What are the risks of not complying with OMB Circular A-21’s effort reporting requirement?
Federal awards represent the majority of ASU’s sponsored project grant and contract award activity. Salary expense represents the largest direct cost component included in the budgets of sponsored projects. Paying salaries with federal funds requires an institution to have an effort reporting system that provides records on how individuals participating in federally funded sponsored agreements actually spend their time. It is incumbent upon institutions receiving federal funding to maintain accurate and auditable systems and records. In recent years, the federal government has become very active in reviewing the effort reporting requirement. It is currently a specific audit focus in federal audit plans. As evidenced below, federal audit disallowances can result in large audit disallowances and financial penalties for institutions. Additionally, criminal charges may be brought against an individual certifying to falsified effort. Some of the recent cases of audit disallowances are: • No
