Navigating the complexities of time and effort reporting on federal grants can be one of the hardest compliance tasks to get right, especially since Principal Investigators (PIs) and salaried staff aren’t usually accustomed to logging their time and effort in detail. This area is highly susceptible to audit findings, making it critical for non-Federal entities to understand and adhere to OMB guidance (2 CFR § 200.430). This blog aims to help you avoid common pitfalls and ensure your organization meets the necessary standards.

Understanding the Requirements

1. After-the-Fact Certification: One of the critical aspects of 2 CFR § 200.430 is the requirement for after-the-fact certification. This means that records of time and effort must be documented after the work has been performed—not estimated beforehand. The certification must reflect the actual time spent on grant-related activities.

Tip: Implement a regular process for certifying time and effort after the fact. This should include a review by individuals with direct knowledge of the work performed.

2. Certification by Someone with Firsthand Knowledge: It’s not enough to simply track time; the certification must be done by someone with firsthand knowledge of the work. This ensures that the reported time and effort are accurate and reflective of the actual work performed.

Tip: Ensure that supervisors or project leaders who have direct oversight of the work are the ones certifying time and effort reports. This adds a layer of accountability and accuracy to the process.

3. System of Record: Time and effort reporting must be captured in an official system of record. This system should be capable of tracking and storing time and effort data in a way that is accessible for review during audits.

Tip: Utilize a reliable, compliant system for capturing and maintaining records. Ensure that your system is up-to-date and that all relevant staff are trained on its use.

4. Reasonableness and Salary Caps: Compensation must be reasonable for the services rendered, and in some cases, there are salary caps that limit the amount of compensation that can be charged to federal awards. The Uniform Guidance requires that compensation, including fringe benefits, be consistent with that paid for similar work in the labor market.

Tip: For new and ongoing awards from the Department of Health and Human Services (HHS), including those from the National Institutes of Health (NIH), be aware that the salary cap has been updated to $221,900 starting January 1, 2024. Ensure that salaries charged to these grants do not exceed this cap and are aligned with federal guidelines. Keep thorough documentation of how compensation rates are determined and ensure they are compliant with salary cap requirements.

5. Fringe Benefits and Negotiated Federal Rates: Fringe benefits, such as health insurance and retirement contributions, must also be allocated appropriately. If your organization has a Negotiated Federal Rate, it should be used to determine the allocable portion of fringe benefits to federal awards. This rate is negotiated with the federal government and represents an agreed-upon percentage of salaries that can be charged as fringe benefits.

Tips:

• If You Have a Negotiated Rate: Ensure that it is applied consistently across all federal awards. Regularly review the rate agreement and document its application to ensure compliance with federal guidelines.

• If You Don’t Have a Negotiated Rate: You can still allocate fringe benefits to federal awards, but it’s crucial to establish a clear and reasonable method. This might involve developing a fringe benefits rate based on actual costs incurred. Document the method used, and apply it consistently to all relevant employees.

  
  

6. Consistency in Application: Your organization’s time and effort policies must be consistently applied, whether the costs are charged to federal awards or other activities. This includes how salaries and fringe benefits are allocated.

Tip: Audit your compensation practices regularly to ensure consistency across all funding sources. Inconsistent application of policies can lead to non-compliance during audits.

Why Compliance Matters

Failure to comply with 2 CFR § 200.430 can lead to significant issues, including disallowed costs, audit findings, and potential penalties. By ensuring that your organization meets these requirements, you protect your federal funding and maintain your reputation as a reliable grant recipient.

At FEDgrant Solutions, we understand the intricacies of federal grant compliance. Our experts are here to guide you through the complexities of time and effort management under OMB guidance. Reach out to us today to learn how we can help you stay compliant and secure your federal funding.