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Time and Effort Reporting for Commercial Organizations

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Commercial (for-profit) organizations must document salaries and wages charged to contracts and grants by maintaining a labor distribution system for all employees regardless of function. The labor distribution system must account for total hours and charge direct and indirect labor to the appropriate cost objectives in order to accurately identify labor costs:

Internal controls

Timekeeping procedures and controls on labor charges are of utmost concern. Unlike other costs, labor is not supported by external documentation or physical evidence that provides independent checks and balances. It is critical that managers indoctrinate individual employees on their independent responsibility for accurately recording their time. Internal controls over labor charging should meet the following criteria:

Time and Effort Documentation Requirements and Responsibilities

Detailed instructions for time documentation should be established in written company procedures. A manual system would require handwritten pen and ink entries on a paper timesheet reflecting all the days in the pay period. An automated timekeeping system typically would use remote data entry for recording labor charging data and sending it directly to a central computer for processing. Supporting documentation for an automated system would normally consist of computer printouts showing data that appear on source documents, i.e., timesheets, in a manual system. Employee Responsibilities Whether a manual or automated time and effort reporting system is in place, the employee is personally responsible for:

Supervisor Responsibilities

Sample Time Sheet:   PDF Format download Adobe Reader Download Adobe Reader       

Excel Format download MS Excel Viewer Download MS Excel Viewer

Reference:  The NIH Grants Policy Statement addresses time and effort reporting requirements under Allowability of Costs/Activities under Part II : Terms and Conditions of NIH Awards, Subpart A: General.  The specific section is entitled "Salaries and Wages" under "Selected Items of Cost"--page down about 25 pages from top of provided link.


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