Policies & Procedures


Section 1

Business and Financial Affairs


Sec. 701-19: Payroll Certification System Guidelines for Federally Sponsored Projects

Responsible Office: Accounting & Fiscal Services, Contracts and Grants Accounting
January 2012

This policy is under revision due to the implementation of Uniform Guidance by the Office of Management and Budget on December 26, 2014.

References / Resources

  • OMB Circular A-21, Cost Principles for Educational Institutions
  • UC Records Retention Schedule
  • UC Accounting Manual
    • A-000-7, Official Documentaion Required in Support of University Financial Transactions
    • P-196-13, Payroll: Attendance, Time Reporting, and Leave Accrual Records
  • UC Business and Finance Bulletin
    • A-47, University Direct Costing
    • RMP-5, Records Retention Program for Financial Documents Pertaining to Federal Awards to the University

Contact: Contracts & Grants Accounting at (949) 824-8190 or rtangen@uci.edu

A. Purpose and Scope

To properly substantiate salaries charged directly to federally funded projects, UCI uses an annual Payroll Certification System approved by its federal cognizant agency, the Department of Health and Human Services. These Guidelines discuss requirements and responsibilities of users of this system. Payroll certifications are required for the salaries of all employees of the University, including hourly employees, part-time employees, adjunct faculty, and students on the University payroll who are paid from federal and federal flow-through funds.

B. Definitions

  1. Payroll certificationis an after-the-fact certification systems used to support both direct salaries and committed cost sharing salaries to federal research, training, and service projects, and is an acceptable method under OMB Circular A-21, Cost Principles for Educational Institutions
  2. Federal flow-through funds are State or non-federal agency awards that are actually funded, in total or in part, by federal agencies. As a sub-recipient of these funds, the University must adhere not only to the requirements of the non-federal agency issuing the award, but also to the policies of the federal agency funding the award.
  3. The Principal Investigator (PI) is the lead investigator as designated in the Notice of Award and as identified in UCI’s financial system.

C. Responsibilities

  1. Principal Investigator (PI)

    The PI is responsible for:

    • Reviewing charges and committed cost sharing for personnel services
    • Certifying all individuals that worked on the project
    • Determining whether salary charges were appropriate and reasonable in relation to work performed
    • Ensuring that any special federal costing requirements were met.

    The PI must certify for each sponsored project within 70 days of the end of the budget year. Although a Co-PI, project director, or others with direct knowledge of the project activities may certify the accuracy of payroll expenses charged to the project, the PI is still responsible for signing the payroll certification.

  2. Departments

    The department's contract and grant analyst and financial manager are responsible for:

    • Monthly reconciling the project’s general ledgers activity
    • Timely processing of any payroll expense adjustments, as required
    • Assisting the PI in understanding expense activity.

    The department head is responsible for ensuring that all payroll certifications and ledger reconciliations are completed within the established timeframe.

  3. Accounting Office

    The Accounting Office is responsible for:

    • Maintaining the integrity of core financial information and coding fund attributes that generate monthly financial reports, annual payroll certifications, and annual cost sharing reporting notifications
    • Notifying campus departments of sponsored projects that need to be certified
    • Assisting PIs and their departments to ensure accuracy of reporting and compliance with policies
    • Monitoring the return of payroll certifications to Accounting to ensure timeliness and completeness.

D. Requirements

UCI's Payroll Personnel System (PPS) reflects actual salary and wage costs of employees by full accounting unit. Committed cost sharing salaries are based on the non-federal portion of the employee's actual salary.

  1. Salary distributions must adhere to the University’s academic and staff personnel policies.
  2. The apportionment of employees' salaries and wages chargeable to sponsored agreements or identified as committed cost sharing must be initiated by the PI or designee using the appropriate departmental personnel services authorization format.
  3. All charges and cost sharing for personnel services must be based on actual salary charges posted in the accounting system and supported by documentation such as employment contracts, appointment letters, and other written guidance.
  4. Individuals whose payroll is to be recorded as committed cost sharing on projects must have worked on the project and be documented in the campus’ cost sharing system under the applicable award's fund number.
  5. Charges must be appropriate and reasonable in relation to work performed as well as comply with special costing requirements (e.g., NIH Salary Cap, NSF senior personnel salary limits, federal exception criteria for charged clerical and administrative salaries).
  6. Non-sponsored activities cannot be charged to sponsored projects (e.g., instruction administration, departmental administration, proposal preparation activities).
  7. The PI must sign the annual payroll certification.

E. Grants Management

To support UCI's Payroll Certification System, which is based on year-end certification, departments are expected to establish a grants management program that includes:

  • Timely set up of personnel on sponsored projects with appropriate approvals.
  • Performance of month-end ledger reviews that will result is timely identification of errors, initiation of corrections, and timely payroll certifications.
  • Transfer of incorrect salary costs within 120 days of the first recording of an expense.
  • If applicable, budgets and a monitoring system for committed cost sharing.
  • Compliance with the costing requirements stated in the terms of the grant and in OMB Circular A-21.

F. Frequency of Certifications

Payroll certification of actual salaries and committed cost sharing is required annually, at the end of an award's budget period and when the award expires.

G. Retention of Certifications

Payroll certifications must be retained for subsequent review and in accordance with the requirements of UC Business and Finance Bulletin, RMP-5, UC Accounting Manual, A-000-7, and the UC Records Retention Schedule which states "contracts, grants, cooperative agreements with related material should be retained the longer of i) 6 years after expiration/termination, ii) resolution of any litigation, claim or audit, or iii) period stated in an award document."

H. Non-Compliance

Compliance with these guidelines is critical to UCI’s fiduciary responsibility for the management of federal funds. Uncertified salaries and untimely certification of salary expenditures create an undue compliance risk for the campus. In the event of non-compliance (not completing payroll certifications), Contract and Grant Accounting may initiate any of the following actions upon approval of the Vice Chancellor-Research and Vice Chancellor-Administrative & Business Services:

  • Transfer uncertified salary charges to an unrestricted funding source in the PI’s department
  • Close all of the PI’s funds and accounts relating to sponsored projects
  • Move grant financial management from the PI and to the Dean
  • Restrict the PI from submitting grant funding proposals.