Business Services Account Management - Corrections and Certifications Presented April 2009 Policy...
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Business Services Account Management - Account Management - Corrections and Corrections and Certifications Certifications Presented April 2009 Presented April 2009 Policy Training Program for the Lifecycle of an Account Music by Chuck Mangione, “Feels So Good,” A&M Records, 1977.
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Transcript of Business Services Account Management - Corrections and Certifications Presented April 2009 Policy...
Business Services
Account Management -Account Management -Corrections and CertificationsCorrections and CertificationsPresented April 2009Presented April 2009
Policy Training Program for the Lifecycle of an Account
Music by Chuck Mangione, “Feels So Good,” A&M Records, 1977.
Business Services
Course Development and Training Team
Presenters:
Chris Martin Effort Reporting
Tom Wright Correcting Documents
Course Developers: Deb Burrow, Business Mgmt Kim Hoebel, Costing Chris Martin, Business Mgmt Rupa Murali, Costing Paula Swank, Business Mgmt JoAnn Wiley, Accounting Tom Wright, SPS
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Course Content
• Objectives• Introduction • Unit 1 – Effort Reporting
– Reasons Behind the Policy/Procedures– Risks of Not Following the Policy/Procedures– When policies and practice collide
• Unit 2 – Correcting Documents– Reasons Behind the Policy/Procedures– Risks of Not Following the Policy/Procedures– When policies and practice collide
• Resources
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Upon completion of this course you will:
Have a better understanding of the issues, policies and procedures for correcting documents and effort reporting at the University.
Course Objectives
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“A good friend will come bail you out of jail, but a true friend will be sitting next to you saying…’Dang, that was fun!’”
In Business Services we want to be neither. ~ unknown
UNIT 1: EFFORT REPORTING
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Why do we do effort reporting?
– Mandated by the Federal Government; OMB Circular A-21 Cost Principles for Educational Institutions
– Supports the distribution of payroll charges to sponsored programs and other accounts
Effort Reporting: Reasons Behind the Policy/Procedures
Resource: OMB Circulars A-21 and A-110http://www.whitehouse.gov/omb/circulars/index.html
Resource: Effort Reporting Traininghttps://www.purdue.edu/costing/BPM/Effort_Reporting/Welcome.html
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Who is required to certify their effort?
– Individuals paid on sponsored projects and/or federal appropriations
Effort Reporting: Reasons Behind the Policy/Procedures
Resource: Purdue University CAS Guidelineshttp://www.purdue.edu/costing/BPM/CAS_Guidelines/Welcome.html
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Why do we do Personnel Activity Reports (PARs) three times a year?
– A-21 Criteria – Section J10(2)(e) states that reports will be prepared each academic term but no less frequently than 6 months
– Purdue has defined an academic term as a semester, and PARs are certified after each semester (Fall, Spring, Summer)
Effort Reporting: Reasons Behind the Policy/Procedures
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Why do I need an academic signature?
– OMB Circular A-21 considers PARs as legal documents– Principal Investigator (PI) or someone with direct
knowledge legally attests that the record of activities allocable as direct costs of each sponsored agreement is appropriate
Effort Reporting: Reasons Behind the Policy/Procedures
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While we may understand the “why” behind the policy, we occasionally interact with principal investigators (PI) who don’t seem compelled by the reasons we just described.
– How do you influence the PI to take the PAR process seriously?
– What should you do if a PI refuses to complete his/her PAR?
Real Life Collision 1…When Policy and Practice Collide
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Before acting, be prepared…consider with whom you are preparing to interact, approach him/her the way they would like to be approached with the information that they need (value added interaction)
Choose a communication style that makes the PI feel comfortable
– Stop! Listen to the concerns of the PI
– Acknowledge frustration; avoid being defensive
– “Tell me more about…” vs. “Why did you…”
Real Life Collision 1 Suggestions…When Policy and Practice Collide
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After you’ve diffused the tension…make your response relevant from his/her perspective.
