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What Are DCAA Compliance Requirements?

In the world of government contracting, achieving and maintaining all Department of Defense (DoD) standards is not simply beneficial, it’s essential. Given this, understanding DCAA (Defense Contract Audit Agency) compliance and its implications is a fundamental economic imperative for businesses navigating the complex terrain of contracts with the U.S. Government. 

From ensuring accuracy in financial reporting to fostering transparency in contract-specific labor charges, DCAA compliance seizes center stage, making the difference between successfully executing contracts or facing financial and operational pitfalls. For businesses aiming to thrive within this rigorous DoD framework, an in-depth understanding of DCAA requirements, coupled with judicious implementation of related protocols, is nothing short of crucial.

In this article, we will answer the question “What are DCAA compliance requirements?” and explore the best solution for businesses struggling to meet these standards.

Overview of DCAA Compliance

The Defense Contract Audit Agency (DCAA) serves as the government’s watchdog, vigilantly regulating and auditing contracts between private businesses and Federal Government Departments. With the primary responsibility to guarantee the proper expenditure of public funds, the DCAA plays an indispensable role in fostering and maintaining a financially sound, secure, and dependable defense contracting environment.

The mission of the DCAA revolves around performing all necessary audits for the Department of Defense (DoD) and providing accounting and financial advisory services regarding contracts and subcontracts to all DoD entities responsible for procurement and contract administration. This involves a meticulous examination of a company’s financial systems, records, and procedures to ensure adherence to federal regulations, and to prevent fraud.

Companies serving the Federal Government, and notably the Department of Defense, are required to conform to DCAA compliance requirements. This entails preserving accuracy in record-keeping, demonstrating transparency in financial practices, and enforcing fair pricing policies.

The impact of DCAA compliance on a business is profound and multidimensional. Complying with DCAA guidelines is not simply a regulatory requirement – it significantly shapes a business’s prospects in the federal marketplace. The requirements play a decisive role in determining a company’s eligibility for government contracts. Furthermore, DCAA compliance can have a direct bearing on the evaluation of a company’s credibility and reliability, influencing its ability to procure future government contracts.

DCAA compliance is like a business’s passport in the realm of federal contracting. Without it, passage to potential opportunities could be impeded. In contrast, businesses that meet these guidelines not only preserve their eligibility to compete for contracts but also underscore their commitment to fiscal responsibility, paving the way for ongoing, productive relationships with government agencies.

DCAA Compliance Requirements

So, what ar the DCAA compliance requirements? DCAA compliance requirements encompass a wide range of categories, each commanding its own set of expectations designed to uphold the integrity of government contracting. Some of the key categories include:

  • Financial Management: Businesses must maintain a consistent accounting system that follows Generally Accepted Accounting Principles (GAAP) and segregates costs, both direct and indirect, related to government contracts.
  • Accurate Reporting: Contracting entities need to generate accurate, comprehensive, and reliable reports that cover various aspects of the contract, such as incurred costs, billings, and labor hours.
  • Reasonable Pricing: Companies should ensure that their pricing is fair and reasonable, in line with the nature and requirements of the contract, and in accordance with the Federal Acquisition Regulation (FAR).

One of the most crucial aspects of compliance is timekeeping, which requires diligent record-keeping related to employee working hours, breaks, and job costing. Accurate timekeeping is essential to guarantee that labor charges billed to the government are genuine and legitimate. Consequently, the DCAA tightly regulates this area, mandating that businesses follow strict guidelines and procedures.

DCAA time tracking compliance primarily revolves around meeting specific standards for accuracy, allocation, timeliness, and documentation.

  • Accuracy: The time for every worker must be recorded accurately, reflecting the actual hours they worked during the time frame.
  • Allocation: Each worked hour should be correctly allocated to the relevant contract or project. Misallocation or errors can lead to compliance issues and potentially cause overbillings or underbillings.
  • Timeliness: Contractors must fill out and submit timesheets on a frequent and regular basis. Delaying the recording or submission of time can result in a failure to comply with DCAA rules.
  • Documentation: DCAA permits time tracking to be completed manually with paper documentation. However, the use of electronic timecards is encouraged, as they typically provide higher accuracy and simpler audit trails.

