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Time and Effort Reporting for Federal Grants: Requirements and Tracking Tools
Last updated: October 10, 2026 · Independent guide · We do not sell rankings or coverage.
Time and effort reporting is the process that proves the salaries you charge to a federal award match the work employees actually performed. Under the Uniform Guidance, those charges must rest on records that reflect the work performed, are backed by internal controls, cover 100% of each employee’s compensated activity, and are reviewed after the fact so that any budget-based estimate is corrected before the final charge stands (2 CFR 200.430(g), eCFR, checked October 10, 2026). In practice, time and effort reporting is a monthly or quarterly cycle that connects three systems: the timesheet or certification tool, payroll, and the grant ledger.
Note the renumbering: the documentation standards that many state guides still cite as 2 CFR 200.430(i) moved to paragraph (g) when the 2024 revision took effect on October 1, 2024 (89 FR 30046, April 22, 2024). Paragraph (i) now covers institutions of higher education (compare the CFR edition revised as of January 1, 2024), so update the citations in your written policy.
The time and effort process in seven stages
- Write the policy and classify each employee as working on a single cost objective or on multiple cost objectives.
- Set interim payroll distributions (budget estimates) in HR or payroll for every grant-funded position.
- Capture after-the-fact activity through timesheets, activity logs or personnel activity reports (PARs).
- Certify the effort on the schedule your policy sets: semi-annual for single cost objective staff, monthly PARs or periodic effort statements for split-funded staff.
- Compare certified effort to the payroll distribution and calculate the difference for each employee and award.
- Post the true-up in payroll and the grant ledger, update future distributions, and correct any drawdowns or financial reports.
- Retain the records and monitor the cycle so the audit trail survives staff turnover and single audit testing.
| Stage | Responsible | Accountable / approves | Key output |
|---|---|---|---|
| 1. Policy and classification | Grant accounting or compliance manager | CFO or business official | Written policy; employee roster with funding type |
| 2. Interim distributions | HR or payroll | Grant accountant | Labor distribution by position and award |
| 3. Activity capture | Employee | Supervisor or principal investigator | Timesheets, logs, draft PARs |
| 4. Certification | Employee or supervisor with direct knowledge | Program director or PI | Signed certifications and PARs |
| 5. Comparison | Grant accountant | Controller | Variance schedule by employee and award |
| 6. True-up | Payroll and grant accounting | Controller | Payroll reallocation or journal entry; revised distributions |
| 7. Retention and monitoring | Compliance manager | CFO; audit committee | Indexed records; exception log |
Stage 1: Write the policy and classify each employee
The compliance manager owns this stage. The output is a written policy and a roster that flags every employee paid from federal funds, including cost-share staff, because cost-share salaries must be supported in the same way as reimbursed salaries (2 CFR 200.430(g)(4)).
The current rule requires distribution support whenever an employee works across more than one award, federal and non-federal activity, direct and indirect activity, or allowable and unallowable activity (2 CFR 200.430(g)(1)(vi)). It does not prescribe a form or a frequency. The familiar split between semi-annual certifications for single cost objective staff and monthly PARs for everyone else comes from OMB Circular A-87, which required PARs to be prepared at least monthly, coincide with pay periods, and be signed by the employee (OMB Circular A-87, Attachment B, 8.h, revised May 10, 2004).
State education agencies still use that structure. Washington’s OSPI lets districts choose between the more flexible federal documentation standards and the older A-87-based approach, which keeps after-the-fact semi-annual certifications and at least monthly PARs for multi-funded staff (OSPI Bulletin 039-24, June 18, 2024). The bulletin cites those standards as paragraph (i). Subrecipients should follow their pass-through entity’s guide.
What goes wrong: the policy cites superseded circulars, the roster misses stipend or extra-duty pay, or an employee’s funding changes mid-year and nobody reclassifies them from “single” to “multiple” cost objectives.
Stage 2: Set interim payroll distributions
Payroll or HR owns the distribution table and the grant accountant approves it. Budget estimates alone do not support charges to a federal award, but you may use them for interim accounting if the estimates are reasonable approximations, significant changes are promptly entered, and periodic after-the-fact reviews lead to all necessary adjustments (2 CFR 200.430(g)(1)(vii)). The rule adds that one- or two-month fluctuations between workload categories need not be considered if the distribution is reasonable over the longer term. Your policy must define what counts as a “significant change.”
Controls: distributions must total 100% for each employee, changes need an approver outside payroll, and each distribution line should carry an effective date so later reallocations can be traced. What goes wrong: distributions are set once at award start and never revisited, or they continue after an award’s end date and charge an expired grant.
Stage 3: Capture after-the-fact activity
The employee records the work and the supervisor reviews it. The outputs are timesheets, calendars or activity logs that support the certification.
