Account Management -

1
Policy Training Program for the Lifecycle of an
Account
Account Management - Corrections and
Certifications Presented April 2009
Music by Chuck Mangione, Feels So Good, AM
Records, 1977.
2
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

3
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

4
Course Objectives

• 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.

5
UNIT 1 EFFORT REPORTING

• A good friend will come bail you out of jail,
  but a true friend will be sitting next to you
  sayingDang, that was fun!
• In Business Services we want to be neither. 
  unknown

6
Effort Reporting Reasons Behind the
Policy/Procedures

• 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

Resource OMB Circulars A-21 and
A-110 http//www.whitehouse.gov/omb/circulars/inde
x.html Resource Effort Reporting
Training https//www.purdue.edu/costing/BPM/Effort
_Reporting/Welcome.html
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Effort Reporting Reasons Behind the
Policy/Procedures

• Who is required to certify their effort?
• Individuals paid on sponsored projects and/or
  federal appropriations

Resource Purdue University CAS
Guidelines http//www.purdue.edu/costing/BPM/CAS_G
uidelines/Welcome.html
8
Effort Reporting Reasons Behind the
Policy/Procedures

• 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)

9
Effort Reporting Reasons Behind the
Policy/Procedures

• 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

10
Real Life Collision 1When Policy and Practice
Collide

• While we may understand the why behind the
  policy, we occasionally interact with principal
  investigators (PI) who dont 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?

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Real Life Collision 1 SuggestionsWhen Policy and
Practice Collide

• Before acting, be preparedconsider 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

12
Real Life Collision 1 SuggestionsWhen Policy and
Practice Collide

• After youve diffused the tensionmake 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)

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Effort Reporting Reasons Behind the
Policy/Procedures

• 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

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Effort Reporting Reasons Behind the
Policy/Procedures

• 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

15
Effort Reporting Reasons Behind the
Policy/Procedures

• 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

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Effort Reporting Reasons Behind the
Policy/Procedures
At Purdue, when may we charge a leave of absence
to a grant?
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 gt10 days NO NO YES
Sick/Jury Duty 10 days YES YES YES
PPL gt10 days NO YES YES
PPL 10 days YES YES YES

• Prorated on the basis of the projects an
  individual is working on at the time the leave is
  taken

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Real Life Collision 2When Policy and Practice
Collide

• Have you ever had a faculty member say
• I wrote the proposal over the weekend on my own
  time
• Purdue didnt pay me for preparing my course
  materials I prepared them in the evenings.
• How do you respond?
• How SHOULD you respond? ?

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Real Life Collision 2 OptionWhen Policy and
Practice Collide

• I respond by saying Get a grip, Dude!
• TENURE means
• Time
• Every
• Nano-second spent for
• University
• Rationale will be
• Explained

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Real Life Collision 2 SuggestionsWhen Policy and
Practice Collide

• 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.

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Real Life Collision 2 SuggestionsWhen 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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Real Life Collision 2 SuggestionsWhen Policy and
Practice Collide

• 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

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).
22
Real Life Collision 3When Policy and Practice
Collide

• 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?

23
Real Life Collision 3 SuggestionsWhen Policy and
Practice Collide

• Most likely, the prior certification would be
  different from how it should be done at this time
  since most faculty projects change frequently.

24
Real Life Collision 4When Policy and Practice
Collide

• Some of my faculty members ask the business
  office to pencil in their recommended
  certification.
• How should I respond?

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Real Life Collision 4 SuggestionsWhen Policy and
Practice Collide

• 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.

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Real Life Collision 5When Policy and Practice
Collide

• What should I do if I suspect that a faculty
  member has misrepresented his/her effort?

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Real Life Collision 5When Policy and Practice
Collide

• 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

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Effort Reporting Risks of Not Following the
Policy/Procedures

• 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

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Case in Point National Landscape

• 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!

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Case in Point Closer to Home

• 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

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Real Consequences

• 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

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Effort Reporting Risks of Not Following the
Policy/Procedures

• 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

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Effort Reporting Risks of Not Following the
Policy/Procedures

• Why do corrections to effort certification
  require such detailed explanations?
• Auditor/reviewer may be unfamiliar with the
  situation explanation must stand on its 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!

