Tracking Timesheets under 2 CFR 200

Uniform Guidance: Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR 200) establishes the standards federal award recipients must follow when charging employee compensation to federal grants.  

Tracking employee time under 2 CFR 200 remains a common compliance challenge. Although the regulation updated long-standing requirements, confusion continues around whether timesheets are still required. 

The specific requirements for employee compensation are found at 2 CFR 200.430, which governs how personnel costs may be charged to federal awards. 

Overview of 2 CFR 200.430 

2 CFR 200.430 includes nine subsections addressing allowability, documentation, and oversight of compensation costs: 

• 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 

Subsections (a) through (f) largely maintain previous cost principles. Subsections (g) and (h) address entity-specific considerations and most non-federal entities should be familiar with the requirements found in these subsections. Most compliance questions arise under 2 CFR 200.430(i). 

What Changed? 

The Uniform Guidance removed the term “time and effort reporting.” This led some organizations to believe that timesheets are no longer required. 

OMB has clarified that organizations with strong internal controls may not need traditional personnel activity reports. However, documentation is still required to support salaries and wages charged to federal awards. 

Required Documentation Standards 

Under 2 CFR 200.430(i), personnel records must accurately reflect work performed and must: 

• Be supported by effective internal controls 

• Be part of official payroll or accounting records 

• Reflect total employee activity 

• Allocate time across all funding sources 

• Follow established accounting policies 

If these conditions are not met, personnel activity reports may be required under 2 CFR 200.430(i)(8). 

Are Timesheets Still Required? 

While a specific format is no longer mandated, organizations must still track how employee time is allocated. Whether called a timesheet or not, documentation must support: 

• Cost allocation 

• Allowability of charges 

• Audit compliance 

In many cases, existing timekeeping systems already meet these requirements. 

OMB’s Intent and Audit Risk 

OMB intended to reduce administrative burden. However, limited guidance has made system changes risky. Organizations that modify timekeeping processes without clear justification may increase audit exposure. 

What This Means for Federal Award Recipients 

Our guidance is simple: 

• Continue using current systems if no audit findings exist 

• Implement corrective action if prior findings have occurred 

Any system changes should be carefully reviewed for compliance with 2 CFR 200.430 and audit readiness. 

Need clarity on time tracking under 2 CFR 200? 

Targeted training can help ensure compliance and reduce audit risk.