To successfully navigate the ins and outs of DCAA timekeeping requirements, many businesses turn to dedicated software solutions like Hour Timesheet. Our DCAA-compliant software streamlines the process by effectively managing labor hours and allocations, ensuring accurate time and attendance tracking, and maintaining thorough documentation of each employee’s efforts – all in accordance with DCAA guidelines.

By offering a suite of tools specifically designed to meet DCAA requirements, Hour Timesheet effortlessly integrates compliance into a company’s daily operations, allowing businesses to confidently meet and exceed auditor expectations.

Hour Timesheet: Your Partner in Ensuring Compliance

Hour Timesheet offers a comprehensive solution to tackle the challenges of DCAA compliance. Equipped with a variety of features ranging from time tracking, leave time management, job costing, location tracking, and mobile time tracking, Hour Timesheet ensures complete compliance with DCAA requirements.

We also provide Android and iOS-compatible applications for easy time-tracking in remote workforces. Moreover, the robust features of our software make it easier to maintain accurate records in line with DCAA guidelines, offering easy documentation for audits, detailed costing of tasks and contracts, alerts, reports, and manager approvals, among others.

Conclusion

The importance of understanding and implementing DCAA compliance requirements cannot be overstated. Firms involved with federal government contracts need to make compliance a priority. Tools like Hour Timesheet help make the process easier and more effective. Our pricing is competitive, at $8 per user per month, with no hidden fees or contracts which includes numerous features integral to ensuring DCAA compliance.

To learn more, visit Hour Timesheet and explore how they can aid your journey towards compliance.

DCAA Compliant Timekeeping Software

DCAA Compliant Timekeeping Software

Having been in the industry for over 25 years, there are a number of key topics that continue to come up when talking with a government contractor about DCAA compliant timekeeping software and requirements and guidelines.  One common theme I hear time and time again is centered around managing correction previously entered time entries as well as enabling someone other than an employee to update an employee’s timesheet. There are many sources on the web and in your google searches that are willing to charge you for FAR training, consulting fees or “compliant bookkeeping. Go ahead, do a little “google research” or just ask one of our many referral partners.

Advice from the experts about DCAA Compliance and Timekeeping Software

Everything needs to be tracked – Time spent on overhead tasks, bid and proposals, training, leave (paid or unpaid) and yes, even uncompensated time should be recorded on a timesheet. Bottom line, all hours worked by employees are required to be tracked by a companies’ timesheet software.

Timekeeping isn’t just for hourly employees -Employees working on contract and in the corporate office need to track hours in order to properly manage DCAA compliance and timekeeping Software . This includes salaried and hourly employees. This includes both labor cost and indirect labor cost (overhead, G&A, B&P)

Corrections on timesheets are okay – Budgets change, mistakes are made, people forget.. that’s why documented timekeeping procedures that include a correction process is imperative.

DCAA Compliant Timekeeping Software: Audit logs are the key – With the internet, all things are possible. Anywhere. Anytime. A detailed audit trail real time edits to all timesheet entries. The time, the place as well as the details.

Do practice floor checks – let your employees know what to expect in the event that the defense contract audit agency does to a floor. Quarterly planned practice floor checks will put your employees at ease.

Just saying it doesn’t make it true – Any software can claim that their software meets DCAA Compliance and Timekeeping Software regulations but we don’t just say it, we guarantee it. Our experts of 20+ years will make sure!

Additional Resources

Measure Costs Right: Make the Right Decisions

How To Calculate And Track Overhead Costs

How do I Calculate Overhead Costs?

