OMB Guidance Analysis

Summary

OMB released final guidance for time and effort reporting (and other requirements) on December 26, 2013. This guidance supersedes OMB Circular A-122 and various other circulars. The effective date of these requirements for non-federal award recipients is December 26, 2014.

OMB Guidance for time and effort reporting
New guidance from federalregister.gov (2 CFR § 200.430)
Whitehouse.gov grant documents and policy statements

Analysis of changes from OMB Circular A-122



Topic OMB Circular A-122
(Attachment B, Section 8(m))
New Uniform Cost Principles
(2 CFR § 200.430)
Analysis of Changes Our Service
Required documentation for payroll charges Charges to awards for salaries and wages, whether treated as direct costs or indirect costs, will be based on documented payrolls approved by a responsible official(s) of the organization. The distribution of salaries and wages to awards must be supported by personnel activity reports [sub para. m (1)] Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; [2 CFR § 200.430 (i)] The new guidance allows for management to exercise greater judgment to design internal controls to document compliance. We designed our timesheets and journal entry allocation reports so that payroll allocations can be easily traced from approved timecards to the general ledger.

Example Reports:
Time and Effort Report
Journal Entry Allocation Report
After-the-fact determination of activity The reports must reflect an after-the-fact determination of the actual activity of each employee. Budget estimates (i.e., estimates determined before the services are performed) do not qualify as support for charges to awards. [sub para. m (2)(a)] Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: [2 CFR § 200.430 (i)(viii)] ... The non-Federal entity's system of internal controls includes processes to review after-the-fact interim charges made to a Federal awards based on budget estimates. [2 CFR § 200.430 (i)(viii)(C)] Budget estimates can be used for interim purposes so long as payroll charges are adjusted to actual. We prepare a payroll allocation journal entry based on after-the-fact employee time data each pay period. As a result, actual time data is readily available as often as you process payroll.
Accounting for 100% of employee activity. Each report must account for the total activity for which employees are compensated and which is required in fulfillment of their obligations to the organization. [sub para. m (2)(b)] Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must [2 CFR § 200.430 (i)]... Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities [2 CFR § 200.430 (i)(iii)] The new guidance is similar to that of A-122. We prepare a journal entry each pay period to allocate each employee's gross wages across 100% of the employees activity, as recorded on their timesheet.
Documenting supervisor approval of time and effort reports The reports must be signed by the individual employee, or by a responsible supervisory official having first hand knowledge of the activities performed by the employee, that the distribution of activity represents a reasonable estimate of the actual work performed by the employee during the periods covered by the reports. [sub para. m (2)(c)] Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; [2 CFR § 200.430 (i)] The new guidance does not explicitly require supervisory signatures on employee time and effort reports. This was to prevent specific audit findings related to incorrect documentation rather than uncovering weaknesses in internal controls. The timesheets we generate for each payroll contain both an employee and supervisor certification of the accuracy of the employee's time and effort.
Frequency of time and effort reports The reports must be prepared at least monthly and must coincide with one or more pay periods. [sub para m (2)(d)] Not specifically addressed The new guidance does not require a minimum frequency of preparation of time and effort reports. It is advisable for efficiency and ease of documentation for time and effort reports to correspond to pay periods. Our time and effort reports are incorporated into each employee's timesheet so they are prepared as frequently as your payroll is processed.

† The Timeandeffort.com analysis is not authoritative.

About Time and Effort

Time and Effort is a free time tracking software for small non-profits and local governments. We do charge a small fee for organizations with more than 25 employees.

Our service allows you to easily track employee time and effort, automate employee paid-time off accruals, and manage compliance requirements. You can learn more about our service on our home page. www.timeandeffort.com

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