Time and Effort Reporting Under 2 CFR 200.430: What Documentation Supports Salaries on a Federal Award

For many nonprofits with federal grants, salaries are the biggest cost charged to an award, and they need the strongest records behind them. This guide is for anyone who manages federal grant funds and has to make sure every salary charged to a grant has the right records behind it. It covers what the regulation requires, where organizations often fall short, and how this differs from the timekeeping rules government contractors follow. For the full picture of what the Uniform Guidance asks of your books, start with Uniform Guidance Compliance for Nonprofits.

The short answer

Under 2 CFR 200.430(g), salaries charged to a federal award must be based on records that accurately reflect the work performed. Those records must be supported by internal controls, be part of your official records, reflect each person's total compensated activity, and support how each salary is split across awards and other activities.

The regulation does not prescribe a form, a frequency, or a software product. It does set two firm limits: a budget split alone does not qualify as support, and for nonexempt employees the records must also show the total hours worked each day.

The practical takeaway: charge salaries from records of what people actually did, not from the grant budget. If you charge on budget during the year, you need a periodic after-the-fact review that corrects the charges to match the effort.

What 2 CFR 200.430(g) requires

The documentation standards are in paragraph (g) of section 200.430. Older guides often cite paragraph (i), which held these standards before the 2024 revision; in the current text, (i) covers colleges and universities. The records behind salary charges must:

• Backed by internal control. There has to be a process that gives reasonable assurance the charges are "accurate, allowable, and properly allocated" ((g)(1)(i)).
• Part of your official records. The records belong to the organization and are kept as part of its records ((g)(1)(ii)).
• Total activity. They reflect everything the person is paid for, including fundraising, administration, and leave, and never add up to more than 100% ((g)(1)(iii)).
• Federal and non-federal work in the same record. One record covers all of a person's work, not a separate one per funding source. Supporting records kept elsewhere are fine if your written policy defines them ((g)(1)(iv)).
• Consistent with your own policies. The records follow the accounting policies and procedures you already apply to the rest of your books ((g)(1)(v)).
• Support for the salary split. Whenever someone's work is split across more than one federal award, federal and non-federal work, direct and indirect activities, or allowable and unallowable activities, the records show how much went to each ((g)(1)(vi)).

Two more rules shape how you set this up:

• Percentages are allowed. Because a full workload varies from job to job, records may show activity as a percentage distribution of total activity ((g)(1)(viii)).
• Nonexempt staff also need daily hours. Under the Fair Labor Standards Act recordkeeping rules, salary charges for nonexempt employees must also be supported by records of the total hours worked each day ((g)(3)).

If your records do not meet these standards, the federal government may require personnel activity reports with prescribed certifications ((g)(8)). That is the outcome to avoid: it replaces your system with one the agency defines.

Why the budget split is not enough

Many organizations set up payroll on the split from the grant budget: 60% on one award, 30% on another, 10% on everything else. The regulation allows that only as a starting point. Budget estimates "alone do not qualify as support for charges to Federal awards," but they may be used for interim accounting if three conditions are met ((g)(1)(vii)):

1. The estimates are reasonable approximations of the activity actually performed.
2. Significant changes in work activity are identified and entered promptly. Your written policy defines what counts as significant. Short-term fluctuations, such as one or two months, do not need to be considered as long as the distribution is reasonable over the longer term.
3. Your internal controls include periodic after-the-fact reviews of the interim charges, and all necessary adjustments are made so the final amount charged to each award is accurate, allowable, and properly allocated.

In practice, that means comparing what the budget charged with what people actually recorded, and correcting the difference. Here is one employee over one quarter, with $18,000 in salary:

	Budget split	Hours actually worked	Charged on budget	Supported by the hours	Correction
Federal award A	60%	240 (46%)	$10,800	$8,308	−$2,492
Federal award B	30%	200 (38%)	$5,400	$6,923	+$1,523
Other activities	10%	80 (15%)	$1,800	$2,769	+$969

The review moves $2,492 off award A: $1,523 goes to award B, where the work was actually done, and $969 goes to other activities, which have to be paid with non-federal funds. Without effort records, nobody would know the correction was needed.

The simplest way to avoid this correction is to never charge salaries on the budget at all. If salaries are distributed from recorded hours every payroll period, the charge already matches the work, and there is nothing to reconcile at the end of the quarter.

Time and effort vs. DCAA timekeeping

Organizations that hold both federal grants and government contracts, and contractors moving into grants, often assume the two sets of timekeeping rules are the same. They overlap, but the Uniform Guidance is more flexible in a few specific places.