Federal Acquisition Regulation Full Download

Federal Timekeeping Policies for Government Contractors (chron.com)

Record-keeping Requirements under the Fair Labor Standards Act

Sign Up today to experience the best DCAA Compliance and Timekeeping Software

DCAA Approved Timekeeping System

DCAA Approved Timekeeping System

Is Your Company Ready?

Most likely, your answer to this question is, “I don’t know”. It's often the case that a company thinks maybe they could be ready for a DCAA audit, but has little confidence that they would pass. On the other end of the spectrum, are you a company who thinks you're definitely ready for DCAA because you have an expensive or robust accounting and/or timekeeping system?

Unfortunately, if you never had DCAA in your office before, then you probably are not ready, regardless of your systems.

Contrary to what you may have heard, you cannot “buy” a DCAA-approved accounting system. No accounting or timekeeping system has ever, or will ever, receive DCAA’s stamp of approval. As a government agency, they will not endorse a product in that manner. In addition, DCAA never “approves” your systems anyway. Instead, they test your end to end system, policies and procedures and determine if it is “adequate”. In a nutshell, they want to make sure that you walk the talk and you do it according to regulation.

How can you prepare for an Audit?

Test yourself

Internal audits (or as we call them “mock audits”) are an ideal way for you to determine where your gaps are and correct those gaps. They are also great to get you ready for an audit as practice. Having an outside party review your accounting system, timekeeping system, chart of accounts, policies and procedures, then test you on those, is the only way to ensure you are ready. Without such a test, you are walking into the battlefield blind. -  Arrowhead Solutions, LLC,

Daily time entry for every employee

Are all employees capturing all hours worked (paid and unpaid)

A detailed audit log or audit trail of every entry made to the employees time card

A system that tracks time by project or job codes

The ability to capture both direct labor cost and indirect labor cost

Supervisor submissions and approvals

Documented timekeeping procedures

All time worked (on government contracts) and overhead is tracked

Read similar post about DCAA Compliant Timekeeping Practices

DCAA Compliant Timekeeping Key Requirements

Advice from the Experts

Tired of Deltek Timesheets?

For more information becoming a referral partner, visit our partner or visit us in the QuickBooks marketplace listing.

Referral Partner Listing

DCAA Assist

Edward Moore

Gov-Con Solutions

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DCAA Compliant Timekeeping Checklist

DCAA Compliant Timekeeping Checklist

Best practices

Timekeeping continues to be a hot item for government contractors including DCAA Compliance. Adequate timekeeping practices are crucial to successfully securing or maintaining a government contract accounting system. Often deficient timekeeping is the reason for failing a DCAA (defense contract audit agency) audits.

The timekeeping system or procedures must be documented in a timekeeping policy or procedure provided to all employees.

All of the key elements of an adequate timekeeping and compliant accounting system must be addressed.

Every employee must record their time daily.

Recording time in advance or days after the fact such as at the end of the week is not acceptable.

All time must be charged

Time must be charged by day and by project and/or indirect accounts. This includes direct labor cost, indirect labor cost and uncompensated overtime.

Employees must record all indirect time.

Hours not identifiable to a given project must be charged to a proper indirect cost account.

All employee leave time must be recorded.

Employees must record all vacation, sick, holiday and other leave time to the proper accounts.

Job codes that appear in the system should be initiated by finance or the system administrator.

Job codes must be provided to employees authorized to work on a given project.

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.

Corrections are approved by the employee’s supervisor.

Under unusual circumstances where the employee cannot make the changes to timesheet, the accountant or administrator may make such changes with the employee’s consent.

All employee time must be signed by the employee.

All employee time must be approved by the employee’s supervisor.

All employees should be provided at least documented time keeping training awareness.

Periodic monitoring of compliance with time tracking requirements should be conducted by "practice" dcaa audits or floor checks.

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.

Check out more about DCAA Compliant Timekeeping @ Edward D. Moore, CPA dcaaConsulting LLC

Hour Timesheet includes all the features for a DCAA compliant time tracking software for both small businesses and large. Employee timesheets are in the cloud are available real time with an online approval timesheet process for supervisors.

