Department: Finance & Accounting Process Owner: Senior Accountant Last Updated: January 2026
1. Overview and Purpose
Objective: To define procedures for managing payroll allocations to grants, preparing support documentation for reporting and audits, and ensuring time tracking aligns with funding restrictions. This SOP ensures that grant-funded labor costs are accurately charged, documented, and retained for audit compliance.
2. Scope
This SOP applies to all grant-funded staff whose payroll costs are allocated to one or more restricted funding sources. It includes monthly timecard preparation, supervisor approvals, digital signatures, storage of support files, and procedures for high-detail audits.
3. Step-by-Step Process
3.1 Ensure Timekeeping System Reflects Grant Allocations
- Employees must enter time in the organization's timekeeping system and allocate hours across eligible grants and programs
- Time entries must be completed by staff and approved by supervisors before payroll submission
- For salaried staff, time should reflect actual distribution of work across grants or unrestricted time
Reviewer / Back-up: Program Managers / HR Coordinator
3.2 Export Grant Allocation Data Post-Payroll
- After payroll is processed, export employee-level allocation report from timekeeping system
- Sort hours and dollars by employee, grant, and program
- Identify any grants with zero charges or unbalanced splits
- Save file in document management system under payroll period and month folders
Reviewer / Back-up: Accounting Coordinator / Senior Accountant
3.3 Prepare Monthly Signed Timecards for Grant-Funded Staff
- Use electronic signature platform to route PDF timecards for signature
- Timecards must display:
- Employee name
- Period covered
- Grant(s) and percentage of time
- Total hours worked
- Employee signs first; supervisor signs second
- Save fully signed timecards in document management system under "Signed Timecards" folder by month
Reviewer / Back-up: Accounting Coordinator
3.4 Match Timecards to Pay Stubs and Payroll Journal Entry
- Pull copies of each pay stub (bi-weekly or monthly, depending on payroll cycle)
- Verify that the gross wages on timecard match the pay stub amount
- Confirm that the payroll journal entry reflects matching allocation totals
- Flag any anomalies for review
Reviewer / Back-up: Senior Accountant / Controller
3.5 Assemble Support Packets for Reporting or Audit
- For grantors requiring payroll support, compile packets including:
- Signed timecard
- Pay stub
- Payroll journal entry excerpt showing account/class coding
- Label clearly with employee name, grant, and period
- Upload packet to grant-specific "Support Docs" folder in document management system
Reviewer / Back-up: Accounting Coordinator
4. Key Roles and Responsibilities
| Role | Responsibilities |
|---|---|
| Accounting Coordinator | Export allocations, prep timecards, collect signatures, archive |
| Senior Accountant | Review allocations, reconcile across documents |
| Controller | Review complex allocation exceptions or audit responses |
| Program Managers | Approve staff time entries and grant allocations |
| HR Coordinator | Ensure system access and support user compliance |
5. Key Files and Systems
- Timekeeping System – Source of time entries, allocation exports, and pay stubs
- Electronic Signature Platform – Used for routing timecards for signature
- Payroll Allocation Export (Excel) – Tracks grant-level splits
- Signed Timecards Folder – Monthly archive of signed documents
- Payroll Journal Entry – Journal entry supporting payroll costs
- Grant Support Docs Folders – For audit and reporting packet uploads
6. Exceptions and Special Cases
- Hourly Staff Without Allocations: Not required to allocate time unless partially grant-funded
- Late Timecard Signatures: Accounting Coordinator monitors signature completion via e-signature platform. If timecards are delayed, flag and follow up with employee and supervisor. Submit retroactively once complete and document the delay.
- Multi-Grant Staff: Must submit single timecard with full split across all assigned grants
- System Downtime: If timekeeping system is unavailable, paper timecards may be used temporarily and uploaded manually
7. Risks and Controls Summary
| Process Step | Risk | Control |
|---|---|---|
| 3.1 Ensure Timekeeping System Reflects Grant Allocations | Inaccurate allocations may result in noncompliant labor charges or audit disallowance | Timekeeping system enforces timecard entry and supervisor sign-off prior to payroll processing |
| 3.2 Export Grant Allocation Data Post-Payroll | Misalignment between timecard data and reported allocations may result in under- or over-reporting | Allocation reports are archived and reviewed post-payroll before grant cost application |
| 3.3 Prepare Monthly Signed Timecards for Grant-Funded Staff | Missing signatures or incomplete timecards may lead to questioned costs during audit | Signed timecards are required monthly and stored centrally for all grant-funded staff |
| 3.4 Match Timecards to Pay Stubs and Payroll Journal Entry | Variances between documentation sources may indicate incorrect charging or accounting errors | Payroll allocations are reconciled across all documents (timecard, stub, journal entry) each cycle |
| 3.5 Assemble Support Packets for Reporting or Audit | Incomplete or disorganized audit documentation may lead to disallowed costs | Support packets are assembled per grantor specifications and stored in structured folders |
