Time and Effort Documentation

Time and effort documentation is the record set showing that salaries charged to a federal award match the work performed. The Uniform Guidance sets standards rather than a form: records must be accurate, sit in the official books, cover an employee’s total compensated activity, and support how pay was split.

Current figures — verified 2026-08-11

Item	Value	Source
Questioned-cost reporting threshold in a single audit	Known or likely questioned costs greater than $25,000 for a type of compliance requirement for a major program	2 CFR 200.516(a)(3)
Record retention period for federal award records	Three years from the date of submission of the final financial report	2 CFR 200.334
Single audit trigger	$1,000,000 or more in federal awards expended in a fiscal year	2 CFR 200.501(a)

These figures change. Verify against the linked source before relying on them. Report an outdated figure

Key takeaways

• Federal rules set documentation standards, not a required timesheet form.
• Records must cover all activity, not only grant-funded hours.
• Budget estimates may charge interim only, with after-the-fact reconciliation.
• Non-exempt employees additionally need daily hours-worked records.
• Cost-shared salary is documented to the identical standard.

What does the Uniform Guidance require for time and effort documentation?

Time and effort documentation is governed by a single standard: “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed” (2 CFR 200.430(g)(1)). Six attributes define an acceptable record, and all six apply together. This is the payroll core of managing the award.

The regulation requires that records:

• Be supported by a system of internal control that provides reasonable assurance the charges are accurate, allowable, and properly allocated.
• Be incorporated into the official records of the recipient or subrecipient — not maintained as a side file that never reaches the general ledger.
• Reasonably reflect the total activity for which the employee is compensated, not exceeding 100 percent of compensated activities.
• Encompass federally assisted and all other activities on an integrated basis, with subsidiary records permitted where a written policy defines them.
• Comply with the established accounting policies and procedures of the organization.
• Support the distribution of salary among specific activities or cost objectives when an employee works on more than one federal award, a federal and a non-federal award, direct and indirect activity, two indirect activities with different allocation bases, or an unallowable and an allowable activity.

Two of those attributes carry more weight than the rest in practice. The total-activity attribute means a record covering only grant hours fails, because there is no way to test whether the federal share is proportionate. The integrated-basis attribute means the same system has to see fundraising, administration, and privately funded programs, since those are the activities the federal share is being measured against. Adequate documentation is also a general condition of allowability under 2 CFR 200.403(g).

Why is time and effort documentation not a prescribed federal form?

Time and effort documentation has no mandated federal form, and that is the single most misunderstood fact in this area. The Uniform Guidance replaced the prescriptive personnel activity report regime of the older OMB circulars with a performance-based, system-based standard: the organization designs the method, and the method is judged by whether it produces records meeting the attributes at 2 CFR 200.430(g)(1).

The regulation says so directly in two places. Records that meet the standard need nothing further: “the recipient or subrecipient is not required to provide additional support or documentation for the work performed” beyond the non-exempt hours rule (2 CFR 200.430(g)(2)). And the old regime survives only as a consequence of failure — where records do not meet the standard, “the Federal Government may require personnel activity reports, including prescribed certifications, or equivalent documentation” (2 CFR 200.430(g)(8)).

Read together, those provisions invert the common assumption. Monthly certifications, semiannual certifications, and percentage-effort forms are not entitlements the government imposes; they are one available design, and the least flexible one. A payroll distribution system that allocates by cost objective, reconciles to actual work, and lives inside the accounting records satisfies the rule without any certification form at all.

Flexibility is not absence of obligation. An organization that dropped its old effort forms after the shift and put nothing in their place has no documentation, which is a worse position than an imperfect form. The standard is documented internal control over payroll allocation, and the design choice belongs to the organization. Effective internal control over federal awards is itself a standing requirement (2 CFR 200.303), and the wider control set is covered under internal controls for grant recipients.

Can budget estimates support salary charges to a grant?

Budget estimates cannot support salary charges to a grant on their own. The rule is explicit: “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes” under three conditions (2 CFR 200.430(g)(1)(vii)).

