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Posted by on May 27, 2015

Tracking Timesheets under 2 CFR 200

Tracking Timesheets under 2 CFR 200

Online timesheet form on a digital tablet

One of the most important, and often misunderstood, change under 2 CFR 200 the Uniform Guidance: Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) is the new reporting requirements for employee compensation, found at 2 CFR 200.430.

For many reasons, this provision has created much confusion in the grants community. The first difficulty comes from just trying to read the multiple subsections. I have sat in many Management Concepts classes where students have spent time just debating where one subsection ends and another begins!

To clarify, 2 CFR 200.430 has nine subsections:

  • 200.430(a) General
  • 200.430(b) Reasonableness
  • 200.430(c) Professional Activities Outside the Non-federal Entity
  • 200.430(d) Unallowable Costs
  • 200.430(e) Special Considerations
  • 200.430(f) Incentive Compensation
  • 200.430(g) Nonprofit Organizations
  • 200.430(h) Institutions of Higher Education (IHEs)
  • 200.430(i) Standards for Documentation of Personnel Expenses

In 2 CFR 200.430(a) through (f), The Uniform Guidance retains the framework found in the previous cost principles for charging personnel costs to Federal awards. 2 CFR 200.430(g) and (h) are entity-specific provisions for nonprofit organizations and IHEs that relate to unique circumstances for each entity type. For the most part, non-Federal entities should be familiar with the requirements found in these subsections.

The fun, and head-scratching, begins at 2 CFR 200.430(i). This subsection outlines documentation requirements for paying employees with Federal funds, and the Uniform Guidance significantly revises these requirements.

One notable omission in this subsection is the phrase “time and effort reporting.” This has led some non-Federal entities to believe that they no longer need to keep timesheets. This may be true for some, but not for all, and this is where the real confusion begins.

Officials from the Office of Management and Budget (OMB) have said that non-Federal entities with strong internal controls do not need to provide personnel activity reports; however, 2 CFR 200.430(i) still requires non-Federal entities to maintain records that “accurately reflect the work performed.” These records must:

  • Be supported by a system of internal control which provides reasonable assurance that the time being charged is accurate, allowable, and properly allocated
  • Are incorporated in the official records, such as payroll records
  • Reasonably reflect the employee’s total activity
  • Provide a time or percentage breakdown on all activities, both Federally funded and non-Federally funded, for the employee
  • Comply with the non-Federal entity’s pre-established accounting practices and procedures

As stated at 2 CFR 200.430(i)(8), non-Federal entities that cannot meet the aforementioned conditions may be required to submit personnel activity reports.

Even though the Uniform Guidance does not require a non-Federal entity to keep timesheets, a non-Federal entity still must account for the time an employee spends on each job-related activity. It may not be called a timesheet, but it sure sounds like one.

OMB has said the purpose of this revision is to reduce the administrative burden on non-Federal entities. Unfortunately, OMB has not provide detailed guidance, so non-Federal entities that attempt to design a new personnel system might expend substantial resources only to conclude their current system is adequate. In addition, changing a personnel system without proper guidance from OMB has the potential for audit findings.

What Does This Mean for You?

Our recommendation is that non-Federal entities should continue to use their current personnel systems, as long as there have not been previous audit findings. Non-Federal entities that have had audit findings on their personnel systems will need to implement corrective action to ensure compliance with 2 CFR 200.

Are you still confused? Let us know in the comment section below.



  1. updates for effort reporting helpful

  2. Under the new Uniform Guidance, are employees who prepare timesheets, or personal activity reports, still required to sign them or can a supervisor sign for the employee?

    • Non-Federal entities have the flexibility to design their time and effort reporting processes to best meet their own needs. However, non-Federal entities must institute adequate internal controls to mitigate risk. Employee certification, along with supervisor approval, is one critical element of internal control over time sheets, and should be integrated into payroll systems.

      • For PAR’s, is there a new requirement (October 2015 or current) that indicates they must be done bi-weekly, instead of monthly?

        • Christine,

          There is no Federal requirement regarding the frequency for PARs. NFEs are provided flexibility in implementing their own requirements, provided that the standards found at 2 CFR 200.430(i)(1) are met.

  3. When Extra Service Pay becomes part of the equation (for example, an employee earning an additional 10% of institutional base salary), must we recalculate the employee’s 100% “total activity” to incorporate the Extra Service Pay, or is this one exception in which the records may reflect more than 100% time and effort?

    • Hi Sophia,

      How your organization tracks an employee’s time and effort may rely on time sheets or other reports, but the total activity should not exceed 100%.

      If you provide additional compensation for an employee, you need to make sure that 1) that the compensated work is directly related to the grant award, and 2) that the employee is compensated based on established and written procedures that apply to both grant awards and non-grant awards. The extra pay should be indicated in your budget and expenditures.

      Paying an employee a bonus or overtime compensation is frequently examined closely by auditors, so make sure you follow your procedures.

      Based on your email address, I assume you work for a college and university. The applicable provisions regarding extra service pay is found at 2 CFR 200.430(h)(4)and 2 CFR 200.430(i)(1)(iii). Be sure to read those provisions closely.


  4. Is PAR’s the same as time tracking or is it the monthly statement that a person signs to certify they worked the percentage of time spent on multiple funded objectives? If monthly statements are allowable are there additional internal controls that should be in place that support the time reported such as a calendar that indicates days of the week a person works and is equivalent to the percentage of time on the monthly statement?

    • Hi Deborah,

      Under 2 CFR 200, non-Federal entities have been provided considerable flexibility to develop their own systems to track time and effort for employee compensation. Non-Federal entities may use PARs in any manner that they wish, provided that they meet the requirements found at 2 CFR 200.430(i)(1). Generally, an ideal internal control would include documentation from the employee which is then approved by a manager or supervisor. The PARs would need to account for an employees entire work for the period, which includes work on both Federal awards and non-Federal awards.