	Uniform Guidance (2 CFR 200.430(g))	DCAA timekeeping
Applies to	Salaries charged to federal grants and cooperative agreements	Labor charged to government contracts subject to DCAA review
Recording frequency	Not prescribed for exempt staff; daily total hours for nonexempt staff	Daily, on the day the work is performed
Unit of record	Hours or a percentage distribution of total activity	Hours by contract or indirect activity
Budget estimates	Allowed for interim charges, with after-the-fact review and adjustment	Labor is charged from recorded hours
Total activity	All compensated activity, not exceeding 100%	Every hour worked, billable and non-billable
Approval	No specific step prescribed; records must be backed by internal control	Supervisor with direct knowledge of the work approves each timesheet

If your organization has both kinds of funding, the simplest approach is to run everyone on the stricter standard: daily time in actual hours, approved by a supervisor. As long as those records cover all compensated activity and drive the salary charges, they also fit 200.430(g). Percentage-based effort reports, on the other hand, would not meet DCAA's daily timekeeping expectations. For the contractor side, see DCAA Timekeeping Requirements: What Auditors Actually Check.

Where time and effort records often fall short

These are general patterns, not a list from any one agency, but each one traces back to a specific part of the standard:

• Records only for grant-funded staff. The standard covers everyone whose salary is charged to an award, and their records must reflect all of their paid activity, not only the grant hours.
• Fundraising and lobbying time hidden inside program time. When someone does unallowable work alongside allowable work, the records have to support that split ((g)(1)(vi)).
• Budget splits that never get reviewed. Charging on budget all year without an after-the-fact review leaves the interim charges as the final ones, which the regulation does not allow.
• Percentages for nonexempt staff without daily hours. A percentage record does not replace the daily hours the FLSA rules require for nonexempt employees.
• No written policy. Several parts of the standard depend on your written policies: what counts as a significant change, which subsidiary records you use, and how often you review. An auditor will ask to see them.
• Records that live outside the books. Effort records kept in a spreadsheet that never ties to payroll or the general ledger are hard to defend as part of the official records.

A note on what may change

On May 29, 2026, the Office of Management and Budget (OMB) proposed a rewrite of 2 CFR Part 200. The continuing appropriations act signed on September 2, 2026 prevents OMB from finalizing that rule through December 11, 2026. Until a final rule is published, the current 2 CFR 200.430 and the terms of each award are what apply.

How WiseCost fits

WiseCost is time tracking and labor distribution software that works on top of QuickBooks Online. Besides government contractors, it is built for nonprofits and other recipients of federal grants that follow the Uniform Guidance. It has a Uniform Guidance compliance preset that sets strict timekeeping controls in one step, tracks each federal award with its period of performance and budget, and posts salaries to each award in QuickBooks Online based on the hours people actually recorded, which is the core of time and effort reporting under 2 CFR 200.430. In practice, that means salaries charged from approved time, not from the grant budget:

• No budget split to correct. For staff who log their time, each payroll period WiseCost distributes each person's pay across the awards and activities they actually recorded, and posts it to QuickBooks Online as a journal entry. The salary on each award matches the approved hours from the start, so there is no budget estimate left to review afterward.
• The Uniform Guidance preset sets the timekeeping controls to a strict starting point: no future-dated entries, no approving your own timesheet, employee certification before approval, and a different approver required.
• Total activity on every timesheet. Each award is its own class or project with its period of performance, alongside internal time for administration and leave. With expected hours turned on, a timesheet cannot be submitted until it accounts for the whole week.
• Approvers who know the work. A program manager can be the approver for their team, and every submission, approval, and change is kept in an audit trail.
• Percentages when your policy allows them. Distributed tracking lets an admin allocate a salaried employee's pay with a set percentage distribution instead of time entries. Because those percentages are set in advance, they work like budget estimates under 200.430(g): your organization still has to review them periodically against the work actually done and correct them. They are not an option for nonexempt staff, who need records of the hours worked each day. The Uniform Guidance preset leaves this setting as it is, so turn it on only if your written policy allows it. With time entries, that review step is not needed.

Your written time and effort policy and your decisions on what is allowable stay with you. The setup steps are in Setting up WiseCost for the Uniform Guidance.

FAQ

The Bottom Line

Time and effort reporting is how a nonprofit proves that the salaries on a federal award paid for work on that award. The Uniform Guidance gives you room to design the records: hours or percentages, budget estimates during the year, your own forms and policies. What it does not allow is charging salaries on the budget and never checking them against what people actually did. Records of real effort, reviewed and reconciled to payroll, are what hold up when an auditor picks a payroll charge and asks what is behind it.

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Official Sources

• Compensation and the standards for documentation of personnel expenses: 2 CFR 200.430
• Internal controls: 2 CFR 200.303
• FLSA recordkeeping for nonexempt employees: 29 CFR Part 516
• Status of the 2026 proposed rule: BDO, What the Continuing Resolution Means for OMB's Proposed Uniform Guidance Rewrite