How does it benefit the PI?– Less work - avoids time documenting
who/what/where/when/why to justify a late PAR or future correction
– Avoids negative consequences
• Personal legal liability
• Civil penalties
• Jeopardizing future funding from specific sponsors (reputation)
Real Life Collision 1 Suggestions…When Policy and Practice Collide
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What constitutes base pay? How is a “full workload” defined?
– Base pay:• AY/FY Salary• Administrative Supplements
– Excludes:• Overloads• Special Merit Pay (SMP)• Professorship supplements• Other special payments
Effort Reporting: Reasons Behind the Policy/Procedures
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Why is it recommended we not retain copies of signed PARS beyond one year?
– Audit risks, copies of PARs may have something different than what the original PAR certifies
– The PARs are available through WebView if needed
Effort Reporting: Reasons Behind the Policy/Procedures
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Why do we discourage changes of less than 5%?
– Federal government realizes that measuring effort can not be precise at all times
– Process is based on an after the fact estimation of how the individual spent his/her time
– Purdue University negotiated the threshold of 5% with DHHS
Effort Reporting: Reasons Behind the Policy/Procedures
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*Prorated on the basis of the projects an individual is working on at the time the leave is taken
Effort Reporting: Reasons Behind the Policy/Procedures
Type of Leave Federal & Federal Pass Through Projects
State, Non-federal, and Industrial
Voluntary Support
Sabbatical NO NO Typically General Funds
Military Leave YES* YES* YES*
Vacation/Holidays YES* YES* YES*
Sick/Jury Duty >10 days
NO NO YES*
Sick/Jury Duty ≤10 days
YES* YES* YES*
PPL >10 days NO YES* YES*
PPL ≤10 days YES* YES* YES*
At Purdue, when may we charge a leave of absence to a grant?
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Have you ever had a faculty member say…
– I wrote the proposal over the weekend on my own time
– Purdue didn’t pay me for preparing my course materials; I prepared them in the evenings.
How do you respond?
How SHOULD you respond?
Real Life Collision 2…When Policy and Practice Collide
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I respond by saying “Get a grip, Dude!
TENURE means: – Time =– Every– Nano-second spent for– University;– Rationale will be– Explained”
Real Life Collision 2 Option…When Policy and Practice Collide
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I SHOULD respond by saying:
Under federal regulations, 100% effort is an employees total hours actually spent on work within the scope of employment regardless of how many or how few hours an employee works and regardless of the FTE listed on the appointment. Effort certification must reflect actual work performed and cannot be budget driven.
Real Life Collision 2 Suggestions…When Policy and Practice Collide
Business ServicesReal Life Collision 2 Suggestions…When Policy and Practice Collide
The following activities are included:
–Departmental/University Research
–Instruction/University Supported Academic Effort
–Externally sponsored projects
–Administrative effort
–Grant writing
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– All outreach and public service activities supported by University funds
– Paid leaves of absence
– Professional activities such as peer review, professional meetings, etc.
– Participating as an officer/committee in which Purdue University is an institutional member
Real Life Collision 2 Suggestions…When Policy and Practice Collide
Total University effort is the total professional activity for which an individual is compensated by the University (regardless of time or
place that the work is done).
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We have found that faculty members like us to provide information about their past certifications.
– How should I respond when my faculty ask “how did I certify my effort last time?”
Real Life Collision 3…When Policy and Practice Collide
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– Most likely, the prior certification would be different from how it should be done at this time since most faculty projects change frequently.
Real Life Collision 3 Suggestions…When Policy and Practice Collide
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Some of my faculty members ask the business office to pencil in their recommended certification.
– How should I respond?
Real Life Collision 4…When Policy and Practice Collide
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Without direct supervision of their work we are not able to recommend how to certify their effort. Only the faculty member is held accountable if there is an error on their reporting.