34

• 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.
35
UNIT 2 CORRECTING DOCUMENTS

• Oh my, if we only got it right the first time I
  could be working on the other 99 priorities on my
  plate!

36
Correcting Documents Reasons Behind the
Policy/Procedures

• 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

Source Correcting Document and Effort
Reporting Training Team
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Correcting Documents Reasons Behind the
Policy/Procedures

• 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

38
Correcting Documents Reasons Behind the
Policy/Procedures

• 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

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Correcting Documents Reasons Behind the
Policy/Procedures

• 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?

Resource Purdue University Correcting Document
Guide http//www.purdue.edu/sps/pdf/cdguide12-03.p
df
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Correcting Documents Reasons Behind the
Policy/Procedures

• 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?

41
Real Life Collision 6When Policy and Practice
Collide

• 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?

42
Real Life Collision 6 SuggestionsWhen Policy and
Practice Collide

• Context is importanthowever, your approach in
  getting the context is equally important
• Id 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?

43
Correcting Documents Reasons Behind the
Policy/Procedures

• 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

44
Correcting Documents Reasons Behind the
Policy/Procedures

• 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

45
Correcting Documents Reasons Behind the
Policy/Procedures

• 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

46
Real Life Collision 7When Policy and Practice
Collide

• How do I decide if the correction is allowable?

47
Real Life Collision 7 SuggestionsWhen Policy and
Practice Collide

• 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.

48
Correcting Documents Reasons Behind the
Policy/Procedures

• 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

Resource Purdue University Account Management
Guidelines http//www.purdue.edu/sps/doc/Account2
0Management20Guidelines20for20SPS20Funds.doc
49
Correcting Documents Risks of Not Following the
Policy/Procedures

• Why is timing so important?
• Post to funds before invoicing sponsor
• Proper financial reporting
• Impacts cash balances
• Delays can cause costing issues

Final invoices and/or financial reports are
normally due within 90 days of expiration
although some sponsors require them be submitted
earlier
50
Correcting Documents Risks of Not Following the
Policy/Procedures

• 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

51
Correcting Documents Risks of Not Following the
Policy/Procedures

• Why do correcting documents require such detailed
  explanations (same as effort reporting)?
• Auditor/reviewer may be unfamiliar with the
  situation explanation must stand on its 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!
52
Correcting Documents Risks of Not Following the
Policy/Procedures

• 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

Resource Notice to Proceed Form and
Instructions http//www.purdue.edu/sps/pdf/ntp.pdf
http//www.purdue.edu/sps/pdf/NTPinstructions.pdf
53
Correcting Documents Risks of Not Following the
Policy/Procedures

• 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

54
Correcting Documents Risks of Not Following the
Policy/Procedures

• 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!

55
Correcting Documents Risks of Not Following the
Policy/Procedures

• 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

56
Correcting Documents Risks of Not Following the
Policy/Procedures

• 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)

57
Correcting Documents Risks of Not Following the
Policy/Procedures

• 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

Resource Purdue University Pre-audit Process
Guide http//www.purdue.edu/sps/accountmgmt/preaud
it/pa_process.html
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Resources

• OMB Circulars A-21 and A-110
• http//www.whitehouse.gov/omb/circulars/index.html
  
• Resource Effort Reporting Training
• https//www.purdue.edu/costing/BPM/Effort_Reportin
  g/Welcome.html
• Purdue University CAS Guidelines
• http//www.purdue.edu/costing/BPM/CAS_Guidelines/W
  elcome.html
• Purdue University Correcting Document Guide
• http//www.purdue.edu/sps/pdf/cdguide12-03.pdf

59
Resources

• Purdue University Account Management Guidelines
• http//www.purdue.edu/sps/doc/Account20Management
  20Guidelines20for20SPS20Funds.doc
• Purdue University Pre-audit Process Guide
• http//www.purdue.edu/sps/accountmgmt/preaudit/ind
  ex.html
• Notice to Proceed Form and Instructions
• http//www.purdue.edu/sps/pdf/ntp.pdf
• http//www.purdue.edu/sps/pdf/NTPinstructions.pdf

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Account Management Corrections and
Certifications
Questions?
Music by Kool The Gang, Celebration, Warner
Bros., 1999.