Hour Timesheet: The Ultimate Solution for DCAA Compliant Employee Time Cards

DCAA Timekeeping Hour Timesheet

Timesheet Sections The “My Timesheet” can be subdivided into 4 sections

Clock In/Clock Out – this section is OPTIONAL

Hours Worked – this section is required for QuickBooks timesheet integration

Notes/Summary – section for entering daily hours worked notes or viewing leave balance data or timesheet summary overview.

Timesheet Audit Log – non-editable activity log of all entries on the employee timesheet.


Section 1. Clock In/Clock Out

This section is auto populated with employee who clock in/out utilizing the web clock on the Hour Timesheet login page. Daily hours are totaled by calculating the time between “clocked in” and “clocked out”. A user may have as many in/out pairs as required. This feature is optional and is hidden by default if no values are present in the in/out section of the timesheet.

Section 2. Adding Work Hours and Leave Hours

Adding Work Hours - this section contains a set of drop down boxes that are available once the user clicks the “Add Work Hours” button on the timesheet. These codes are referred to as “Employee Authorized Charges”. These selections are designed limited to codes each user is “authorized” to use when charging time on the timesheet.

Adding Leave Hours - this section contains a set of drop down boxes that are available once the user clicks the “Add Leave Hours” button on the timesheet. These codes are the leave types that are available to each user of Hour Timesheet.

Copy Previous Timesheet Codes – this feature allows the user to copy the codes from the previous timesheet period to the current period.

Section 3. Timesheet Notes/Hours Summary/Leave Balance

Adding Notes – there are two types of notes that may be entered in the timesheet. General notes are notes that apply to the entire timesheet. Daily hours worked notes apply to the single entry of time entered for a specific authorized charge code on a specific day.

Hours Summary – This graphic shows the breakdown of hours worked on the current timesheet divided into the following categories 1) Regular Hours 2) Leave Hours 3) Overtime Hours

Leave Balances – Displays the current leave balance for each employee.

Section 4. Timesheet Audit Log

This section of the timesheet is auto populated with each entry into the employee timesheet. The audit trail captures the username of the person who made the timesheet entry, the IP address of the person who made the entry along with a time and date stamp of the entry made. The audit trail is not editable.

10 Signs You Need Web-Based Timekeeping Software

Web-based Timekeeping Software Top 10

top 10 reasons

Reasons why you need Hour Timesheet: The industry’s leading web-based timekeeping software.

You may need a new timekeeping software tool if:

  1. You spend more than 5 minutes each week searching for missing employee timesheets.
  2. Despite having a web-based solution for timekeeping, you still manually enter employee work hours into your third-party payroll software.
  3. Basic math and time management are not strong suits for your employees.
  4. Your non-exempt employees manually track overtime.
  5. Your employees have varying billing rates for different jobs.
  6. Your workforce telecommutes and desires a free time tracking app.
  7. You have found yourself searching for an employee, only to remember two hours later that they took the day off.
  8. There is an employee who is rarely present when needed.
  9. You are tired of wasting paper and killing trees with printed timesheets.
  10. Processing payroll feels more dreadful than going to the dentist.

Our team of seasoned experts, with over 20 years of experience in the time tracking software industry, is eagerly looking forward to hearing from you. We are passionate about delivering top-notch solutions and are dedicated to providing exceptional support throughout your journey. Feel free to reach out to us with any questions or requirements you may have.

We understand organizations aren’t cut from the same mold, that’s why Hour Timesheet lets business owners define your integration needs.

