Grant-funded payroll: from time records to the award ledger

Start with the documentation standard

The current 2 CFR 200.430(g) requires records that accurately reflect work performed, supported by internal controls and incorporated into official records. They must account for the employee’s total compensated activity and support distribution among relevant cost objectives. Budget percentages alone are not enough to support final charges. Interim estimates require a reasonable basis, monitoring of changes and an after-the-fact review with necessary adjustments. Check the version and conditions incorporated into each award; older materials cite paragraph (i).

There is no software brand that makes an allocation compliant by itself. The records, review and accounting treatment must agree.

Illustrative: one employee, two awards

This example is hypothetical, not a client result. Assume one salaried employee earns $6,000 gross for a month, with $1,800 of allocable employer fringe costs. Assume the organization’s documented fringe method produces the same allocation as salary, all award charges are allowable, the activities fall within each award period and the reviewer has approved the supporting activity records.

These percentages represent the reviewed activity for the period, not a target chosen to spend down an award. General operations is separate here; whether any of it belongs in an indirect-cost pool depends on the organization’s approved method and award terms. Employee withholdings are part of gross salary, not additional fringe expense.

Suppose payroll was initially mapped 60 percent to Award A, 20 percent to Award B and 20 percent to operations. The supported result requires moving $600 of salary and $180 of fringe from A to B. The total payroll cost remains $7,800. The correction changes the allocation, not the employee’s pay. Retain the original mapping, the support, the review and the correcting entry together.

Make the monthly handoff repeatable

1. Before payroll: agree on the employee, period, program and award codes. Map those codes consistently in the payroll export, the ledger and the activity record. Record who approves changes. Do not assume every platform uses the same field names.
2. During the period: collect activity records through the organization’s established process. Have program leads flag material shifts in assignments while they are happening.
3. At close: compare the payroll register, supported allocation and posted journal. Reconcile gross wages and employer costs separately; reconcile cash and payroll liabilities as their own control. Investigate differences before finalizing the award report.
4. After review: post approved corrections, lock the reviewed period through the organization’s normal close process and keep a dated allocation schedule with the source records. Carry unresolved items into an exception log with an owner and due date.

These are practical workflow suggestions, not a prescribed federal template. Financial records must identify award expenditures and connect them to source documentation under 2 CFR 200.302. Apply the retention requirements and exceptions in 2 CFR 200.334, alongside applicable award terms and any longer governing requirement.

One-page monthly checklist

• □ Confirm the award period, budget, applicable requirements and allocation method.
• □ Confirm matching employee, pay-period, program and award identifiers across records.
• □ Collect and review activity support covering total compensated work.
• □ Check salary and fringe separately for allowability, allocation and duplication.
• □ Reconcile the payroll register to the ledger and the allocation schedule.
• □ Replace unsupported estimates with reviewed results; document correcting entries.
• □ Obtain the designated approval and record the review date.
• □ Tie the award report to the reviewed ledger, retaining explanations for differences.
• □ Store supporting records under the retention schedule; assign unresolved exceptions.

A reliable close makes the audit trail a byproduct of the work, rather than a reconstruction months later.

General operational guidance. The award terms and applicable regulations govern. Praxis does not provide legal, tax-filing or employment-law advice; consult the responsible payroll provider, CPA or counsel for those decisions.