A Guide to Incurred Cost Submissions

Obtaining a contract with the Department of Defense (DoD) can be a great win for any business. When you do have a contract with the DoD, you can typically expect that it will be long-lasting and provide you with a good revenue stream. As part of signing any DoD contract, you will need to fully understand your requirements for seeking reimbursement for costs. Part of this can include knowing how to follow the proper protocol for incurred cost submissions.

Why Do You Need to Submit Incurred Costs?

The DoD frequently has contracts with companies that will provide a reimbursement for costs incurred by the company. This can include wages, benefit allocations, material and inventory costs, and other expenses related to providing the product or service. Due to the size of the DoD, they frequently partner with the Defense Contract Audit Agency (DCAA) for routine and targeted audits. These audits will seek to ensure that the incurred costs were filed properly and accurately. This is why companies who work on government contracts must ensure that all processes remain DCAA compliant, in the case that an audit is performed.

What Are Examples Of Incurred Costs?

When you are going to submit an incurred cost report, it is important to know what costs are frequently included. In general, incurred costs should be any costs that were necessary for you to provide the DoD with the agreed products or services. These can include direct costs such as labor, benefits, and materials. It can also include indirect costs such as allocation of overhead spending, security, and administration. The programs offered by Hour Timesheet can help you better understand what your incurred costs are, by making it easier for employees and contractors to track the proper time. Plus, Hour Timesheet integrates directly with QuickBooks , Gusto and ADP, to make payroll and accounting processes more efficient.

Who Is Required To Submit An Incurred Cost Submission?

An incurred cost submission is generally required for any vendor that performs services for the DoD. There are carve-outs for this requirement that could change your requirement based on the type of contract that you have in place. Most of the time, you will need to have these reports sent in by June 30 following the end of the prior fiscal year.

What Needs To Be Included In The Submission?

The purpose of the submission is to ensure that you are reimbursed for any costs that you incurred for providing the service to the DoD. You should always include all direct costs and provide any information that you have to support your expenses. This typically will largely include receipts from inventory suppliers as well as payroll registers. The products and services offered by Hour Timesheet can help make it easier to keep records and stay DCAA compliant while ensuring the right information is included in your cost submission.

There are also going to be indirect costs that can be harder to allocate. For these, it is important to list all of your indirect costs and also complete any supporting schedules that are needed to validate the costs you incurred as well as the fair amount to have reimbursed for the DoD.

What Happens If I Am Audited By The DCAA?

The DCAA frequently audits vendors. These can be random, targeted, or completed on vendors that have not gone through the process in a while. A large part of the process for a DCAA audit will aim to verify that the internal cost submissions were fair and accurate. To ensure that you are prepared, you should always keep your records and supporting schedules handy so you are able to answer any questions that can arise. Completing your own internal audits can also help with overall preparation. If you’re not sure your company meets DCAA compliance requirements, Hour Timesheet offers resources to help.

Ultimately, having a contract with the Department of Defense can be a great deal for any business. While there are a lot of opportunities to grow with the DoD, the contracts can be complicated and often require that you send in an incurred cost submission at least once per year. This will be a large factor in determining the revenue you receive as part of the contract. When you need help with your incurred cost submissions or any other support with your DoD contract, contact Hour Timesheet to learn how we can help your company with DCAA compliance.

DCAA Compliance With QuickBooks Software

When you are in the business of federal government contracts, DCAA compliance is non-negotiable. DCAA stands for the Defense Contract Audit Agency. QuickBooks provides an accounting package that is well suited for small to mid-sized businesses looking for DCAA compliance. QuickBooks offers two options and several different versions depending on your unique business requirements. QuickBooks offers both a desktop solution and an online tool, and either can be set up to be DCAA/Federal Acquisition Regulation (FAR) Compliant, especially with our DCAA compliance checklist. The keys are Job Costing and Labor Distribution.

DCAA Contracts

Potential government contractors who wish to bid on certain types of contracts should know that although the contracts vary, there is a difference between direct costs and indirect costs.

A direct cost is a cost that can be tied directly to the production of goods or services. A direct cost may be variable. An example of a direct cost is labor cost or manufacturing supplies.

Indirect cost allocations include overhead expenses such as rent and insurances and general expenses like accounting department costs. Indirect costs are harder to pin down and harder to allocate to a specific project or item. Using a timesheet tracking application in conjunction with an accounting package like QuickBooks, you can better control the indirect cost allocations, particularly for general and administrative expenses, to the correct cost objective.

One type of DCAA contract is called a cost reimbursable contract, where the direct cost and a percentage of the indirect costs are paid. This type of contract requires the accounting system approval under FAR subpart 16.3.

What is QuickBooks?

QuickBooks is an accounting software solution that allows for integration across multiple platforms to make payroll quick and easy. They have two main products that make their service worthwhile.

QuickBooks Desktop

This interface of web-based time tracking software and payroll makes QuickBooks Desktop an ideal tool for DCAA Compliance. We base this on our experience with hundreds of clients over several decades. Furthermore, the QuickBooks Desktop integrated payroll module permits the charging of time directly to the General Ledger. This includes Customer, Job, and Service Items, which are immensely beneficial.

