Activity Reporting Presentation

1. Office of Grants & Contracts Accounting May 2008 Activity Reporting Presentation

2. Activity Reporting Overview • The purpose of activity reporting is to provide documentation to support the salary disbursements (expenditures) and commitments made to Federal grants and contracts. • MUSC receives significant Federal dollars in awards each year. A provision of receiving those awards is that we will adhere to the: • Cost Principles contained in OMB Circular A-21; • Administrative requirements in OMB Circular A-110; and • Audit requirements in OMB Circular A-133. • Activity Reports are a REASONABLE estimate of your activities.

3. Activity Reporting Overview(continued) • Our Activity Reports are also important because they are: • Used to prepare the Medicare Cost Report • Tested for compliance during the annual A-133 Audit • The impact of noncompliance with activity reporting could result in one or more of the following: • Cost disallowances • Negative headlines in the press • Loss of credibility with Sponsors • A-133 audit findings • F&A Cost Rate reductions • Potential for false claims suits

4. MUSC Activity Reporting Systems • Quarterly After-the-Fact Activity Reporting System for Monthly-Paid Employees • The distribution of salaries and wages is initially charged to UDAK projects based on your budgeted salary distribution & supported by activity reports • Documents clinical and hospital administrative activities for Medicare/Medicaid Reporting • Time-Reporting System for Bi-Weekly-Paid Employees • The distribution of salaries and wages are documented by MUSC's electronic time reporting system (KRONOS) manual time cards, or manual time sheets. • No further certification or documentation is required (Circular A-21)

5. Employees Covered by the Activity Reporting System • All University Faculty, except Faculty with 100% effort in instruction • All other University personnel who: • Direct charge or cost share effort to one or more sponsored agreements • Distribute activities between direct and indirect activities • Affiliate Personnel who are directly charged to sponsored agreements

6. Grants & Contracts Accounting Responsibilities • Manage application • Monitor for compliance • Manually enter paper copies into the system • Defines users • Manages reporting information for employees who have effort in the clinical categories to comply with Medicare/Medicaid Cost Reimbursement requirements. • Train covered employees and effort coordinators

7. Departmental Effort Coordinator Responsibilities Inform covered employees when the Online Activity Reports are available for certification. Ensure that the reports are electronically submitted to GCA by the stipulated due date. Effort coordinator and employee need to resolve any significant variances between an employee’s reported effort and their actual distribution of payroll charges by project. Maintain adequate documentation for changes to an employee's salary distribution that will meet all audit requirements. Inform GCA (Randy Trussell) if the Effort Coordinator changes.

8. Employee Responsibilities • Review & electronically certify your online Quarterly Activity Report by the due date • Provide a reasonable estimate of the distribution of your activities by activity category for each UDAK Project that funded your salary and fringe benefits for the quarter • Inform your supervisor or responsible official during the quarter if the distribution of salary charges should be modified based on a significant change (+/- 5%) in your activities.

9. Activity Reporting Categories 1. Sponsored & University Projects 2. Cost Sharing • Incremental Teaching/Clinical Time • Clinical Instruction • Clinical Services • Hospital Administration • Classroom Instruction • Other University ActivitiesFor those who have effort in the clinical categories: These activities must continue to be reported separately for MUHA’s Medicare Cost Reporting requirements. Average Hours Worked per week must be reported by these employees. If a paper copy is submitted and effort is reflected in these categories, the report must be signed by the covered employee.

10. Consolidation of Fund Sources • Non-Sponsored UDAKs : • Includes unrestricted instruction, clinical, administration, NIH Salary Cap, & other departmental UDAKs • Sponsored & Cost Share UDAKs - Displayed individually: • Grants & Contracts UDAKs • University Research Council UDAKs • MUSC Foundation UDAKs • Cost Share UDAKs

11. Built-in Online Activity Reporting System Checks • Total Actual Labor Distribution equals 100% • Variance difference of 5% or more between effort distribution and actual distribution • If you submit effort in the Clinical categories, you must provide average hours per workweek • Sponsored projects and Non-Sponsored projects effort percentages are entered in the appropriate categories • Website: https://appserve.musc.edu/effort

12. Due Dates and Delinquent Reports • Due date is 60 calendar days after distribution. • Activity Reports considered delinquent if not completed within 30 days after the due date. • Sponsored Projects UDAKs listed on any delinquent activity reports will be subject to suspension of expenditure privileges, including personnel charges, until all delinquent reports are submitted. • Terminated employees should complete their activity reports before leaving (included on exiting research checklist).

