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Effort Reporting at UTHealth

Effort Reporting Guidelines & Policies

Risks of Non Compliance

In recent years, the federal government and its auditors have become much more active in their review of effort reporting requirements, and a number of universities have received large audit disallowances as a result. Recent cases of audit disallowances are:

  • Northwestern University paid $5.5 million to settle issues related to problems with effort reporting, on a contracts and grants base of $325 million
  • South Florida returned $4.1 million to the federal government to settle a number of charging issues, including effort reporting
  • University of California paid a total of $2.1 million to settle an NIH salary cap limitation disallowance for the period July 1, 1995 through June 30, 2002.

An effort reporting system must provide records on how individuals participating in federally funded sponsored agreements actually spend their time. Because the federal government mandates effort reporting, it is incumbent upon institutions that receive federal funding to maintain accurate and auditable systems and records.  Documentation on how individuals spend time on federally sponsored projects is subject to federal audit and can be cause for institutional or individual disallowances.

Institutional disallowances can result if:

  • The effort report was certified by an individual other than the employee or someone who has "first-hand" knowledge of 100 percent of the employee's time;
  • The effort report does not encompass all of the activities performed by the employee under the terms of their employment;
  • The levels of effort reported do not appear reasonable, given the responsibilities of the individual.

Individual disallowances can result if:

  • The effort report certified by the individual is found to be falsified;
  • The levels of effort reported do not appear reasonable.

As evidenced above, federal audit disallowances can result in serious financial penalties for institutions. In addition, criminal charges may be brought against an individual certifying to falsified effort. Current audit plans for federal auditors include effort reporting as a specific audit focus.