Getting it Right – Federal Grant Time and Effort Reporting

Five years after full implementation of Code of Federal Regulations (CFR), Title 2: Grants and Agreements, Part 200: Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, commonly referred to as Uniform Guidance (2 CFR § 200), time and effort reporting, or Compensation – personal services (2 CFR § 200.430) is still a compliance risk for non-Federal entities.

Many award recipients and subrecipients have personnel-heavy projects. During the public comment periods that preceded full implementation of the Uniform Guidance, respondent comments focused on the restrictive nature of time and effort reporting guidance in previous Office of Management and Budget (OMB) circulars.

In response, OMB and the Council on Financial Assistance Reform (COFAR), (which has since been replaced by the Chief Financial Officers (CFO) Council) built more flexibility into the new guidance. Unfortunately, this resulted in some confusion about what is now required and what will survive audit muster.

Future revisions of the Uniform Guidance should provide more clarity. In the meantime, there are some key takeaways that all non-Federal entities should address in their organizations. Federal and pass-through agencies can also use these points to monitor the time and effort reporting of their recipients and subrecipients effectively.

Reporting Requirements

• Compensation must be reasonable and in line with work on similar activities performed by the non-Federal entity; if no comparable activities exist at the non-Federal entity, compensation is considered reasonable if comparable to that paid for similar work in the applicable labor market
• Compensation ceilings may apply for certain employees according to 10 U.S.C. 2324(e)(1)(P), and 41 U.S.C. 1127 and 4304(a)(16) or established statutory ceilings
• Non-Federal entities must have written policies surrounding time and effort reporting that are consistently applied to both Federal and non-Federal activities
• Non-Federal entity policies and procedures for matching funds must align with policies and procedures for Federal funds
• Restrictions on professional activities outside of the non-Federal entity must follow 2 CFR § 200.430(c):
  • Time and effort must be aligned to a particular cost objective, and accurately charged; some flexibility is afforded to institutions of higher education (2 CFR § 200.430(i)(1)(x))
• The actual percentage of employees’ time must be recorded and documented per funding source
  • Not by estimates or budgets
  • Total must not exceed 100%
  • Documentation must be maintained to support allocations

These key takeaways are not all-inclusive. While the grants community waits for revised OMB guidance, we encourage you to read 2 CFR § 200.430.

Best Practices

Your time and effort tracking and reporting system must be supported by a strong system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. The following best practices may help your organization maintain compliance with enough flexibility to meet your performance goals and objectives.

• Supervision – Responsibilities of personnel designated to supervise time and effort reporting should include:
  • Certifying that time and effort recorded is accurate and allowable and submitted in a timely fashion
  • Confirming proper alignment with cost objectives
  • Preventing resources from being exhausted prior to the end of the funding period
  • Ensuring certification does not take place before the end of the specified period
• Internal Control – Incorporate policies and procedures that include methodologies and tools for measuring, documenting, and reporting time and effort expended on Federal awards
• Communication – A robust, compliant system should include organizational charts delineating responsible personnel, as well as process flows and job aids to communicate the system effectively to staff, leadership, and auditors

Finally, no grants management system, including time and effort reporting, is complete without staff training. By guiding your staff through the haze of compliance, and providing complete information, your team will have more time to direct their energies to meet the mission, and you will have less stressful monitoring visits and audits.