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State, Local, and Indian Tribal Governments (from OMB Circular A-87)

Support of salaries and wages. These standards regarding time distribution are in addition to the standards for payroll documentation.

  • Charges to Federal awards for salaries and wages, whether treated as direct or indirect costs, will be based on payrolls documented in accordance with generally accepted practice of the governmental unit and approved by a responsible official(s) of the governmental unit.

  • No further documentation is required for the salaries and wages of employees who work in a single indirect cost activity.

  • Where employees are expected to work solely on a single Federal award or cost objective, charges for their salaries and wages will be supported by periodic certifications that the employees worked solely on that program for the period covered by the certification. These certifications will be prepared at least semi-annually and will be signed by the employee or supervisory official having first hand knowledge of the work performed by the employee.

  • Where employees work on multiple activities or cost objectives, a distribution of their salaries or wages will be supported by personnel activity reports or equivalent documentation which meets the standards in subsection (5) unless a statistical sampling system (see subsection (6)) or other substitute system has been approved by the cognizant Federal agency. Such documentary support will be required where employees work on:

    • More than one Federal award,

    • A Federal award and a non-Federal award,

    • An indirect cost activity and a direct cost activity,

    • Two or more indirect activities which are allocated using different allocation bases, or
    • An unallowable activity and a direct or indirect cost activity.

  • Personnel activity reports or equivalent documentation must meet the following standards:

    • They must reflect an after-the-fact distribution of the actual activity of each employee,

    • They must account for the total activity for which each employee is compensated,

    • They must be prepared at least monthly and must coincide with one or more pay periods, and

    • They must be signed by the employee.

    • Budget estimates or other distribution percentages determined before the services are performed do not qualify as support for charges to Federal awards but may be used for interim accounting purposes, provided that:

      • The governmental unit's system for establishing the estimates produces reasonable approximations of the activity actually performed;

      • At least quarterly, comparisons of actual costs to budgeted distributions based on the monthly activity reports are made. Costs charged to Federal awards to reflect adjustments made as a result of the activity actually performed may be recorded annually if the quarterly comparisons show the differences between budgeted and actual costs are less than ten percent; and

      • The budget estimates or other distribution percentages are revised at least quarterly, if necessary, to reflect changed circumstances.

  • Substitute systems for allocating salaries and wages to Federal awards may be used in place of activity reports. These systems are subject to approval if required by the cognizant agency. Such systems may include, but are not limited to, random moment sampling, case counts, or other quantifiable measures of employee effort.

    • Substitute systems which use sampling methods (primarily for Aid to Families with Dependent Children (AFDC), Medicaid, and other public assistance programs) must meet acceptable statistical sampling standards including:

      • The sampling universe must include all of the employees whose salaries and wages are to be allocated based on sample results except as provided in subsection (c);

      • The entire time period involved must be covered by the sample; and

      • The results must be statistically valid and applied to the period being sampled.

    • Allocating charges for the sampled employees' supervisors, clerical and support staffs, based on the results of the sampled employees, will be acceptable.

    • Less than full compliance with the statistical sampling standards noted in subsection (a) may be accepted by the cognizant agency if it concludes that the amounts to be allocated to Federal awards will be minimal, or if it concludes that the system proposed by the governmental unit will result in lower costs to Federal awards than a system which complies with the standards.

  • Salaries and wages of employees used in meeting cost sharing or matching requirements of Federal awards must be supported in the same manner as those claimed as allowable costs under Federal awards.

See sample time and effort report for State, Local, and Indian Tribal Governments:
[Excel Format][PDF Format]

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