When compensation is charged to a federal award, the recipient must support it with records that accurately reflect work performed. The Uniform Guidance does not prescribe one universal “time and effort” form, reporting interval, signature, personnel activity report, or semiannual certification.

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 accurately reflect work performed
Support the distribution of salaries across awards
Be based on records that reflect actual activity

The Audit Risk

Unsupported or inaccurate personnel charges create significant audit risk. Problems can lead to:

Questioned costs, which may later be disallowed and recovered after resolution
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

The records and controls should:

Show what employees actually worked on
Cover all compensated activities (not just federal projects)
Be incorporated into the organization's official records
Support the distribution of salary or wages among specific activities or cost objectives when an employee works on more than one

Documentation Approaches

These are possible approaches, not federally mandated formats. A compliant system is judged as a whole against 2 CFR 200.430 and the award.

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: Set by the organization's control system; monthly or per pay period is common practice, not a universal federal interval.

Method 2: Periodic Single-Cost-Objective 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]."

This is a legacy and agency-specific control some organizations retain. Current 2 CFR 200.430 does not itself create a government-wide semiannual-certification safe harbor. Working on one cost objective is not always the same as working on one grant; follow agency and award terms.

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: Other Internal-Control Systems

The current rule is standards-based. Prior federal approval is not generally required merely because an organization chooses a different documentation format, although agency or award-specific terms may require approval. The system must provide reasonable assurance that charges are accurate, allowable, and properly allocated.

Creating Compliant Time Records

Essential Elements

Depending on the system, useful elements include:

Employee name and ID
Pay period dates
Total hours worked
Hours by project/grant
Hours for non-grant activities
Evidence of the review required by organizational controls
Correction and reconciliation history
Date of preparation or review

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
The organization's total compensated activity and a supportable distribution among applicable cost objectives
Budget estimates alone are not final support, but they may be used for interim accounting when the internal-control system produces reasonable approximations and timely adjustments under 2 CFR 200.430(i)(1)(viii)
Standard allocations only when the underlying facts and controls make them an accurate reflection of work performed; a budget-balancing allocation is not evidence
Supported corrections when records or payroll distributions were wrong—not retroactive changes made merely to use a budget

Periodic Certifications

When You Can Use Them

Some organizations or awards use certifications 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: ___________

Set timing based on the internal-control design and any agency or award-specific requirement; six months is not a universal requirement in current Part 200.

Budget Estimates vs. Actual

The Estimate-to-Actual Problem

Many organizations:

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

Without controls that produce reasonable approximations and timely adjustment to accurately reflect work performed, this is not compliant.

Required Reconciliation

If you use estimates for interim charges:

Significant changes must be identified and entered into records in a timely manner
Internal controls must include processes to review after-the-fact interim charges and make necessary adjustments; 2 CFR 200.430 does not prescribe a universal quarterly interval or variance percentage
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: Investigate what official records and controls support the charges, correct unsupported charges, and implement an appropriate documentation system. Repayment depends on the facts and resolution process.

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: Reconcile on the documented cadence needed to identify significant changes promptly; adjust as needed.

Finding 4: Missing Required Review Evidence

Problem: Records lack the review or approval evidence required by the organization's internal controls or award terms.

Fix: Follow the documented review control and retain its evidence. A signature is one possible control, not a universal federal format requirement.

Finding 5: Records Not Contemporaneous

Problem: Time records created months later from memory.

Fix: Set a timely preparation and review cadence that produces reliable records; weekly or biweekly completion is one possible design, not a federal deadline.

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
Complete review promptly under the documented policy (two weeks is an example, not a federal deadline)

4. Reconcile Regularly

On a documented cadence suited to payroll and risk:

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

5. Maintain Records

Keep all time and effort records:

Generally for three years from submission of the final financial report, with later starting points and extensions for certain circumstances under 2 CFR 200.334
Longer when the award, litigation/audit/claim, property rules, records transferred to the agency, or organizational policy requires it
Available for audit review

Setting Up a System

Using Spreadsheets

Simple approach for small organizations:

Create weekly timesheet template
List all projects/grants
Employees complete weekly
Supervisor reviews and signs
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

How GrantLink supports this today

GrantLink helps by organizing allocations backed by QuickBooks Online, budget lines, fund receipts, funding shares, documents, report outputs, and activity history. It supports audit preparation, but it does not replace funder guidance, accounting policy, or professional review.