      -Shane Jernigan

  5. How long are timecards required to be kept?

    • Carol,

      Under 2 CFR 200.333, non-federal entities are required to keep all grants-related documents for three years from the date of submissions of the final expenditure. There are some exceptions to this requirement, as detailed in the provision.


  6. Are semi-annual certifications still acceptable for employees who work solely on a single Federal award or cost objective?

    • Hi Jeri,

      If your organization has not had any audit findings related this, then you should be fine to continue this practice. Be sure to review 2 CFR 200.430(i) to ensure that your organization has met all the requirements, especially for internal control.

      Shane Jernigan

  7. At our non-profit organize employees record all hours worked by federal award and other cost centers on a bi-weekly timesheet. Supervisors approve. It’s unclear to me if, under 2 CFR 200, these employees should also be recording detailed notes of work performed each day (or for some other time frame)? Thanks.

    • Hi Greg,

      2 CFR 200.430(i)(1)(vii) best addresses your question:

      (vii) Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity.

      The amount of detail your employees provide depends on your accounting procedures. If your organization keeps multiple accounting codes for different activities for each grant program, then this information should suffice.

      Requiring detailed notes from your employees, while beneficial for documentation purposes, may significantly increase administrative burden. As long as your internal controls provide “reasonable assurance that the charges are accurate, allowable, and properly allocated,” then you are in compliance with 2 CFR 200. Make sure your internal manual discusses the procedures the supervisors take when approving time sheets by identifying how supervisors verify that the charges are accurate.

      I hope this information helps,
      Shane Jernigan

  8. Question: If a non-profit organization is charging a grant the monthly billable hours from a timesheet; are holiday pay or sick pay hours billable hours to a grant when one has a federal approved fringe rate.

    • Jo Ann,

      Assuming that the cost of paid time off (sick, holiday, vacation) is built into the salary, then the leave is charged to the grant.


      • If the agency has multiple awards, how would they go about distributing the vacation, holiday, and sick day hours used during the pay period?

  9. our organization allows salary staff to use comp time when they work more than the regular working hours. staff report the additional time worked and the comp time on the timesheet. how should we allocate the comp time if taken on a different pay period.

    • Nikki,

      In this situation, I’d start with following your organization’s standard operating procedures for time reporting. From an internal controls (and sanity) perspective, consistently following the policy is really important. And why your accountant/CFO should be a good friend.

      I’d also say that if your comp time policy is similar to how you treat PTO, you’d want to have it go to the grant.

      What I like about your question is that you and your organization are already thinking about tracking the actual time spent on a project. That’s going to benefit you in the long run.


  10. We receive Title III grant funds from the State. In turn, we allocate those funds out to subcontracted providers. Should we be requiring that those providers submit time sheets or activity reports to us for their S&W expenditures?

    • Hi Heather, thank you for your question. You do not need to review every time sheet or activity report, unless that is part of your monitoring plan and compliance requirements for your subrecipients. You need to verify that the subrecipients have a system in place to ensure compliance with 2 CFR 200.430(i). You can achieve this by reviewing their system and internal policies. Depending on how many subrecipients you have, and the number of personnel in your office, reviewing every time sheet for every employee for every subrecipient would probably be cost-prohibitive. You can also do a random review of certain time sheets to verify for compliance, and if you notice something suspicious or incorrect, then you could do a more in-depth review for a select subrecipient. Hope that helps! -Shane Jernigan

  11. We are a salvadoran non-profit organization with a USAID contract in El Salvador.

    The audit firm recommends us to implement procedures so that each person who works for the Project carries and maintains Records of Work Done, which must be prepared following the instructions set forth in paragraph (i), numeral (1) literals ) And following in Guide 2 CFR 200.430.

    It is the guide 2 CFR 200.430 in the literal (i), numeral (1) literales (i) applicable to our non-governmental organization or is for institutions of higher education.

    If our employees work full time under this contract, is the employee’s time sheet sufficient?

  12. Our company is a new for-profit company that has been awarded a grant. Nearly all employees are exempt but only a few will work on the grant. Some of these employees will dedicate 100% of their time while others will dedicate a much smaller amount of time. In setting up a time reporting system, should the exempt employees report actual hours worked every day, even when it’s over/under 8 hrs? And are we violating FLSA rules by having track their time in such detail (of course, no impact on their monthly salary).

  13. Hi,
    If a salaried PI has been budgeted to work 25% on a grant (say, 40 hours/month), does he have to record each hour, each day, or can he extrapolate it out each month (say, 10 hours a week) so his time sheet can remain consistent. Assuming within a month, it will average the 25%. Thanks

  14. Great post and comment thread! My question: If an employee’s timesheet says that they worked 100% of their time on a federal grant for a particular pay period, but we want to only bill the government for 60% of that time, is that permissible? Or must the timesheet always match what’s billed in this situation? (I certainly understand we don’t want to overbill the government, i.e., where an employee worked less than what we bill the government for.)

  15. We have a nonprofit that receives federal awards. We also have indirect cost that covers the Administrative department. My question is, do Administrative employees on salary need to enter a timesheet? Or can we utilize a default timesheet for those employees? I’m hoping you have an answer, the CFR seems a little confusing.

  16. For a non-federal entity that is processing timesheets, how do you ensure the monthly salary is paid to employees when the working days of the month vary? For instance, if an employee is paid 33% on a US Government project and 66% on a UK Government project, but the number of working days in April and May are different, should their salaries vary month to month? It seems unfair to pay staff less due to changes in working days per month, but this is the only way to ensure that staff are charged the actual number of hours worked on the project.

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