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DCAA Compliance

Adequate timekeeping practices are crucial to successfully securing or maintaining a government contract accounting system. 

Often deficient timekeeping is the reason for contractors’ failing DCAA accounting system audits. 


Below are the key requirements for compliant timekeeping systems and practices, which are indeed possible within Timeco:

  • Your timekeeping policy must be well documented and provided to all employees. 
  • Employees must record their time daily. Entering these hours must be done daily. Not after the fact or before the work is actually performed. Timeco keeps an audit of any transactions along with the date it was actually entered. This will allow you to report against these transactions and proactively find employees who are not doing this daily.
  • Time must be charged by day and by project for both direct and indirect accounts. Employees must record all time worked on projects to the proper job numbers and codes. Employees must record all indirect time not identifiable to a given project to proper indirect cost accounts. Timeco labor levels can be setup to track direct/indirect labor accounts as well as projects or job codes.
  • Employees must record all vacation, sick, holiday and other leave time to the proper accounts. Timeco’s leave management system will allow a user to code time off to the appropriate labor level.
  • Employees must account for all hours worked.
  • All project names or job codes that appear in the system should be initiated by finance or the system administrator. Project names or codes must be provided to employees authorized to work on a given project. Timeco security role can allow only finance or system administrators to setup the appropriate labor codes.
  • All employee time must be approved by the employee’s supervisor. In Timeco supervisors can be granted permission to approve timecards. Each employee is assigned a main supervisor as well as backup supervisors. 
  • Corrections to time entries should only be made by the employee. Corrections are approved by the employee’s supervisor. Under unusual circumstances where the employee cannot make the changes to time sheets then accounting or the administrator may make such changes with the employee’s consent. This exception only applies in rare situations. 
  • All time charges must be the employee’s own. All time must be recorded properly based on work completed, irrespective of whether the time is billable or recoverable. Under no circumstance may personnel work on one project and record time to a different project. Under no circumstance may personnel work on indirect tasks and record time as direct costs to a project or vice versa.
  • All employees should be provided documented timekeeping policies annually and annual training is recommended.
  • Time sheets and all corrections must be maintained for a period of at least 2 years. However, project records under a government contract must be maintained for audit purposes for a period of three years after final payment. The requirements for record retention are contained in FAR Subpart 4.7. Timeco does not purge any historical data for active clients.
  • Periodic monitoring of compliance with time keeping requirements should be conducted by audit or floor checks.
  • Password protection must be required. Passwords should be changed periodically not less frequent than 6 months. Timeco security policy has an option to force an employee every 6 months to ensure this.
  • Workforce protection should be initiated to limit access to project numbers, names and codes to employees approved to work on a given project. This is an optional item, but an excellent preventative measure to minimize employees from accidentally charging time to the wrong accounts.
  • Use of an audit trail feature documenting all transactions in the timekeeping system is required. This includes all employees, time charges, dates, project numbers, time stamped submission and approvals. For corrections, it will records changes made, the employee who made the change, date of the change, who approved it, and an optional reason for change etc.
  • Timeco’s distribution of labor reports and hours and dollars reports will allow you to document hours and dollars by employee, by project name or job code and and can be broken down by direct or indirect accounts. This labor distribution should be reconciled monthly to general ledger labor accounts. Failure to do will in most cases cause you to fail a DCAA audit.

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