Time and Effort Reporting for Federal Grants

If you receive federal funding, you must document how staff spend their time. Time and effort reporting isn't just paperwork—it's how you prove payroll charges to grants are accurate.

This guide explains the requirements and best practices.

Why Time and Effort Matters

The Legal Requirement

Under 2 CFR 200 (Uniform Guidance), organizations charging personnel costs to federal awards must:

• Maintain records that reflect actual time worked
• Support the distribution of salaries across awards
• Be based on records that reflect actual activity

The Audit Risk

Time and effort is one of the top audit findings. Problems lead to:

• Questioned costs (repayment required)
• Findings that affect future funding
• Increased audit scrutiny
• Potential fraud investigations

The Practical Purpose

Beyond compliance, good time tracking:

• Ensures accurate grant charges
• Identifies over/under-spent grants
• Supports budget planning
• Documents employee activities

What the Requirements Actually Say

2 CFR 200.430 - Compensation

Key provisions:

"Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed."

These records must:

• Be supported by a system of internal control
• Be incorporated into official records
• Reasonably reflect the total activity for which the employee is compensated
• Encompass both federally assisted and all other activities
• Support distribution of activity to each federal award

What This Means Practically

You need documentation that:

1. Shows what employees actually worked on
2. Covers ALL their time (not just federal projects)
3. Is prepared at least monthly
4. Is signed/certified by someone with knowledge

Acceptable Documentation Methods

Method 1: Personnel Activity Reports (PARs)

Traditional after-the-fact reports showing:

• Total hours worked
• Distribution across projects/activities
• Signature of employee
• Signature of supervisor

Frequency: Monthly or per pay period

Method 2: Semi-Annual Certifications

For employees who work on a single cost objective:

"I certify that 100% of [Employee Name]'s time from [date] to [date] was spent on [Grant Name]."

Requirements:

• Employee works solely on one grant
• Certification signed by employee or supervisor with first-hand knowledge
• Prepared at least every 6 months

Method 3: Contemporaneous Time Records

Daily time records showing:

• Hours by project/activity
• Prepared as work is performed
• Not estimated or allocated after the fact

Examples: Timesheets, time-tracking software, project logs

Method 4: Substitute Systems

With prior approval, you can use alternative methods if they:

• Produce the same results as traditional methods
• Are documented and consistently applied
• Provide reasonable assurance of accuracy

Creating Compliant Time Records

Essential Elements

Every time record should include:

1. Employee name and ID
2. Pay period dates
3. Total hours worked
4. Hours by project/grant
5. Hours for non-grant activities
6. Employee signature
7. Supervisor approval
8. Date signed

Sample Time Record Format

Date	Total Hours	Grant A (Fed)	Grant B (State)	General Admin	PTO
1/6	8	4	2	2	0
1/7	8	3	3	2	0
1/8	8	5	1	2	0
...	...	...	...	...	...
Total	80	35	20	20	5
%	100%	43.75%	25%	25%	6.25%

What Counts as "Actual Activity"

Records must reflect:

• Time actually worked on each project
• Not budgeted percentages
• Not standard allocations
• Not retroactive assignments

Semi-Annual Certifications

When You Can Use Them

Certifications work when an employee:

• Works 100% on one federal award
• Or works 100% on activities charged to one cost objective

What Must Be Included

SEMI-ANNUAL CERTIFICATION

I certify that for the period [Start Date] to [End Date],
[Employee Name] worked solely on [Grant Name/Number].

This certification is based on my direct knowledge of
the employee's work activities.

Employee Signature: _______________ Date: ___________

Supervisor Signature: _____________ Date: ___________

Timing

• At least every 6 months
• At grant end (final period)
• When employee changes activities

Budget Estimates vs. Actual

The Estimate-to-Actual Problem

Many organizations:

1. Budget 50% of salary to a grant
2. Charge 50% each month automatically
3. Never reconcile to actual time worked

This is not compliant.

Required Reconciliation

If you use estimates for interim charges:

• Must reconcile to actual at least quarterly
• Must adjust charges if actual differs from budget
• Must document the reconciliation

Example Reconciliation

Employee	Budgeted to Grant A	Actual Time	Adjustment Needed
Smith	50% ($25,000)	47% ($23,500)	Credit $1,500
Jones	30% ($15,000)	33% ($16,500)	Charge $1,500

Common Audit Findings

Finding 1: No Time Records Exist

Problem: Organization charges salaries to grants with no documentation.

Fix: Implement time-tracking immediately; may need to repay costs.

Finding 2: Records Don't Support Charges

Problem: Time records show different distribution than payroll charges.

Fix: Adjust charges to match actual time.

Finding 3: Estimates Not Reconciled

Problem: Charged budgeted percentages without verifying actual activity.

Fix: Perform quarterly reconciliations; adjust as needed.

Finding 4: Unsigned Records

Problem: Time records exist but aren't signed.

Fix: Obtain signatures; implement signature policy.

Finding 5: Records Not Contemporaneous

Problem: Time records created months later from memory.

Fix: Require weekly or bi-weekly completion.

Best Practices

1. Make It Easy

The harder time tracking is, the worse the data quality.

• Use simple forms or software
• Keep project list short and clear
• Provide training and examples
• Review regularly for issues

2. Train Staff

Ensure employees understand:

• Why time tracking matters
• What activities go to which projects
• How to handle split time
• When records are due

3. Supervisor Review

Supervisors should:

• Have direct knowledge of work performed
• Review and approve timely
• Question anomalies
• Sign within 2 weeks of period end

4. Reconcile Quarterly

At minimum, quarterly:

• Compare time records to payroll charges
• Identify any variances
• Make adjusting entries
• Document the reconciliation

5. Maintain Records

Keep all time and effort records:

• For 3 years after grant close
• Or per your record retention policy
• Available for audit review

Setting Up a System

Using Spreadsheets

Simple approach for small organizations:

1. Create weekly timesheet template
2. List all projects/grants
3. Employees complete weekly
4. Supervisor reviews and signs
5. Payroll uses to allocate salaries

Using Time-Tracking Software

Many options integrate with payroll:

• Set up projects matching grants
• Employees log time daily/weekly
• Reports generate automatically
• Some provide certification workflows

Connecting to Payroll

However you track time:

• Export percentages to payroll system
• Or use payroll's time-tracking feature
• Ensure charges match approved time
• Keep documentation linked

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