The three conditions are cumulative. The estimating system must produce reasonable approximations of the activity actually performed. Significant changes in work activity, as defined by the organization’s own written policies, must be promptly identified and entered into the records — though short-term fluctuations of a month or two need not be adjusted where the longer-term distribution stays reasonable. And the internal control system must include processes for periodic after-the-fact review of interim charges, with “all necessary adjustments” made so the final amount charged is accurate, allowable, and properly allocated.

The third condition is where most organizations fail. Charging at budgeted percentages is permitted; charging at budgeted percentages and never looking again is not. Without a documented reconciliation that compares the estimate to what happened and posts adjusting entries, the interim charge never becomes a final charge supported by records, and every dollar of salary on the award sits on an estimate.

The consequence is measurable. In a 2024 audit of New York Medical College, the HHS Office of Inspector General found that “the College used budget estimates instead of actual activity to claim $7.5 million in salaries, fringe benefits, and indirect costs,” and recommended the College work with the National Institutes of Health to determine the allowability of $7,469,306 in unsupported charges (HHS OIG A-04-20-03583). The underlying work was not alleged to be fictional. The records were.

How do you build a compliant time and effort system?

A compliant time and effort system is built by writing a policy, choosing one allocation method, running it inside the accounting system, and reconciling on a fixed cycle. Seven steps produce a system that survives testing at any organizational size:

1. Write the policy first. Name the method, the recording frequency, who completes records, who reviews them, what counts as a significant change in activity, and the reconciliation cycle. The regulation repeatedly defers to the organization’s written policy, which means an unwritten practice has no defense.
2. Define the cost objectives. List every activity that salary can be charged to: each federal award, each non-federal award, unrestricted program work, fundraising, general administration, and any indirect activity with its own allocation base. Records must distribute across this full list, not only the federal portion.
3. Choose one allocation method and apply it uniformly. Activity-based timesheets, after-the-fact effort confirmations, and payroll distribution driven by documented allocations all qualify. Mixing methods across departments without a written basis creates inconsistency that reads as an internal control deficiency.
4. Record contemporaneously. Records built weeks later from memory are the weakest form of evidence, and records built backward from what was already charged are worse than none. Recording within the pay period costs almost nothing and removes the entire category of dispute.
5. Post the allocation into the general ledger. The record has to be incorporated into official records, and the financial management system must identify federal award spending and tie it to source documentation (2 CFR 200.302). A labor distribution living in a spreadsheet that no ledger entry reflects leaves the accounting system and the documentation telling different stories.
6. Reconcile on a set cycle and adjust. Compare recorded activity to charged salary at least quarterly, document the comparison, and post adjusting entries where they diverge. The review is the control the regulation asks for; the adjustment is the evidence it worked.
7. Retain the records. Personnel records supporting charges fall under the general retention rule for the period shown in the figures above (2 CFR 200.334), which starts at final financial report submission, not at project end.

Scale changes the tooling and not the standard. A three-person nonprofit with two federal awards can satisfy every attribute with a weekly activity sheet that lists all cost objectives, is signed by the employee and a supervisor, and feeds the payroll allocation. A research university with hundreds of awards needs a payroll certification workflow, cost-transfer controls, and monitoring of completion rates — but faces the same six attributes and the same reconciliation duty.

What counts as adequate time and effort documentation?

Adequate time and effort documentation ties a specific dollar of salary to a specific record of work covering the employee’s full compensated time. The distinction between adequate and inadequate is rarely about format and almost always about coverage, timing, and reconciliation.

The table below contrasts common documentation practices against the standard at 2 CFR 200.430(g).