For nonexempt employees, you also need records of total hours worked each day under the Fair Labor Standards Act recordkeeping rules (2 CFR 200.430(g)(3); 29 CFR part 516). The records must reflect all compensated activity, federal and non-federal, on an integrated basis and must not exceed 100% (2 CFR 200.430(g)(1)(iii)-(iv)).
What goes wrong: timesheets record hours only to the employee’s home cost center, so the split between awards is reconstructed later from memory. Others show grant hours only and omit the rest of the employee’s compensated time.
Stage 4: Certify the effort
South Carolina’s Department of Education lets the employee or a supervisor with direct knowledge sign a semi-annual certification, while PARs are signed by the employee monthly and must account for 100% of activity (SC Department of Education, no date shown). Note that this guidance still cites the old paragraph (i)(1).
Universities usually certify by term or quarter; the University of San Francisco certifies each semester (USF, May 23, 2024). For institutions of higher education, the rule allows records to show a percentage distribution of total activity and accepts that teaching, research, service and administration are intermingled, so a precise assessment is not required (2 CFR 200.430(g)(1)(viii)-(ix)).
What goes wrong: certifications signed before the period closes, an administrator signing for staff whose work they did not see, or late certifications that pile up until audit fieldwork.
Stage 5: Compare certified effort to the payroll distribution
The grant accountant compares certified effort with posted payroll and produces a variance schedule by employee and award. The current rule requires periodic after-the-fact reviews but leaves the frequency and tolerance to your written policy. A common approach is the A-87 model: compare actual costs to budgeted distributions at least quarterly, and if the quarterly differences are under 10%, you may record the adjustment annually (OMB Circular A-87, Attachment B, 8.h(5)(e)). If you adopt a threshold, write it into the policy so auditors can test against it.
Illustration (constructed numbers): a program coordinator earns $5,000 a month, budgeted 60% to a Title I award and 40% to the general fund. Monthly PARs for the quarter show 50%, 45% and 52% Title I effort. Payroll charged Title I $9,000 (3 × $3,000). Certified effort supports $7,350 ($2,500 + $2,250 + $2,600). Title I is overcharged by $1,650, which is about 18% of the interim charge, so the adjustment cannot wait until year end.
| Account | Debit | Credit | Note |
|---|---|---|---|
| Salaries, general fund | $1,650 | Illustration; move related fringe the same way | |
| Salaries, Title I award | $1,650 | Reference the certified PARs |
What goes wrong: the comparison is run against the budget rather than the payroll actually posted, so retroactive pay or leave payouts are missed.
Stage 6: Post the true-up
Payroll and grant accounting post the correction, the controller approves, and the outputs are a reallocation entry, a revised forward distribution and, where needed, a corrected financial report. Post the correction through payroll reallocation where your system supports it, so the payroll subledger, the general ledger and the employee’s effort record agree. A manual journal entry in the general ledger fixes the award balance but leaves payroll reports showing the old split. Shifting a cost between federal awards is allowed only when it is allowable under both and permitted by their terms; you may not move a cost to cover a deficiency on another award (2 CFR 200.405(c)).
What goes wrong: late cost transfers onto awards with unspent balances, transfers with no explanation attached, and adjustments that never reach the financial report already submitted to the agency.
Stage 7: Retain the records and monitor
Keep certifications, PARs, timesheets and reallocation support for three years from submission of the final financial report, or longer if an audit or claim is open (2 CFR 200.334). Records must be incorporated into your official records (2 CFR 200.430(g)(1)(ii)), so store them in the official system rather than on personal drives.
Single audits apply once you spend $1,000,000 or more in federal awards in a fiscal year (2 CFR 200.501). If your records fall short, the federal government may impose PARs with prescribed certifications (2 CFR 200.430(g)(8)).
Metrics to track
- Certification completion rate by due date, by department or school site.
- Average days from period end to certification; a rising number signals that certifiers are losing direct knowledge of the work.
- Variance between payroll distribution and certified effort, as a percentage of interim charges, by award.
- Number and dollar value of salary cost transfers, and the share posted more than 90 days after the original charge (90 days is our suggested flag, not a federal rule).
- Employees with distributions not totaling 100% or charging an award after its end date.
How software supports each stage
Distributions and true-ups (stages 2 and 6). Workday Grants Management calculates effort from posted payroll results, including retro pay and payroll accounting adjustments, and can automatically initiate a payroll accounting adjustment when effort is changed during certification (Workday documentation, updated October 2, 2026; Workday sells this product). In Workday, “PAR” means pay accounting reallocation, not personnel activity report, so define the acronym in your policy.