QuickBooks Online

QuickBooks Online is a cloud-based solution that is not, at the outset, designed to meet the FAR and DCAA requirements and has some limitations. The good news is that there are ways to make the QuickBooks Online system meet all the government’s requirements without too much effort.

What is DCAA Compliant Accounting Software?

DCAA-compliant accounting software is software that meets DCAA requirements. Your chosen accounting package – in this case, QuickBooks is set up to meet the requirements. Timekeeping and the allocation of costs are of particular importance. Consequently, QuickBooks Time Tracking software integration is an essential aspect of DCAA compliance.

Refer to DCAA compliance explained for more information.

Any accounting package set up to meet compliance requirements will be subject to strict internal controls to ensure financial integrity. One of these internal controls should be an internal accounting system audit regularly. There should also be regular checks on a monthly basis to see that all the income and expenditures balance.

The Benefits of Being DCAA Compliant for Small Businesses

If you are DCAA compliant, you may be one step closer to securing funding from the federal government programs SBIR and STTR. These programs gear towards supporting innovation and technology in small businesses. QuickBooks with Hour Timesheet will be invaluable in pursuing this kind of opportunity.

Is QuickBooks DCAA Compliant?

Yes, QuickBooks can be set up to be DCAA compliant. There are three areas to consider:

Chart of Accounts establishment

Flow of transactions

Cost and Computations

It’s important to note that one should always bear Generally Accepted Accounting Principles (GAAP) in mind when analyzing your accounting system.

Even if you understand all the regulations, it is still best to refer to the DCAA compliance checklist. Where possible, seek professional assistance! Be ready to implement policies and procedures that need to be applied consistently across your business.

Keys to Compliance

Employee time tracking posted daily with required explanations for edits and record locking.

Printable timesheet reports.

Policies & Procedures oriented toward FAR Compliance Criteria found in DCAA’s SF-1408 pre-award audit checklist.

Consistently applied labor dollar distribution accommodating uncompensated OT for salary exempt personnel.

Indirect Cost Pools and the ability to compute and forecast Indirect Rates applied to Direct Costs under Cost Reimbursable Awards.

Progress billing + Cumulative dollar values reported against award ceilings tied to cost proposals.

Identification and segregation of Unallowable Costs as defined per FAR 31.205.

This isn’t a comprehensive list, but it gives a good idea of what to expect. One of the best ways to help navigate DCAA compliance with timekeeping and accounting systems is to partner with a company that has a demonstrated knowledge of government contracts. It can also be helpful to review multiple services and look for important features in DCAA compliant time tracking systems.

What Happens if You Fail a DCAA Audit?

You may lose your contract or face a suspension of payment. Be assiduously aware of remaining compliant. Floor checks are routine, and timekeeping records are an essential part of your compliance. A floor check is the DCAA’s way of verifying your employees.

One way to help ensure you pass your DCAA audit is to get any requested information to your auditors quickly. This can speed up your audit, and help ensure the DCAA auditor has all the information they need. In order to do this, it’s best practice to keep excellent records and track every process and transaction. Hour Timesheet allows businesses to keep these kinds of records, in a convenient, cloud-based place.

We Can Help

Hour Timesheet isn’t just a timekeeping software provider for government contracts looking to pass a DCAA audit. We also partner with dozens of CPA firms and consultants who can assist you with the entire life cycle of getting a DCAA-approved accounting system. Give us a call today! We can introduce you to our extensive list of experienced partners.

Hour Timesheet Tracking Software and The Staffing Industry

The responsibilities of a staffing firm go beyond the fulfillment of job orders. As a staffing firm, you will be charged with ensuring that your client is looked after and that you retain your best candidates. To enable you to do so will include having timekeeping software, such as Hour Timesheet. Using electronic timesheets will speed up the invoice process and streamline your payroll process. But it will also offer several other benefits, including the following. Continue reading to find out why Hour Timesheet is the perfect fit for firms looking for a Timekeeping Software designed for the staffing industry.

Straight-Forward Entry & Corrections

Hour Timesheet features a highly user-friendly format for any user to input their name and hours for each client. This is designed to be done with minimal interaction or navigation. Our mobile app helps employees easily track time while working, whether at home, in the office, or at the client’s location. Once the time is entered via the Hour Timesheet Mobile app, it’s available on any web-browser for your review.

Making corrections is straightforward with Hour Timesheet. Staffing agencies need software and a mobile app that allows the user to make corrections quickly. Additionally, when the correction is made, there needs to be a complete audit trail for reconciliation purposes, precisely what Hour Timesheet offers.

Integration with Payroll Systems

Staffing companies often look for payroll and accounting systems that can integrate with their timesheets. Hour Timesheets embedded payroll feature saves a significant amount of manual rekeying overhead, which adds cost and risk.

Configurable Approval System

An efficient time tracking software program should include a function where managers receive an email every time a timesheet is submitted for approval. Or they should be able to choose daily consolidated updates for larger volumes. This way, they are prompted automatically for approvals. With Hour Timesheet, when they login to the portal, the approval or denial process for timesheets is accessible with just a click. Managers can add notes where needed.