Practice	Adequate	Why
Activity record covering all cost objectives, signed, posted to the ledger	Yes	Meets total-activity, integrated-basis, and official-records attributes
Payroll distribution from documented allocations, reconciled quarterly with adjusting entries	Yes	Interim estimates cured by after-the-fact review under (g)(1)(vii)(C)
Timesheet listing grant hours only	No	Cannot show the federal share is proportionate to total activity
Budgeted percentages charged all year with no review	No	Budget estimates alone do not qualify as support
Effort form completed after year-end to match amounts already charged	No	Reverse-engineered records fail the accuracy and internal control tests

Two further practices sit outside the table because they are permitted only with approval. States, local governments, and Indian Tribes may use substitute processes — random moment sampling, rolling time studies, case counts, or other quantifiable measures — but only if the cognizant agency for indirect cost approves, and sampling must cover the full universe and the entire period and produce statistically valid results (2 CFR 200.430(g)(5)). Cognizant agencies may also approve outcome-based or milestone-based alternatives where they are clearly documented (2 CFR 200.430(g)(6)). Which compliance requirements an auditor tests for a given program is set by the OMB Compliance Supplement, though a requirement not tested is still a requirement.

How does time and effort documentation vary by employee type?

Time and effort documentation applies to every employee whose salary touches a federal award, but four categories carry additional or different requirements. The base standard never relaxes; the additions stack on top of it.

Non-exempt employees under the Fair Labor Standards Act need one thing more than everyone else. Charges for their salaries and wages “must also be supported by records indicating the total number of hours worked each day,” in accordance with Department of Labor regulations at 29 CFR part 516 (2 CFR 200.430(g)(3)). This is the only place the Uniform Guidance demands a daily hour record.

Exempt salaried staff are covered by the same six attributes with no daily-hours obligation. The workable approach is percentage distribution across cost objectives rather than clock hours, which the regulation expressly contemplates: because practices vary as to what constitutes a full workload, “records may reflect categories of activities expressed as a percentage distribution of total activities” (2 CFR 200.430(g)(1)(viii)).

Employees working on a single cost objective still need records. Nothing in the regulation exempts them, and the total-activity attribute is precisely what a 100-percent charge has to satisfy — any supervision of other programs, development work, or general administration performed during the period contradicts the charge. A periodic confirmation that the employee worked exclusively on the named award, signed by someone with firsthand knowledge, is the minimum.

Institutions of higher education operate under a salary cap rather than an hour count. Charges may not exceed the proportionate share of institutional base salary, which “excludes any income an individual earns outside of duties performed for the IHE” (2 CFR 200.430(i)(2)). The rule also concedes the limits of precision in academic work: teaching, research, service, and administration “are often inextricably intermingled,” so “a precise assessment of factors contributing to costs is not required.”

Cost-shared effort is the category most often forgotten. Salaries used to meet cost sharing requirements “must be supported in the same manner as salaries and wages claimed for reimbursement” (2 CFR 200.430(g)(4)). Undocumented match is disallowed match, and the shortfall is owed in cash — the mechanics are covered under cost share and matching requirements.

What does an auditor test in time and effort documentation?

An auditor testing time and effort documentation works from the charge backward to the record, not from the record forward. The procedure is stable across firms because it follows the compliance requirement for allowable costs, and knowing the sequence tells an organization exactly what to keep.

A typical test runs in six moves. The auditor selects a sample of employees with salary charged to a major program. The auditor requests the supporting records for the sampled periods. The auditor compares recorded activity to the amount charged and quantifies any variance in dollars. The auditor checks that the records account for total compensated activity rather than grant time alone. The auditor traces the allocation into the general ledger and payroll register. And the auditor reviews cost transfers for timing and justification, since a pattern of late transfers signals that the allocation was never right in the first place.

Two documents matter more than the timesheets themselves. The written policy establishes the criterion the auditor measures against — without one, the auditor falls back on the regulation, and every judgment call goes against the organization. The reconciliation evidence establishes that the control operated: a dated comparison of recorded activity to charged salary, with adjusting entries where they diverged.

Where the sample fails, the dollar consequence is rarely limited to the sample. Auditors report known questioned costs and consider likely questioned costs — the best estimate of total questioned costs in the population. A questioned cost includes an amount that “lacked adequate documentation to support compliance” at the time of the audit (2 CFR 200.1), which is how a handful of missing records becomes a six-figure finding (2 CFR 200.516(a)(3)). The threshold at which questioned costs must be reported appears in the figures above, and the audit itself is described under the Single Audit.