Unveiling the Benefits of Hour Timesheet Integrated with Gusto Payroll

When Hour Timesheet joins forces with Gusto Payroll, the result is a streamlined timekeeping and payroll processing experience that adheres to the needs of businesses of all sizes. Here’s a look at the direct benefits of this powerful integration:

  • Seamless Synchronization: Employees’ hours are automatically synced with Gusto Payroll, which means no more manual data entry errors or discrepancies, leading to precise payroll processing.
  • Compliant Workforce Management: Stay updated with labor laws, as the integration ensures compliance with government regulations, providing peace of mind to employers.
  • Efficiency in Record Keeping: Tailor your reporting with robust data analytics that merge timekeeping data directly into your Gusto payroll reports.
  • Time Savings: Reduce administrative tasks and focus on driving your business forward while the integrated system takes care of the grunt work.
  • User Friendly: Enjoy an intuitive interface designed for ease of use, allowing quick adoption by employees and employers alike.
  • Cost Effective: Eliminate the need for multiple software solutions and reduce overhead costs with an all-encompassing, reliable, DCAA-compliant timesheet and payroll service.

By integrating Hour Timesheet with Gusto Payroll, companies can unlock unparalleled efficiency, accuracy, and compliance, ensuring that payroll processes are handled with finesse. Elevate your business operations—choose this integrated solution trusted by the world’s most innovative companies. Discover the potential by starting your 30-day free trial and see the discernible difference firsthand. Get started with Hour.

Ready to transform your timekeeping and payroll processes? Hour Timesheet offers everything you need—a seamless, efficient, and compliant experience. Don’t let payroll challenges slow down your business momentum. Embrace a solution that’s trusted by industry leaders and start reaping the benefits today.

Experience the full potential of our software with no risk involved. Click the link below to take the first step towards streamlining your business. Remember, every moment saved on administrative tasks is an opportunity for growth and success.

Start Your 30-Day Free Trial Now and witness the transformation in your payroll management.

Questions? Our expert support team is just a phone call or email away, ready to assist you with any inquiries and ensure a smooth transition to efficient timekeeping.

The A – Z Of QuickBooks Compatible Timekeeping

QuickBooks Compatible timekeeping should be as simple as ABC

26 Reasons Why Your Company Needs Hour Timesheet

HTS ABC ListAudit trail – know where, when & who updated each timesheet entry. Accountability is important.

Back-end business logic – leave the thinking to us. Restrict overtime, late entries, absentees & more.

Compatible on any browser and operating system.

DCAA compliant time tracking software – 25+ years of experience. Take care of your business and leave compliance to us.

Eliminate manual data entry – enter all your data one time and in one place

Free trial – 30-day no obligation free trial included when you sign up.

Growing profits – with the price per user so low, you’ll be increasing your bottom line in no time.

Helpful user guides – includes a detailed step-by-step guide of everything you need to know

Integration with QuickBooks– simple one-click timesheet imports to top 3rd party payroll solutions

Job costing – stay informed. The who, what when and why of project management.

Knowledge base – easy to access on our website.

Leave management – let us track your employee leave balances. Delete that excel spreadsheet.

Manager approvals – sign one or sign them all. Supervisors will find this task easy as pie.

No credit card required – no obligations when you sign up for the free 1-month trial.

Overtime tracking – take control of your employees. No more surprises after payroll processing

Price – $8/user. Affordable for small businesses

QuickBooks compatible – simple integration with online and desktop versions.

Real time data – access to real-time data 24/7 from in the office or remote job site.

Save time time it takes to run payroll

Track time – on the web, on a smart phone or even a time clock

Uncompensated pay – track all your employee time, know where those extra hours are going.

Vendor tracking – import your 1099 and contractor users from QuickBooks Desktop

Working window-based web clock

X-tra care –our support team loves to help and we look forward to exceeding your expectations.

You won’t regret it – sign up now and see what everyone else is talking about. It’s almost too easy!

Zero cost for 30-days – Once again…. why not give us a try? We guarantee you’ll love it. The best QuickBooks compatible timekeeping software on the market.

Additional Resources

What is direct labor?

What Is an Audit Trail and Why Is It Important in Accounting?

Utilizing a Timekeeping App Is Crucial To Your Business. Learn Why!