Real Life Collision 4 Suggestions…When Policy and Practice Collide
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What should I do if I suspect that a faculty member has misrepresented his/her effort?
Real Life Collision 5…When Policy and Practice Collide
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If you suspect a faculty member has misrepresented effort you should either
– Check the job postings and apply for a transfer (just kidding!), OR
– Elevate the situation to your supervisor and discuss next steps/course of action
Real Life Collision 5…When Policy and Practice Collide
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Why should we care about effort reporting?
– Stewardship obligation to various funding agencies (federal agencies, industrial sponsors, private donors, etc.)
– Improper stewardship could result in disallowances of cost, the reputation of the institution/PI, and future funding opportunities
– Jeopardizes institutional authority to act on sponsors’ behalf
Effort Reporting: Risks of Not Following the Policy/Procedures
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– Northwestern University required to repay $5.5M– Northeastern University settled for $5.5M for unsupported direct
labor and fringe benefit costs– Yale University settled for $7.6M resulting from allegations of
unallocable costs to grants and improper charging of summer salary
– Johns Hopkins University and one of its hospitals settled for $2.6M due to researchers overstating amount of time spent on medical-research projects financed by federal government
– Harvard University agreed to pay $3.3M to settle claims of overbilling the NIH for work done on several research and training grants
Purdue would prefer to stay out of this club!
Case in Point – National Landscape
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Purdue Internal Audit Reports
– Agreement between professor and research assistant in violation of University policies resulted in cost to a Purdue department in excess of $22K
– Purdue professor required to repay the University for his own personal overcompensation due to incorrect effort reporting
Case in Point – Closer to Home
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Violations of the False Claims Act
– Possible individual (PI) penalties of not less than $5,000 nor more than $10,000 for each violation
– Criminal sanctions of imprisonment for up to five years and fines of up to $25,000
– Institutional reimbursement to the government for three times the amount of damages sustained by the government because of individuals’ acts
Real Consequences
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Why is timing so important?
– Must remain compliant with federal regulations; A-110 says “timely manner”
– Purdue interprets “timely manner” as within 90-days of effort reporting period
– Inaccurate or untimely reports can affect future funding opportunities
– Completing effort reports in a timely manner helps to ensure accuracy of reports
Effort Reporting: Risks of Not Following the Policy/Procedures
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Why do corrections to effort certification require such detailed explanations?
– Auditor/reviewer may be unfamiliar with the situation; explanation must stand on it’s own
– Clear regardless of passage of time
– Demonstrate that corrective action is necessary and appropriate
– Show that the correction is allowable, allocable, and reasonable
Proactive account management will help us avoid these challenges!
Effort Reporting: Risks of Not Following the Policy/Procedures
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60 second intermission…
Stand up, stretch, dance, jump, sip your beverage, or whatever will prepare you for Act II
Now, SIT BACK DOWN!Music by Van Halen, “1984-Jump,” Warner Bros., 1983.
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Oh my, if we only got it right the first time I could be working on the other 99 priorities on my plate!
UNIT 2: CORRECTING DOCUMENTS
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News Flash ………………………………
New survey just released from the Federal Government!
– 3 out of every 5 financial persons in Higher Education despise preparing correcting documents
– 5 out of every 5 financial persons at Purdue University despise preparing correcting documents
Correcting Documents: Reasons Behind the Policy/Procedures
Source : Correcting Document and Effort Reporting Training Team
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Why do we do correcting documents?
– Account management process/procedure failed – Something went awry– Obligation to correct – stewardship of funds– Ensure each project pays fair share of costs
Correcting Documents: Reasons Behind the Policy/Procedures
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What are the various documents used to make corrections?
– Non-payroll corrections made using JV account document (T code = FV50)
– Payroll corrections prior to certification are made using the Cost Distribution Change (CD-01)
– During certification process – PAR
– After certification process – Revised PAR and post-PAR
Correcting Documents: Reasons Behind the Policy/Procedures
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What questions should I ask when considering doing a correcting document?
