TLDR
Time-and-effort documentation for federal grant personnel is one of the highest-scrutiny areas in a single audit. 2 CFR 200.430 requires that salary charges to federal awards be based on contemporaneous records reflecting actual work performed - not budgeted percentages, not retroactive certifications from memory, and not estimates. Organizations that do not have a functioning T&E system before the grant period begins tend to discover the gap when they are trying to close a grant or explain a finding.
Why T&E Documentation Gets Audited So Closely
Personnel costs are typically the largest line item on any nonprofit budget, and they are the largest cost category on most federal grants. That combination - large dollar amounts, complex documentation requirements - makes T&E one of the primary audit focus areas for federal programs.
The specific requirement in 2 CFR 200.430 is not complicated in concept: salary charges to federal awards must be based on records that reflect actual work performed. The implementation is where organizations struggle.
The Contemporaneous Standard and Why It Matters
The word “contemporaneous” in 2 CFR 200.430 has a specific meaning. Records must be prepared at or near the time the work is performed. Not at the end of the grant period. Not when the auditor arrives. Not when the annual reporting cycle begins.
The practical standard auditors apply: records prepared within a pay period of the work are generally considered contemporaneous. Records completed weeks after the pay period ended, or certifications covering multiple months signed on a single day, are not.
This distinction matters because retroactive records are less reliable. An employee reconstructing their work distribution from memory for a period three months past may genuinely believe their estimate is accurate. It may not match what the payroll records show was actually charged. Auditors understand this and treat retroactive documentation accordingly.
Single-Grant vs. Split-Funded Employees
The documentation requirement differs by funding structure.
For employees funded 100% by a single federal program, a semi-annual certification is sufficient. The certification is a signed statement by the employee or a responsible supervisor confirming that the employee worked solely on the federal program during the certified period. This is the least burdensome T&E documentation approach.
For employees splitting time across multiple funding sources, full effort reporting is required. The effort record must show how the employee’s compensated time was distributed across every activity - including non-federal activities. The sum must equal 100% of compensated time, not just the federally funded portion.
This is where the most common T&E errors occur. Organizations document time spent on federal programs and do not track time spent on other activities. The result is records that show 80% effort on federal programs - which may be accurate - but do not account for the remaining 20%. Auditors cannot verify that the 80% figure is correct without seeing the other 20%.
The Pay Period Documentation Cycle
Aligning T&E documentation with the payroll cycle is the most reliable way to maintain contemporaneous records. The sequence:
At the end of each pay period, employees complete the effort record for the period just ended. The record shows hours or percentage of effort by grant or program, covering every day in the period. The employee signs.
The supervisor reviews and confirms the allocation is consistent with what they observed. The supervisor signs.
Finance processes payroll charges to each grant based on the approved effort record - not the budget, not last period’s allocation.
Finance files the signed effort records in the grant file.
This cycle takes five to ten minutes per employee per pay period. It prevents the audit-time scramble of producing T&E records for a year of payroll when the documentation never existed.
Download the Time and Effort Certification Template for a pre-built effort reporting form that satisfies 2 CFR 200.430 requirements for both single-funded and split-funded employees.
Free resource
Get the Time and Effort Certification Template
A 2 CFR 200.430-compliant effort reporting template for nonprofits with federal grants - covering personnel cost documentation, certification requirements, multi-source allocation, and a pre-audit documentation checklist. Delivered by email.
- Effort reporting
- The system and process by which employees document the distribution of their working time across federally sponsored and non-sponsored activities. Required under 2 CFR 200.430 for employees whose compensation is charged to federal awards.
DEFINITION
- Personnel activity report (PAR)
- The time-and-effort documentation document completed by employees or supervisors to record the distribution of work time across federal programs and other activities. Must reflect actual activity, not budgeted allocations.
DEFINITION
- Split-funded position
- An employee position funded from two or more sources - multiple grants, a mix of grant and organizational funds, or multiple federal programs. Split-funded employees require full effort reporting showing 100% of compensated time distributed across all funding sources.
DEFINITION
Q&A
What do auditors look for in T&E records?
Auditors test that: (1) records exist for all employees with federally charged salary, (2) records reflect actual work performed rather than budgeted percentages, (3) records are contemporaneous - record dates are near payroll dates, not end-of-year, (4) employees who are split-funded have records that account for 100% of their compensated time, (5) records are signed by the employee or supervisor, and (6) the salary charges to the grant match what the records show.
Q&A
What happens when T&E records are missing or retroactive?
Missing T&E records for a reporting period typically result in the associated salary costs being questioned - meaning auditors flag them as potentially unallowable without adequate documentation. Retroactive certifications covering multiple months are treated similarly. Questioned costs can become disallowed costs, requiring repayment, if the organization cannot produce other evidence that the work was actually performed as charged.
Frequently asked