Time and Effort Reporting for Federal Grants: Compliance Requirements

What Is Time and Effort Reporting?

Time and effort reporting is the process by which organizations document how employees funded by federal grants spend their working hours. It serves as the primary evidence that personnel costs charged to a grant are reasonable, allocable, and allowable under the terms of the award. Because salaries and benefits typically represent the largest category of expenditure in most federal grants, time and effort reporting receives intense scrutiny from auditors and federal oversight agencies.

The requirements for time and effort reporting are rooted in the Uniform Guidance at 2 CFR 200.430, which addresses compensation for personal services. This section establishes that 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 controls that provides reasonable assurance that the charges are accurate, allowable, and properly allocated.

Uniform Guidance Standards for Personnel Costs

Under the Uniform Guidance, organizations must maintain records that meet several specific criteria. The documentation must:

• Be supported after the fact: Records must reflect actual activity, not budgeted or planned allocations. You cannot simply charge a grant based on what the budget says an employee should be spending; you must document what they actually did.
• Account for total activity: Records must encompass all activities for which the employee is compensated, not just the federally funded portion. An employee who works on three projects must document time across all three.
• Comply with the organization's accounting system: The time and effort records must be integrated with or reconcilable to the organization's payroll and general ledger systems.
• Support the distribution of salaries and wages: For employees working on multiple activities or cost objectives, the records must support the percentage of effort allocated to each.

For a detailed overview of how these standards interact with your broader compliance obligations, see our guide on post-award grant management and compliance.

Acceptable Methods for Documenting Time and Effort

The Uniform Guidance moved away from the prescriptive methods previously required under OMB Circular A-21 and A-87, which mandated specific approaches like Personnel Activity Reports and plan-confirmation systems. Under current rules, organizations have flexibility in choosing their documentation method, provided it meets the standards described above. Common approaches include:

After-the-Fact Activity Reports

Employees complete periodic reports, typically monthly or semi-annually, documenting the percentage of effort devoted to each project or activity during the period. These reports are reviewed and signed by the employee and a supervisor with direct knowledge of the work performed. This method is straightforward and widely used across universities and nonprofits.

Contemporaneous Time Tracking

Employees record hours worked on each project on a daily or weekly basis using timesheets or electronic time-tracking systems. This method provides the most granular data and is often preferred for employees who work on multiple grants or who split time between grant-funded and non-grant activities. It also aligns well with the documentation expectations of many federal agencies.

Plan-Confirmation with Reconciliation

Organizations establish a planned allocation of effort at the beginning of a period and then confirm or adjust it at the end based on actual activity. Significant deviations from the plan trigger retroactive payroll adjustments. This method works best for employees whose effort allocation is relatively stable.

Common Audit Findings in Time and Effort Reporting

Single Audit reports and Office of Inspector General reviews consistently identify time and effort documentation as one of the top areas of noncompliance. The most frequent findings include:

• Missing or incomplete certifications: Effort reports that are unsigned, undated, or missing for certain periods.
• Certifications by unqualified individuals: Reports signed by someone without firsthand knowledge of the employee's actual activities.
• Budgeted rather than actual effort: Charges based on the approved budget percentage rather than documented actual effort.
• No reconciliation to payroll: Effort percentages that do not tie to the salary amounts charged to the grant.
• Untimely completion: Reports completed months or years after the activity period, undermining their reliability as contemporaneous records.

Understanding the cost principles that govern allowable personnel charges is essential context for time and effort compliance. Our guide on grant budget fundamentals and federal cost principles explains the framework in detail.

Implementing a Compliant Time and Effort System

Building a compliant system starts with a written policy that defines your organization's method, frequency, roles, and responsibilities for time and effort reporting. The policy should address how effort is documented for different employee categories: full-time staff charged entirely to one grant, staff split across multiple grants, and staff who work partly on grant activities and partly on general organizational functions.

Train every employee who will complete time and effort records, not just once during onboarding but periodically as a refresher. Employees need to understand why the documentation matters, what information they must capture, and the consequences of inaccurate reporting. Supervisors need training on their review and certification responsibilities.

Technology Solutions

Electronic time-tracking systems offer significant advantages over paper-based methods. They can enforce required fields, flag missing entries, route certifications for supervisor approval, and generate reports for reconciliation against payroll. Many cloud-based solutions integrate with common accounting platforms, reducing manual data entry and the risk of transcription errors. Even a well-designed spreadsheet template with built-in validation rules is better than a blank form.

Special Considerations for Different Organization Types

Universities, nonprofits, and state and local governments each face unique challenges in time and effort reporting. Faculty members at universities may split effort across sponsored research, teaching, and service, making accurate effort certification particularly complex. Nonprofits with small staffs often have employees who work across multiple grants and general operations simultaneously. Understanding how your organization's structure and workforce model affect time and effort documentation is essential to choosing the right approach. For guidance on building organizational capacity that supports compliance, see our article on organizational capacity and partnerships in grant proposals.

Learn more about grant writing strategies at Subthesis.

Build Your Post-Award Compliance Expertise

Time and effort reporting is one of many post-award compliance areas where expertise separates well-managed organizations from those that face audit findings and funding disruptions. The Complete Grant Architect course covers the full lifecycle of grant management, including personnel cost documentation, financial reporting, and audit preparation. Enroll today and build the skills to manage federal awards with confidence and precision.