The approval needs of staffing firms will change depending on the size of their workforce. That is why a configurable approval system is essential. As an example, a staffing firm with a large workforce will have several approvers at several different levels; the timesheet solution should be customizable to meet their needs and ensure automated and seamless steering at each stage. Hour Timesheet offers this kind of customizable software.

Timesheet Software and the Staffing Industry

Time tracking software is essential. It shows employers how long it takes to complete tasks and allows you, the manager, to monitor projects. Yet, with so much choice of time tracking software currently available on the market, the responsibility falls on the manager to find the right product that suits their needs and helps their staffing agency grow. Hour Timesheet’s configurable, user-friendly software is the ideal solution. For more information, contact us today. We’d love to offer you a FREE 30-day trial of our software, because we know you’re going to love it!

Integrated Billing with QuickBooks for your 1099s

Even before the rise of the pandemic, contractors were a growing part of the U.S. labor force. In 2018 contractors made up 20% of the labor market, with a prediction that contract workers could make up half of the American workforce within a decade. Tracking 1099 timesheet data with simple QuickBooks Integration is simple with Hour Timesheet

What Is A Contractor?

Contractors are professionals who provide skills or services to companies for a set period. They may be employed for a set number of hours, a specific time frame, or the duration of a project. Unlike full-time employees, companies have no payroll tax obligations, with no responsibility for the employer to offer benefits or even provide supplies to independent contractors. They can be self-employed and work independently or run their own limited company.

Why Are Companies Hesitant to Hire Contractors?

Employees and contractors are paid differently. Contractors or 1099s (known to the IRS) are treated as accounts payable in QuickBooks. In this system, a Bill has to be created and paid for each 1099 in the company file for each billing period. This can create tremendous work and be an extremely burdensome process if a company employs many contractors or vendors. But thanks to a new feature offered by Hour Timesheet, this type of heavy data entry is a thing of the past.

What Features Does Hour Timesheet Offer?

The Hour Timesheet software integrates with QuickBooks, and enables the contractor to input time against customers and jobs on their timesheet. When the data is exported to QuickBooks, the Bill for the contractor’s expense is already complete. It’s that simple and straightforward. Gone are the days of creating a Bill and paying it manually with each contractor and vendor.

Also, QuickBooks recommends that you set up your contractors as vendors. This way, QuickBooks can track all their related payments. Therefore, when you, their employer, need to complete their 1099, you’ve already got their information together in one place.

How Can This Help Businesses?

The answer is simple: it can save time! A company’s accountant does not have to enter each Bill for their vendor expenses manually. And with the current trend being corporations moving away from employees and moving towards 1099s for their workforce, Hour Timesheet’s software becomes even more valuable. It will prove to be a tremendous asset for businesses’ accounting workflow process as they move into this post-COVID contractor work environment. Integrated Billing with QuickBooks for your 1099s makes invoicing your clients simple with Hour Timesheet.

Is Hour Timesheet’s 1099 Integrated Billing Feature DCAA Compliant?

Nothing has changed concerning time tracking. Every employee, including contractors, must track their hours to remain DCAA compliant. Hour Timesheet’s software makes it easier for companies to choose vendors for their project needs because they’ll be able to track their hours and then bill them efficiently.

For more information on how you can access Hour Timesheet’s integrated billing feature for contractors, contact us here.

New Location Tracking Feature in Mobile App

Whether you’re a contractor, manager or member of a team of employees geographically spread out, you can benefit tremendously from using Hour Timesheet’s location tracking feature. There are several advantages of this feature but it’s important to first learn how it works.

How does Hour Timesheet’s Location Tracking Feature Work?

Hour Timesheet’s location tracking feature is only available when using our mobile app. When a user log’s in, the feature will indicate from where they logged in and at what time. The same applies for when they logged out, all users can see exactly where the person was when this action took place.

Who Will Benefit Most From The GPS Time Tracking Feature?

GPS tracking is perfect for contractors working directly from home or field workers who need to work outdoors or at site. For example, construction workers might use this feature when clocking in or out at a job site. Hour Timesheet’s GPS is perfect for night-nurses who are working at a patient’s home. There are so many different kinds of employees that do not work in traditional offices who could benefit tremendously from this feature.

What Are The Advantages of GPS Time Tracking?

1. Transparency If a company uses Hour Timesheet’s time tracking software with GPS, everybody has a clear understanding of who is doing what. The GPS tracking feature will prove that an employee was on the clock and on location, exactly where they said they were. The proof is in the real-time reports.

2. Accuracy With transparency comes accuracy. When an employee knows that they are being monitored they’re more likely to make less mistakes and follow the rules.

3. Data to Support Client Billing The greater quantity of validating data you have to provide your client, the better your chances are of getting paid on time. Often accounting departments will delay the payments because they’re trying to locate more information regarding your bill. With geolocation data, you’ve lent a much greater amount of proof to the accuracy of your billing. And with our QuickBooks integration, billing will be a breeze. For more information on how Hour Timesheet’s location tracking feature can help your business contact us here.