Grant-funded organizations, like hospitals, universities, nonprofits, public agencies, carry significant compliance exposure every single pay period. Federal auditors don’t just want to know how grant money was spent; they want proof, tied to real employee hours, signed off and documented. Time and effort reports are required for federal grants, and those reports must reflect actual work performed, not estimates, budget projections, or what was planned at the start of the project.
Most organizations are still managing this with spreadsheets, email chains, and crossed fingers. There’s a better way — and if you’re already using UKG, you may already have access to it.
The Real Cost of Getting Grant Compliance Wrong
Federal grant compliance under OMB Uniform Guidance (2 CFR Part 200) requires organizations to document how employee time is allocated to grant-funded activities. For grants started within the last decade, the burden of proof falls squarely on the organization. Compensation must reflect actual work performed on federal grants, not budgeted percentages.
The stakes are significant. Personnel costs are the largest category of disallowed costs in federal single audits and missing or inadequate time records generally lead to dollar-for-dollar repayment obligations. Failed audits can result in claw backs, disallowed charges, and jeopardized future funding. Even small documentation gaps, such as a few missing periods, an unsigned effort report, can come back with large financial consequences.
Beyond audit risk, there’s a quieter cost: the administrative burden on your people. Manual attestation, chasing signatures, reconciling timesheets after the fact — these tasks drain hours from managers and employees who are already stretched across multiple grants. This isn’t a “nice to have” compliance area. It’s a liability hiding in your payroll process.
Why Most Organizations Struggle with Time and Effort Reporting
Many grant-funded organizations still rely on manual, paper-based, or spreadsheet-driven time and effort (T&E) reporting processes — not because they haven’t tried to fix it, but because coordinating across departments, funding sources, and pay periods is genuinely difficult.
Employees splitting time across multiple grants face the most friction and carry the highest audit risk. Federal grants require after-the-fact activity reports, and 100% effort is defined as all duties within an appointment. When someone is supporting three grants plus general operations in a single workday, selecting the right project codes and ensuring hours to match reality requires both discipline and accessible tools.
The problem compounds at scale. The more grants an organization manages, the more employees involved, the more complex the reporting, and the more room for error. Time and effort reports are completed multiple times per year, with submission deadlines that require strong coordination to meet across a large workforce.
Here’s the key insight: most compliance risk isn’t intentional misreporting. It’s process gaps and a lack of visibility. A supervisor approves timesheets without first-hand knowledge of the work performed. An employee enters the same allocation percentages month after month based on a budget estimate rather than actual effort. A grant code gets configured incorrectly, and nobody catches it until an auditor does. These are system and process problems, not people problems.
Adding to the complexity, the underlying data needed for accurate effort reporting rarely lives in one place. Payroll, HR, and finance data frequently reside in separate systems with different master data structures and no embedded crosswalk logic to reconcile them. When a separate reporting layer sits on top of those systems, pulling consistent, reliable data becomes its own project. For organizations that also rely on scheduling software, that data introduces yet another feed to validate. When the source data doesn’t align across systems, even a well-configured timekeeping solution will produce reports that don’t hold up under scrutiny.
What Grant-Funded Organizations Actually Need
Before evaluating any solution, it helps to frame the need from a business perspective:
- Real-time time capture: Employees must select grant or project codes at the point of entry, not reconstruct their hours weeks later from memory.
- A clear, auditable record: Every allocation, every approval, every change needs a history that auditors can follow without requesting supplemental documentation.
- A process people will actually follow: If the workflow is too cumbersome, people find workarounds. Workarounds create compliance gaps.
- Budget visibility: Finance directors and grant managers need to view spent-versus-awarded data without running manual reports.
- Audit confidence: The goal is to make compliance a background function, not a quarterly fire drill.
How UKG Addresses Each of These Needs
UKG’s platform offers several capabilities that directly solve core business challenges, and they’re built specifically for the complexity that grant-funded workforce management demands.
Visibility into labor allocation
UKG enables real-time distribution of employee hours across multiple grants or cost centers. Using the Project Costing & Budgeting module in UKG Ready, employees can clock time directly to specific grant tasks. Finance and operations teams always know where labor dollars are going with no manual data gathering required.
Automated attestation
Instead of chasing employees for signatures, UKG prompts them directly through configurable workflows tied to pay periods. Supervisors with first-hand knowledge can review and sign off on effort reports within the system, leading to less friction, more consistency, and a complete audit trail.
Audit-ready documentation
Every time entry, allocation, and approval is timestamped and stored. When auditors request documentation, the answer is a report, not a project. The system supports the after-the-fact reporting and certification to ensure Uniform Guidance requirements are met.
Budget tracking
Grant expenditures can be monitored against awarded amounts through visual dashboards, giving leadership early warning before overspending becomes a problem. For a university managing dozens of grants simultaneously, that visibility is the difference between proactive management and a year-end surprise.
It’s also worth noting that UKG’s platform integrates timekeeping with payroll, ensuring that what shows up in effort reports matches what flows through to the general ledger — a reconciliation that auditors will specifically look for.
The Implementation Gap and Why It Matters
UKG has the right tools. But many organizations aren’t fully using them. The gap usually falls into a few distinct areas:
- Module selection: The Project Costing & Budgeting feature that enables grant-level labor tracking is only available in UKG Ready’s Premium bundle, meaning organizations on lower-tier plans may not have access to grant codes, task-level time entry, or compliance dashboards at all. If that module wasn’t scoped into the original implementation, timesheets may lack grant codes entirely.
- Configuration gaps: Even when the right modules are in place, attestation workflows might not require sign-off from a supervisor with first-hand knowledge of the work performed. Certification frequency might not align with reporting requirements. Grant and task codes may be outdated or incomplete. These are the kinds of details that look fine on the surface until an auditor looks closer.
- Training and adoption: Without a clear understanding of what Uniform Guidance actually requires, employees tend to replicate the same allocation percentages period after period based on budget estimates rather than actual effort, which is exactly the pattern that auditors flag as non-compliant. Meaningful adoption requires more than a single internal champion; it requires organization-wide education that ties the “how” of the system to the “why” of the compliance requirement.
- Documented policies: Auditors expect written policies that define how time and effort reporting is handled: frequency, roles, permissible deviations, and reconciliation procedures. The system supports the process, but the process itself has to be defined first. The gap isn’t usually awareness; it’s bandwidth and expertise. Getting the configuration right the first time prevents the manual workarounds, rework, and audit exposure that come from a partial setup.
- Critical data alignment: UKG is most commonly implemented for payroll, and sometimes HR, but accurate effort reporting depends on data that often lives elsewhere. Finance data, budget allocations, and grant award details may sit in a separate ERP or accounting system. If your organization uses scheduling software, that data is another variable. Successful grant compliance requires that these data feeds be in scope from the start of any UKG implementation. Key data elements – employee cost centers, grant and task codes, budget thresholds, and pay basis information – must be consistent across systems. If that data doesn’t all live in UKG, the integration and data governance work required to align it needs to be planned for explicitly, not treated as an afterthought.
Get Started with Our Team
Grant compliance doesn’t wait for a convenient time, and neither do auditors. If your team is managing time and effort reporting manually, working around a partial UKG configuration, or unsure whether your current setup meets Uniform Guidance requirements, the risk is real and it compounds every pay period.
Our UKG consulting team has the platform expertise and compliance context to close those gaps fast. Contact us today to get your UKG Grants configuration working the way it should.
