DCAA Compliant timekeeping: What you need to know

Getting a government contract is a big win for any business. It can be an excellent opportunity for steady work and revenue.

Keep in mind, though, that there are specific rules when working on these contracts. You’ll need to use a payroll and accounting system that follows the guidelines of the Defense Contract Audit Agency (DCAA).

The DCAA audits government contracts to make sure companies follow timekeeping procedures. The DCAA is the federal government's auditor, and its job is to check that contractors follow Federal Acquisition Regulation (FAR) rules.

This blog will tell you everything you need to know about the DCAA’s timekeeping requirements and introduce you to electronic timesheet software to stay ahead of the game.

DCAA compliance means that a contractor's policies and systems for managing money are according to the Federal Acquisition Regulations (FAR) and the DCAA's Contract Audit Manual (DCAM).

When you get a government contract, the DCAA has to ensure that your company follows all the rules (from both FAR and the DCAA) regarding accounting and employee time requirements.

Documenting employee work hours is the main focus of the DCAA's timekeeping rules. So, you need to set up and keep track of transparent, simple timesheets.

What are the benefits of DCAA Compliance?

The DCAA wants to make sure that companies awarded government contracts follow the rules and don't waste taxpayer money.

What could happen if you don’t follow the rules? You could get a fine or be banned from working with federal government agencies. Under the False Claims Act, it is a crime to turn in false timesheets, and you could spend up to five years in prison for doing this.

Proper timekeeping and compliance with DCAA regulations ensure that:

• Company operations are transparent

• Payments are made to your company and employees on time

• Your business has an accessible timekeeping system

• In the future, you are likely to get more contracts

Take a look at this list of essential DCAA timekeeping regulations to help you stay in compliance.

One: Create a DCAA-compliant timekeeping policy

The DCAA needs a formal policy document that outlines a functional timekeeping system. Consider developing a process or policy guide that describes your company's record-keeping and recording time requirements.

Each employee, including those not working on the government project, must have an updated policy book. You'll also need to provide informal and formal time tracking training to your workforce every year.

The DCAA can interrogate any team member during a “Floor Check.” Everyone on your team must know the timekeeping regulations and processes.

Two: Track time with compliant timekeeping software

All of your employees must keep track of their time every day, on their own, in real-time. They must log overtime, unpaid hours, and paid time off. You can leverage DCAA-compliant time tracking software for time tracking and to calculate labor cost automatically.

Also, with reliable and compliant timekeeping software, you and your employees can add time from anywhere, across multiple devices, and have all the data synced together. You can also make manual entries for timesheets with compliant timekeeping systems.

Three: Set up timesheet approvals

After your team members have tracked their time, a manager needs to review the timesheet and approve it.

Supervisors must review and sign off on timesheets as they are legal documents that are part of government contracts. For each timesheet to be DCAA-compliant, it needs to be signed by two supervisors.

By setting up automatic approval processes with time tracking software, you can send emails to remind managers about timesheets that require their sign-off — saving everyone time and money.

Four: Manage timesheet changes

The DCAA looks closely at every time entry from your employees. The employee must make all changes to timesheet data, recorded in a detailed audit trail, and approved by the manager.

The audit trail tells the DCAA who made the changes, when they happened, and why. To comply with the DCAA, you need a clear audit trail.

Five: Keep a record of timesheets

Companies must keep records of timesheets for at least two years. In particular, the DCAA recommends that you keep timekeeping records for government contracts for three years after the last received payment.

When you keep your business files on paper or a local hard drive, they are more likely to get lost or misplaced. Consider using DCAA-compliant cloud-based software to ensure that your timesheets will be safe and accessible for a long time.

Yes, there is: Hubstaff.

The software allows you to efficiently track your team members' time following the DCAA timekeeping requirements for government contractors.

Benefits of a DCAA compliant timekeeping software

A time tracking system compliant with the DCAA makes managing your team easier and prevents errors. It makes it less likely that costly mistakes will happen. Some of the essential benefits of DCAA-compliant software and apps include:

• Managerial efficiency

• Enhanced accuracy

• Built-in compliance with DCAA timekeeping requirements with no extra steps

Additional requirements of a DCAA compliant timekeeping software

You need to know a few more things to follow all of the DCAA’s timekeeping rules.

• Password restriction: The time tracking system you set up must require each user to have a unique password to access and manage their timesheets. Also, you must require users to change their passwords every six months.

• Record edits: When an employee's timesheet is changed, the software should have a notes section that explains why the employee altered the time entry.

• Audit trail: The timekeeping system must create detailed audit trails that show the record of all changes.

• Timesheet approval: The system needs an approval workflow to ensure that supervisors approve employees' timesheets.

Use a DCAA-compliant electronic timekeeping system like Hubstaff. The time data keeps your organization in DCAA compliance and helps you manage teams, projects, and labor costs.

Keeping track of daily time is simple and precise with Hubstaff. The software is straightforward, and employees can use it on various platforms such as mobile, desktop, web, Android, and iOS devices. Hubstaff is also easy to set up, so you can spend more time winning contracts.

If you have questions regarding the DCAA's timekeeping regulations or how Hubstaff may help you stay compliant, don't hesitate to contact us.

Important Notice: The information in this article is general in nature and you should consider whether the information is appropriate to your needs. Legal and other matters referred to in this article are of a general nature only and are based on Hubstaff’s interpretation of laws existing at the time and should not be relied on in place of professional advice. Hubstaff is not responsible for the content of any site owned by a third party that may be linked to this article and no warranty is made by us concerning the suitability, accuracy or timeliness of the content of any site that may be linked to this article. Hubstaff disclaims all liability (except for any liability which by law cannot be excluded) for any error, inaccuracy, or omission from the information contained in this article and any loss or damage suffered by any person directly or indirectly through relying on this information.