– Is there documentation supporting why the correction should be done from someone with first-hand knowledge?
– Why was the expense not originally charged to the project?
– Did the expense benefit the project?
– Is it allowable, allocable, and reasonable?
Correcting Documents: Reasons Behind the Policy/Procedures
Resource: Purdue University Correcting Document Guide http://www.purdue.edu/sps/pdf/cdguide12-03.pdf
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What questions should I ask when considering doing a correcting document? (continued)
– Is the expense necessary to conduct the work? – Are the funds available?– Can proportional benefit be easily determined and
documented?– Is the correction timely?
Correcting Documents: Reasons Behind the Policy/Procedures
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Periodically, a PI asks me to move charges from one project to another. He/she points out “all of my projects are related.” What should I do?
Real Life Collision 6…When Policy and Practice Collide
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Context is important…however, your approach in getting the context is equally important:
“I’d like to help you resolve this. To do that, I need your help understanding some of the specifics…”
– How does the expense benefit the second project?
– Why was this change requested now rather than at the time it originally occurred?
Based on the answers, determine…
– Is it allowable, allocable and reasonable for the second project to incur the expense?
Real Life Collision 6 Suggestions…When Policy and Practice Collide
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Why do corrections require PI certification?– Originally, the expense was certified to benefit another project.
In order to move the charges, additional documentation will be needed to justify the change to an auditor. PI certification will be necessary since he/she has first-hand knowledge of the situation.
All corrections require certification EXCEPT:– Keying errors (supported by primary source document)
– Correction of GL accounts
Correcting Documents: Reasons Behind the Policy/Procedures
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All corrections require certification EXCEPT: (continued)
– Movement of expenses under the same grant
– Movement of expenses from a sponsored program to a general fund, gift fund or SPS voluntary support sponsored program
Correcting Documents: Reasons Behind the Policy/Procedures
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Is there a dollar limit required in order to process a correcting document?
– All expenses incorrectly charged to a sponsored program must be corrected (with the exception of Voluntary Support)
– If an expense was charged to a general fund or gift fund and benefitted a sponsored program, but no funds were available, the expense would not be corrected
Correcting Documents: Reasons Behind the Policy/Procedures
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How do I decide if the correction is allowable?
Real Life Collision 7…When Policy and Practice Collide
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– Refer to the proposal guidelines or the notice of award. – Take into consideration project period dates and life expectancy
of the item being purchased. – Collaborate with the Sponsored Program Services (SPS)
Account Manager prior to charging a questionable expense.
Real Life Collision 7 Suggestions…When Policy and Practice Collide
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Why do departments have to clear overdrafts?– Sponsors authorize a specific dollar amount
How are overdrafts that are $100 or less handled (at closing)?
– SPS will clear if compensation is the only expense on the sponsored program and there are no other funds available in the grant
– Departments are responsible for all other situations
Correcting Documents: Reasons Behind the Policy/Procedures
Resource: Purdue University Account Management Guidelines http://www.purdue.edu/sps/doc/Account%20Management%20Guidelines%20for%20SPS%20Funds.doc
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Why is timing so important?
– Post to funds before invoicing sponsor*
– Proper financial reporting*
– Impacts cash balances
– Delays can cause costing issues
Correcting Documents: Risks of Not Following the Policy/Procedures
* Final invoices and/or financial reports are normally due within 90 days of expiration although some sponsors require them be submitted earlier
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What happens if I need to do a correction that is over 30 days past occurrence or is after the expiration date of the project?
– Verify if the grant is still open and the final financial and/or final invoice has not been submitted to the sponsor
– Additional documentation will be necessary to explain why the correction is late and is allowable, allocable and reasonable
Correcting Documents: Risks of Not Following the Policy/Procedures
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Why do correcting documents require such detailed explanations (same as effort reporting)?