Activity capture (stage 3). Sage Intacct posts labor cost to the general ledger when timesheets are submitted and, where approval is required, approved, and its “salary with variance” method sends the difference between timesheet cost and salary cost to a variance account (Sage Intacct help, last modified October 8, 2026). A Sage partner notes that timesheet labor cost is an estimate and payroll cost is the actual expense (RKL eSolutions, December 9, 2021), so you still need the stage 5 comparison.
Certification (stage 4). Research universities often use a dedicated tool. Vanderbilt uses ecrt (its guide carries a Huron Consulting Group copyright) for quarterly effort statements certified by individuals and principal investigators (Vanderbilt ecrt guide, no publication date shown). Many school districts still run the cycle on forms; Montgomery County Public Schools in Maryland uses quarterly certification statements and biweekly PARs posted as PDF forms (MCPS, no date shown). For the wider system choice, see our guides to grant management software and nonprofit accounting software, and for the indirect side of the same salary base, our guide to the de minimis indirect cost rate.
How we researched this
We read the current text of 2 CFR 200.430 on eCFR on October 10, 2026, and compared it with the CFR edition revised as of January 1, 2024 to confirm the renumbering. We reviewed state education agency guidance, university effort procedures and the archived OMB Circular A-87 for the origin of semi-annual certifications and PARs, and we checked vendor documentation for each software capability named. We do not accept payment from any vendor mentioned.
Related guides
- Grant Budget Template: Categories, Narrative and 2 CFR 200
- Functional Expense Allocation: Methods and Entries
- NICRA: How Negotiated Indirect Cost Rates Work
Frequently asked questions
Is 2 CFR 200.430(i) still the time and effort rule?
No. Since October 1, 2024, the standards for documentation of personnel expenses sit in 2 CFR 200.430(g), and paragraph (i) now covers institutions of higher education. The substance is similar, but you should update citations in your policy and procedures.
Are semi-annual certifications still required?
The current federal text does not name semi-annual certifications or set a frequency. The practice comes from OMB Circular A-87, and state education agencies such as Washington’s and South Carolina’s still use or allow it for staff working on a single cost objective. Follow your pass-through entity’s rules and write your chosen frequency into your policy.
Can we charge salaries to a grant based on the budget?
Only as an interim step. Budget estimates may be used for interim accounting if they are reasonable, significant changes are entered promptly, and after-the-fact reviews lead to adjustments so the final charge is accurate. Estimates with no after-the-fact review do not support the charge.
How often should PARs be completed?
A-87 required PARs at least monthly, coinciding with pay periods, and Washington’s OSPI still accepts that for split-funded staff under its older option. Universities commonly certify by term or quarter. The current rule leaves frequency to your policy, so choose one that keeps certifiers close to the work.
How long do we keep time and effort records?
Keep them for three years from submission of the final financial report for the award, and longer if an audit, claim or litigation is open. Your agency or pass-through entity can extend the period in writing.
Sources
- eCFR, 2 CFR 200.430 Compensation, personal services (current text, last amended October 1, 2024), checked October 10, 2026. ecfr.gov
- Code of Federal Regulations, 2 CFR 200.430, edition revised as of January 1, 2024. govinfo.gov
- Office of Management and Budget, Guidance for Federal Financial Assistance, 89 FR 30046, April 22, 2024 (effective October 1, 2024). federalregister.gov
- eCFR, 2 CFR 200.334 Record retention requirements, checked October 10, 2026. ecfr.gov
- eCFR, 2 CFR 200.405 Allocable costs, checked October 10, 2026. ecfr.gov
- eCFR, 2 CFR 200.501 Audit requirements, checked October 10, 2026. ecfr.gov
- eCFR, 29 CFR part 516 Records to be kept by employers, checked October 10, 2026. ecfr.gov
- OMB Circular A-87 (archived), Attachment B, item 8.h, revised May 10, 2004. obamawhitehouse.archives.gov
- Washington OSPI, Bulletin No. 039-24, Time and Effort (T&E) Reporting, June 18, 2024. ospi.k12.wa.us
- South Carolina Department of Education, Time and effort reporting guidelines and examples, no date shown. ed.sc.gov
- University of San Francisco, Time and Effort Reporting, May 23, 2024. myusf.usfca.edu
- Montgomery County Public Schools, Time and Effort Certification, no date shown. montgomeryschoolsmd.org
- Workday, Effort Certification (Grants Management) administrator documentation, updated October 2, 2026. Workday sells this product. doc.workday.com
- Vanderbilt University, ecrt Guide for Faculty and Principal Investigators, no publication date shown (copyright 2017). vanderbilt.edu
- Sage Intacct, Set up labor cost posting, last modified October 8, 2026. Sage sells this product. intacct.com
- RKL eSolutions (Sage partner), Project Labor Costing and Understanding the Salary Variance in Sage Intacct, December 9, 2021. rklesolutions.com
Sherman Hsieh
Independent analysis of enterprise software — ERP, CRM and more
