Total effort”. • Total effort includes: – teaching, research activities, administrative responsibilities, etc – all effort for which the person is compensated by the University.

Total University Effort Concept • It is important to have internal controls in place to ensure that an individual’s effort is not committed beyond 100%. • For example, the sum of committed effort on a faculty member’s projects disclosed on the Other Support pages of a proposal application should not exceed 100% in the aggregate.

Extra Compensation • UR faculty cannot normally receive extra pay to consult on UR-administered projects. • Extra compensation is not a part of the employee’s ongoing distributed salary, therefore is not reflected as a component of their compensated activities for purposes of the Plan Confirmation System.

Extra Compensation • Extra compensation relates to activities in excess of the faculty member, staff member or other individual’s TUE, thus extra compensation payments are not considered in that person’s effort certification. • Justification is required regarding how the activity being compensated is outside of the person’s TUE. • The extra compensation must be calculated using the person’s current institutional base salary and the amount of time associated with the respective activity.

Peer Audit in Calendar 2020 Extra compensation payments • Duke charged $23, 107 for personal compensation and applicable overhead for a faculty member. No documentation was available (e. g. , hourly rate or institutional base salary or amount of associated effort) to explain how the compensation amount was derived.

Changes in Effort At a minimum, if an effort change is at least 10% of the individual’s total effort or results in a reduction of documented effort on a single project (over a six month period) of 25% or more of the original commitment for the current project period, an update to the respective person’s effort/payroll allocation must be done.

Administrative Salaries 2 CFR 200 • Services are integral to the project • Person can be specifically identified with the project • The salaries are explicitly included in the budget or have prior written sponsor approval • The salaries are not also recovered as indirect costs

Peer Audit in Calendar 2020 Administrative and clerical salaries • Duke charged $94, 817 to an account related to a “project coordinator” who performed activities such as making travel arrangements, organizing meetings and bookkeeping. Advance approval from the sponsor – to charge the salary of this person as a direct cost - was not obtained.