– Auditor/reviewer may be unfamiliar with the situation; explanation must stand on it’s own
– Clear regardless of passage of time
– Demonstrate that corrective action is necessary and appropriate
– Show that the correction is allowable, allocable, and reasonable
Correcting Documents: Risks of Not Following the Policy/Procedures
Proactive account management will help us avoid these challenges!
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Why do correcting documents require such detailed explanations (continued)?
– Maybe a Notice To Proceed (NTP) will help avoid the need for such a detailed description
Correcting Documents: Risks of Not Following the Policy/Procedures
Resource: Notice to Proceed Form and Instructionshttp://www.purdue.edu/sps/pdf/ntp.pdfhttp://www.purdue.edu/sps/pdf/NTPinstructions.pdf
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The risks are real!Here are some recent audits/monitoring visits that have
occurred at Purdue: – May 2008, National Science Foundation Office of Inspector
General (OIG), All Areas– July 2008, Indiana Family Health Council, Ft. Wayne Campus– July 2008, U. S. Department of Labor, Engagement Area– September 2008, Sandia National Laboratories/DOE, College of
Engineering/College of AG/Discovery Park– September 2008, International Vaccine Institute, College of
Science
Correcting Documents: Risks of Not Following the Policy/Procedures
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Recent audits/monitoring visits (continued):
– October 2008, Indiana Tobacco Prevention and Cessation, School of Nursing
– November 2008, Indiana Department of Workforce Development, Engagement Area
– March 2009, Indiana Department of Workforce Development, College of Technology
– 2009 and beyond, More coming!
Correcting Documents: Risks of Not Following the Policy/Procedures
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What correcting documents require pre-auditor review?
The following documents which correct or change posted entries to sponsored program and/or federal appropriation funds
– JV account document (document type SA)
– Cost Distribution Change (CD-01)
– Revised Personnel Activity Report (PAR) or Post PAR
Correcting Documents: Risks of Not Following the Policy/Procedures
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What are the sponsored program and federal appropriation funds that require pre-auditor review?
– Funds 4XXXXXXX (Sponsored Programs)
– Funds 3401XXXX (Federal Appropriations)
– Funds 3451XXXX (Federal Appropriations)
Correcting Documents: Risks of Not Following the Policy/Procedures
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Why do we pre-audit correcting documents on sponsored program and federal appropriation funds?
– Assure the corrections are appropriate
– Assure compliance with university rules, regulations and policies
– Assure compliance with federal cost allocation guidelines
– Adjusting and correcting documents are targets for federal audits and potential cost disallowances
Correcting Documents: Risks of Not Following the Policy/Procedures
Resource: Purdue University Pre-audit Process Guide http://www.purdue.edu/sps/accountmgmt/preaudit/pa_process.html
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OMB Circulars A-21 and A-110http://www.whitehouse.gov/omb/circulars/index.html
Resource: Effort Reporting Traininghttps://www.purdue.edu/costing/BPM/Effort_Reporting/Welcome.html
Purdue University CAS Guidelineshttp://www.purdue.edu/costing/BPM/CAS_Guidelines/Welcome.html
Purdue University Correcting Document Guidehttp://www.purdue.edu/sps/pdf/cdguide12-03.pdf
Resources
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Purdue University Account Management Guidelineshttp://www.purdue.edu/sps/doc/Account%20Management%20Guidelines
%20for%20SPS%20Funds.doc
Purdue University Pre-audit Process Guidehttp://www.purdue.edu/sps/accountmgmt/preaudit/index.html
Notice to Proceed Form and Instructionshttp://www.purdue.edu/sps/pdf/ntp.pdf
http://www.purdue.edu/sps/pdf/NTPinstructions.pdf
Resources
Business ServicesAccount Management: Corrections and Certifications
Music by Kool & The Gang, “Celebration,” Warner Bros., 1999.
