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The Office of Management and Budget's (OMB) Circular A-21 "Cost Principles
for Educational Institutions" is the federal government's cost principles for
colleges and universities. It defines what costs are allowable and allocable to
federal grants and other "assistance" agreements.
OMB Circular A-21 (Section J.10) Compensation for Services sets forth the
following general principals:
(a) There will be a documentation process that will provide for after the
fact verification of the distribution of actual payroll costs for sponsored
projects. The verification will occur at least annually.
(b) Institutions may include in a residual category all activities that are
not directly charged to sponsored agreements. The components of the residual
category are not required to be separately documented.
Recognizing there is no single best method, the apportionment of employees'
salaries and wages chargeable to more than one sponsored agreement or other
cost objective (instruction, research, patient care, administration), will be
accomplished by methods that produce an equitable distribution of charges for
employee's activities. A-21 outlines criteria for acceptable methods of
charging salaries and wages to federally sponsored projects which include the
following:
(a) At a minimum, the verification process will allow confirmation of
activity allocable to each sponsored agreement.
(b) To confirm that the distribution of activity represents a reasonable
estimate of the work performed by the employee during the period, the reports
will be signed (electronic signature/ approval is acceptable) by the employee,
principal investigator, or responsible official(s) using suitable means of
verification that the work was performed.
To comply with these requirements Dartmouth has established a Labor
Verification Report by Grant Account and a Labor Verification Report by
Employee (Dartmouth Employee's).
The Labor Verification Report by Grant Account is produced monthly for
review purposes, but on an annual basis the PI must complete the verification
statement confirming the salaries are appropriate for the worked performed. If
PI is not in agreement with the report they should work with department grant
manager to correct the information. This completed report is returned to the
Office of Sponsored Projects.
On an annual basis, usually the month following the Dartmouth fiscal year
end, a Labor Verification Report by Employee will be distributed to each
employee that has worked on a sponsored project during the past year. The
individual must review the report for accuracy and if in agreement with the
salary distribution for the worked performed, sign the verification statement.
If the individual does not agree with the report, they should work with the PI
or department grant manager to correct the information. This completed report
is returned to the Office of Sponsored Projects.
A reminder when reviewing the salary allocation, time spent preparing a
proposal or a bid is not normally directly chargeable to a sponsored
project.
Quick Reference:
Labor Verification Reports
- Labor Verification Reports by Grant Account are generated at the end of the
sponsored research budget period (annually)
- Labor Verification Reports by Employee are generated at the end of
Dartmouth’s fiscal year end (June 30)
- Labor verification Reports by Grant Account are reviewed and signed by the
Principal Investigator
- Labor Verification Reports by Employee are reviewed and signed by the
Employee
- Labor Verification Reports by Grant Account are due back to OSP 30 days
after the department receives report
- Labor Verification Reports by Employee are due back to OSP 30 days after
the department receives report
- These reports do not replace the monthly payroll reports that are generated
by the Payroll Office
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