Conducting Appropriate Time Studies

SED continues to stress that the most acceptable way to charge personnel costs is either through detailed contemporaneous time records or by conducting acceptable time studies throughout the year. It is important to understand that time clocks, that acknowledge when a staff member comes and goes, do not meet the requirement of a time study or contemporaneous record. This is only sufficient for an employee that is charged to a single entity or program. For all other staff, staff members need to at least perform time studies, to ensure salary costs are properly allocated between entities or programs.

Time studies are required to be done quarterly for all employees for whom time is allocated across more than one entity and/or program. The time studies must be performed over a two week period each quarter, must be contemporaneously maintained, and the employer must use a different two week period each quarter (e.g. they can’t do the last two weeks of each quarter). 

There are a few methods which can be utilized for reporting employee time. For direct staff (200 and 300 code staff), “functional” timesheets must be maintained, which document the number of hours worked in each program in each shift (according to the OSC auditors, this applies to such staff as floaters). For program administrative staff (500 code staff) who split their time between direct and indirect services (for example, a program director serving part-time as a therapist), then time may be reported in a functional timesheet. For indirect staff (600 code staff), employees need only document time if they are charged to multiple codes. If a staff is charged 100% to a single 600 code (say 605 – office worker), than no specific time studies are necessary as the employee’s time will get allocated to programs utilizing the ratio value method as outlined in the CFR instructions. For internal control purposes, employees should report time contemporaneously, time records should be reviewed and approved by a supervisor, and all documentation must be maintained. Documentation, particularly for employee time reporting is crucial when the entity is under audit. Controls and procedures should be implemented in order to ensure proper documentation and support is maintained. It is also important to note that the use of budgeted time, or time studies performed on an annual basis are not acceptable methods. To ensure that employees are accurately reporting their time, periodic observations should also take place. For electronic time systems, each employee should also be given a unique user identification to help mitigate false time reporting by other employees. Whatever system is utilized to report employee time, it should adequately maintain a record of all manual entries, including overwrites, deletions, etc.

Time reported must be based on actual time spent and effort devoted in each program. Keep in mind, that when the time studies are to be reviewed, there should be proper documentation which supports the conduct and evaluation of the study, ensuring that the time period was properly selected and observations satisfactorily performed and results of the study were also documented accurately and completely. Time studies should be used as the basis for recording employee’s time within the agency’s general ledger and ultimately CFR. 

While other allocation methodologies have been used and accepted by SED and OSC, it is important to understand, SED methodology principally requires time studies or contemporaneous records. Unless you have specific approval you may want to ensure you have supportable studies.