13. Retroactive Changes to a Certified Activity Report • Retroactive changes to salary distribution should be rare and should be limited to the correction of errors. • Such changes are subject to close audit scrutiny. • Employees must inform the Business Manager or Departmental Effort Coordinator explain why the previously certified report requires recertification. • The department must contact GCA for instructions on re-certifying the Online Activity Report.

14. Recent Audit Settlements andLessons Learned

15. Audit Settlements • Northwestern University • $5.5 million False Claims Act settlement • Involved allegations of charging clinical salary w/o accounting for clinical effort . • Failing to consider clinical effort when charging for research. • Failure to fulfill the effort requirements on NIH K Awards which demand a certain percentage of time. • Johns Hopkins University • $2.6 million False Claims Act settlement • Allegations included charging for more than 100% of physicians’ salaries. Hogan & Hartson LLP, Ernst & Young, SECA October 2004

16. Audit Settlements • East Carolina University • DHHS/OIG audit of $4 million National Library of Medicine Contract ~$566,000 determined to be unallowable ~$1.8 million set aside due to inadequate documentation • Charged salaries of employees who had been instructed to falsely certify that they were devoting effort to contract • Inconsistent time & effort reporting methods • No requirement for timely submission of effort reports • No procedures in place to compare: • Reported effort vs. committed (awarded) effort • Reported effort vs. actual payroll distribution DHHS Office of Inspector General Audit Report, August 2004

17. Audit Settlements • Harvard, Beth Israel Deaconess Medical Center • Paid $850,000 in 2002 for misuse of NIH funds • Paid $2.4 million to settle similar allegations that they made false claims to NIH in connection with four Federal grants: • Salaries of scientists who did not work on grant • Salaries of scientists who did not meet citizenship requirements of grant • The salary of scientist who did not meet the 75 percent effort requirement for the NIH K Award • Salary expenses of the PI in excess of the budgeted amount

18. Audit Settlements • Due to these recent audit findings and settlements regarding activity reporting: • HHS IG’s office and the NSF IG’s office has intensified their audits • The OMB Circular A-133 Audit Guide requires auditors to intensify their reviews of activity reporting compliance

19. Lessons Learned • Never falsify data • Be careful of what you instruct your employees to do (Qui Tam actions are generally initiated by clerical or administrative employees) • Be aware of documentation that may contradict or be inconsistent with activity reporting system. • Pay attention to what affiliates are doing. • Be careful if institution is charging salary costs for employees whose effort is also being tracked by another institution. • Use caution if you are claiming reimbursement for salary costs actually paid by another institution. Hogan & Hartson LLP, Ernst & Young, SECA October 2004

20. Basic Compliance Issues • Effort is normally expressed as a percentage of total institutional activity (e.g,. Research, teaching, admin., proposal writing) • Effort percentages may not be based on a 40-hour work week if actual hours are greater • Total effort may not exceed 100% • Persons signing an effort certification must have a means of verifying that the certification is correct • Compliance with applicable salary caps Hogan & Hartson LLP, Ernst & Young, SECA October 2004

21. Red Flags • No written policy defining a compliant activity reporting system • Activity Reports signed by a departmental administrator • “Corrected” Activity Reports • Revised PEAR Forms • Large numbers of payroll cost transfers • 100% effort on a research project • Dual or multiple compensation sources • Salary increases tied to grants awards • Activity Reports not submitted online

22. Thank-You We had a 100% return rate for activity reports last fiscal year

23. Questions? Contact Info: Randy Trussell 792-6438trussell@musc.edu Velma Stamp 792-3657stampvg@musc.edu Jennifer Hutson 792-2696hutsonj@musc.edu Office of Grants and Contracts Accounting 19 Hagood Avenue Harborview Office Tower, Suite 608 PO Box 250806 Charleston, SC 29425 Fax: 792-3235