This article is general information about federal cost principles and documentation standards, not legal, audit, or accounting advice. Requirements depend on your award terms, your organization’s written policies, and your auditor’s professional judgment.

What goes wrong with time and effort documentation?

Time and effort documentation fails in a small number of repeating ways, and none of them involve fraud. The pattern across audit reports and practitioner summaries of recurring single audit deficiencies is a documentation failure sitting on top of legitimate work, which is why the losses feel so arbitrary to the organizations that suffer them.

Seven failure modes account for most findings:

• Budgeted percentages with no after-the-fact review. The most common allowable-cost finding, and the one the regulation names directly. Cited by practitioner analysis of recurring single audit findings as a leading cause of questioned payroll costs (GRF CPAs, a public accounting firm).
• Records covering grant time only. Without the non-federal activity, proportionality cannot be demonstrated, so the entire charge is unsupported rather than partly unsupported.
• Effort exceeding 100 percent. Two awards each carrying 60 percent of a person is arithmetically impossible and is visible the moment an auditor sums a row.
• Certifications that do not match payroll. An employee confirms 30 percent while the ledger shows 45 percent, and no cost transfer was posted. The variance is the finding; the direction does not matter.
• Late or reverse-engineered records. Documents created after year-end to agree with amounts already charged are treated as unreliable rather than as evidence, and often escalate from a questioned cost to an internal control finding.
• Undocumented cost-shared effort. Match commitments tracked in a proposal spreadsheet and nowhere else, despite carrying the same documentation standard as reimbursed salary.
• Non-exempt staff without daily hour records. A narrow, easily fixed gap that generates findings because organizations assume a percentage allocation is sufficient for everyone.
• Systems that cannot be reconciled at all. In one federal review of a university payroll certification pilot, the Office of Inspector General estimated the institution had put $11.7 million in salaries and $5.9 million in associated facilities and administrative costs at risk on NIH awards because the system did not confirm that payroll costs were appropriately allocated (HHS OIG, February 8, 2017).

The remedy in every case is the same pairing: a written policy that defines the method, and a documented periodic reconciliation that proves the method ran. Federal audits have repeatedly recommended exactly that combination — in one HHS Office of Inspector General review of a university’s NIH awards, the recommendations were to strengthen “procedures for reconciliation of payroll costs to approved salaries and wages and to payroll reports” and to ensure “the timely completion and certification of employee time and effort reports” (HHS OIG A-07-20-05127). Pass-through entities should expect to test the same records at subrecipients, as covered under subrecipient monitoring and pass-through funding.

Frequently asked questions

Are timesheets required for federal grants?

No. The Uniform Guidance requires records that accurately reflect work performed and meet six stated attributes; it does not require timesheets, certifications, or any specific form. Timesheets are one compliant design. Non-exempt employees are the exception: their charges must also be supported by records of total hours worked each day.

Can salary be charged at budgeted percentages?

Yes, for interim accounting only. Budget estimates may drive charges during the year if the estimating system produces reasonable approximations, significant activity changes are entered promptly, and the organization performs periodic after-the-fact reviews with adjusting entries. Without that review and adjustment, the charge remains unsupported.

Does an employee who works only on one grant need records?

Yes. No exemption exists for single-cost-objective employees, and a 100-percent charge is exactly the claim that total-activity records exist to support. A periodic confirmation signed by someone with firsthand knowledge that the employee worked exclusively on the award satisfies the standard.

How often should effort records be reconciled to payroll?

The regulation says periodic and leaves the interval to written policy. Quarterly is the common practice and is defensible; semiannual is the practical floor. What matters more than the interval is that the comparison is documented, dated, and followed by adjusting entries when recorded activity and charged salary diverge.

How long do time and effort records have to be kept?

For the retention period shown in the figures above, which runs from the date the final financial report is submitted rather than from the end of the project. Records tied to a litigation, claim, or audit started before the period expires must be kept until the matter is resolved and final action taken.

Who is allowed to sign or confirm an effort record?

