What Is Time & Effort Reporting?
Time and effort reporting is a process used to track the amount of time employees spend on various projects and tasks. It fulfills a critical role for Community Health Centers (CHCs) by helping to ensure that federal awards are charged only for time worked, authenticating that personnel costs are for allowable activities, and confirming that federal programs pay only their proportionate share of employee costs.
Effort is defined as the amount of time spent on a particular activity and includes time spent working on a sponsored project in which the salary is directly charged, or cost is shared to a federally funded grant (also known as a match).1 Individual effort can be recorded as a percentage of the total amount of time spent on work-related activities including instruction, research, administration, and clerical tasks. Effort reporting is the required method of certifying that an effort charged or cost shared to each award has been completed.2
Reporting Requirements
It is imperative for CHCs to follow specific time and reporting requirements.3 They include:
- Compensation must be reasonable and in line with work on similar activities performed by the nonfederal entity; if no comparable activities exist at the nonfederal entity, then 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.
- Nonfederal entities must have written policies surrounding time and effort reporting that are consistently applied to both federal and nonfederal activities.
- Nonfederal entity policies and procedures for matching funds must align with policies and procedures for federal funds.
- Restrictions on professional activities outside of the nonfederal 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 education4.
- The actual percentage of employees’ time must be recorded and documented per funding source,5 and:
- Not by estimates or budgets
- The total must not exceed 100%
- Documentation must be maintained to support allocations
Budget estimates alone do not qualify as support for charges to federal awards. However, they may be used for interim accounting purposes if approximations are reasonable. Significant changes to the activity are to be identified and updated in a timely manner, supported by a system of internal controls to review after-the-fact interim charges and adjustments made, such that the final amount charged to the award is accurate, allowable, and properly allocated.6
Best Practices
Your time and effort tracking and reporting system must be supported by strong internal controls that provide reasonable surety that the charges are accurate, allowable, and properly allocated.7 The following best practices may help your organization maintain compliance with enough flexibility to meet your performance goals and objectives.
- Monitoring – Define responsibilities of personnel designated to supervise time and effort reporting. Examples may include:8
- Authorizing that time and effort recorded is accurate and allowable.
- Confirming accurate 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 – Create a robust, compliant system with resources such as organizational charts (delineating responsible personnel), process flows, and job aids to communicate the system effectively to staff, leadership, and auditors.9
In addition, no grants management system (including time and effort reporting) is complete without staff training. By guiding your staff through the importance of compliance and providing clear information, you can help them redirect their focus to meet the mission, and help prepare the team for monitoring visits and audits.
Common Issues With Time & Effort Reporting
The below issues were identified in HRSA financial management and grant reviews. CHCs should consider these challenges when working on time and effort reporting:
- Use of grant funds to pay employees based on budgeted hours, when it must be based on actual hours.
- Lack of allocation records for employees whose salary is charged to multiple sources.
- Use of percentage of grant funding to determine an employee’s percentage of time worked, when it must be proportionate to the time spent to achieve the purpose of the grant.
- Inconsistent application of requirements across funding sources.
- Charging time to federal awards when no work occurred.
- Charging total time across all sources that exceeds 100%.
Key Reminders for Time & Effort Reporting
- Base the time and effort reporting on actual time.
- Incorporate findings into the official record.
- Time and effort reporting should be documented.
- Time and effort reporting should be supported by internal controls.
- Time and effort reporting should be representative of total compensated activity.
- The reporting should be consistent for all funding sources.
To help improve documentation and limit risk of noncompliance, CHCs should integrate the organization’s time and effort reporting with its payroll software. By doing so, entities may avoid after-the-fact reconciliation and adjustments, eliminate paper activity reports, and expedite the reporting process using technology tools already available to them.
Unfortunately, many CHCs fail to employ this due to lack of system understanding, staff turnover, or a change in payroll service provider. Given the potential future headwinds for CHCs, it is key that a CHC’s data capture automatically integrates with its payroll system. This can help streamline ongoing compliance work and avoid potential reporting issues.
Professionals at Forvis Mazars are experienced in the main payroll service providers used by CHCs and can assist your organization with its time and effort reporting. Our team is eager to help you reach your full potential and long-term growth goals. If you have any questions on time and effort reporting for CHCs, please reach out to our Community Health Center team.
- 1“Best Practices for Effectively Managing Your Grants,” hrsa.gov, May 4, 2022.
- 2“Best Practices for Effectively Managing Your Grants,” hrsa.gov, May 4, 2022.
- 3“Getting It Right – Federal Grant Time and Effort Reporting,” ngma.org, August 18, 2019.
- 4“2 CFR Section 200.430 – Compensation-Personal Services,” govinfo.gov, January 1, 2019.
- 5“Getting It Right – Federal Grant Time and Effort Reporting,” ngma.org, August 18, 2019.
- 6“Best Practices for Effectively Managing Your Grants,” hrsa.gov, May 4, 2022.
- 7“Getting It Right – Federal Grant Time and Effort Reporting,” ngma.org, August 18, 2019.
- 8“Getting It Right – Federal Grant Time and Effort Reporting,” ngma.org, August 18, 2019.
- 9“Getting It Right – Federal Grant Time and Effort Reporting,” ngma.org, August 18, 2019.