Someone with firsthand knowledge — or a suitable means of verification — of the work performed. That is usually the employee, the supervisor, or the principal investigator. A signature from an administrator who never observed the work is the kind of control weakness that turns a documentation gap into an internal control finding.

Related topics

• Managing the Award — the hub for post-award compliance, reporting, and closeout
• Grant Reporting Requirements
• Closing Out a Grant
• How to Read a Notice of Award

Sources

1. Electronic Code of Federal Regulations, 2 CFR 200.430, “Compensation—personal services.” https://www.ecfr.gov/current/title-2/section-200.430 (accessed 2026-08-11)
2. Electronic Code of Federal Regulations, 2 CFR 200.403, “Factors affecting allowability of costs.” https://www.ecfr.gov/current/title-2/section-200.403 (accessed 2026-08-11)
3. Electronic Code of Federal Regulations, 2 CFR 200.303, “Internal controls.” https://www.ecfr.gov/current/title-2/section-200.303 (accessed 2026-08-11)
4. Electronic Code of Federal Regulations, 2 CFR 200.334, “Record retention requirements.” https://www.ecfr.gov/current/title-2/section-200.334 (accessed 2026-08-11)
5. Electronic Code of Federal Regulations, 2 CFR 200.501, “Audit requirements.” https://www.ecfr.gov/current/title-2/section-200.501 (accessed 2026-08-11)
6. Electronic Code of Federal Regulations, 2 CFR 200.516, “Audit findings.” https://www.ecfr.gov/current/title-2/section-200.516 (accessed 2026-08-11)
7. Electronic Code of Federal Regulations, 29 CFR part 516, “Records to be kept by employers.” https://www.ecfr.gov/current/title-29/part-516 (accessed 2026-08-11)
8. U.S. Department of Health and Human Services, Office of Inspector General, “New York Medical College Claimed Unallowable Grant Costs and Did Not Meet Certain Financial Conflict of Interest Requirements,” report A-04-20-03583, May 14, 2024. https://oig.hhs.gov/reports/all/2024/new-york-medical-college-claimed-unallowable-grant-costs-and-did-not-meet-certain-financial-conflict-of-interest-requirements/ (accessed 2026-08-11)
9. U.S. Department of Health and Human Services, Office of Inspector General, “Saint Louis University’s Management of NIH Grant Awards Did Not Comply With All Federal Requirements,” report A-07-20-05127, June 2023. https://oig.hhs.gov/reports/all/2023/saint-louis-universitys-management-of-nih-grant-awards-did-not-comply-with-all-federal-requirements-but-complied-with-financial-conflict-of-interest-requirements/ (accessed 2026-08-11)
10. U.S. Department of Health and Human Services, Office of Inspector General, “The University of California at Riverside’s Pilot Payroll Certification System Did Not Provide Accountability Over Payroll Charges to Federal Awards,” February 8, 2017. https://oig.hhs.gov/reports/all/2017/the-university-of-california-at-riversides-pilot-payroll-certification-system-did-not-provide-accountability-over-payroll-charges-to-federal-awards/ (accessed 2026-08-11)
11. Office of Management and Budget, Compliance Supplement (Part 3, Allowable Costs/Cost Principles). https://www.whitehouse.gov/omb/information-resources/guidance/compliance-supplement/ (accessed 2026-08-11)
12. Electronic Code of Federal Regulations, 2 CFR 200.1, “Definitions” (Questioned cost; Cost objective). https://www.ecfr.gov/current/title-2/subtitle-A/chapter-II/part-200/subpart-A/section-200.1 (accessed 2026-08-11)
13. GRF CPAs and Advisors (public accounting firm), “Common Findings in Single Audits: How Nonprofits Can Strengthen Compliance,” September 22, 2025. https://www.grfcpa.com/resource/how-nonprofits-can-strengthen-compliance/ (accessed 2026-08-11)
14. Electronic Code of Federal Regulations, 2 CFR 200.302, “Financial management and standards for financial management systems.” https://www.ecfr.gov/current/title-2/section-200.302 (accessed 2026-08-11)