Woman Wearing A Watch With Notebook Blurred In Background

We compensate our employees based on time, and we invoice our clients accordingly. Time is also a crucial factor in tracking our vacations. The ability to effectively manage time is a key attribute of successful businesses. Our enterprises are centered around the concept of time, and our accomplishments stem from its judicious utilization. Continue reading to discover why it is worthwhile to delve deeper into the employee timekeeping applications available in today’s market.

Why is an employee timekeeping app so important to a business?

To maximize your time efficiency, it’s crucial to utilize employee timekeeping apps like Hour Timesheet. Nowadays, time tracking happens online, and with a reliable time and attendance tool, employers gain access to valuable features, including:

  • Identifying tardy employees
  • Job costing
  • Overtime management
  • Automated payroll file creation

These tools streamline operations, enhance productivity, and ensure accurate record-keeping.

Imagine the amount of time wasted on inefficient systems. If you could calculate it, you’d be astounded. Consider how many hours your employees spend on these tasks:

  • Correcting math errors on timesheets
  • Chasing down late timesheets
  • Manually inputting employee payroll data

But with the right time and attendance tool, like Hour Timesheet, these tasks become simple. Employee timekeeping apps, such as Hour Timesheet, are available to make your life easier and eliminate concerns about wasted time. Let technology do the heavy lifting for you!

Let the latest employee timekeeping app technology work for you.

Most small businesses use QuickBooks Online or QuickBooks Desktop to process payroll or create invoices. There are several fields in QuickBooks that you might want to have employees capture time or hours worked against.

Customer Job Data 

This is undoubtedly the most crucial data you’ll need when billing your clients. Understanding the expenses allocated to each client helps you gain insights into your resources and strategically plan your bottom line.

Service Items 

Companies capture these data points in employee time data. QuickBooks then associates these items with a chart of accounts, which serves as a foundational element for your business.

Payroll Items 

Understanding these additional data sources is crucial when requiring employees to capture time entry, whether it be online, by phone, or through a web-based system. The pay type, also referred to as a payroll item, plays a significant role in importing time to various leave types, overtime rules, and distinguishing between hourly and salary pay.

Now that your timesheets are complete, the ideal solution is to effortlessly sync or export your employee time card data to QuickBooks. Hour Timesheet seamlessly integrates with QuickBooks, streamlining this process for you. Learn more about our QuickBooks integration here.

Compliance and Reliability at the Forefront

It’s essential for businesses to not only enhance efficiency but also ensure that every aspect of their operations is compliant with regulatory standards. Hour Timesheet understands this need intimately, providing a solution that is not only user-friendly but also meets the meticulous requirements laid out by government bodies for time-tracking compliance.

With Hour Timesheet, companies can benefit from:

  • DCAA Compliant Timekeeping: Keeping your business in line with the Defense Contract Audit Agency’s regulations.
  • Automated Audit Trail: Providing clear, accessible records needed for governmental audits, thus safeguarding against compliance issues.
  • Accurate Job Costing: Allowing for precise and transparent allocation of employee time to different projects and tasks, crucial for financial planning and reporting.

Enterprises across various sectors, including those highly regulated, trust Hour Timesheet to maintain their legal and ethical obligations without sacrificing operational excellence.

Testimonials That Speak Volumes

Our commitment to delivering a reliable and compliant timekeeping solution is echoed through the experiences of our most innovative clients. Trusted by leaders in industries ranging from construction to consulting, Hour Timesheet has proven to be an invaluable asset for thriving businesses. Here’s what some of our clients have to say:

“Hour Timesheet has revolutionized the way we handle payroll. The integration with QuickBooks and the ability to maintain DCAA compliance has made it indispensable.” – A Tech Industry Leader

Discover the peace of mind that comes with knowing your business is backed by a tool that carries the weight of compliance for you. Choose Hour Timesheet today for a seamless blend of functionality and compliance.

The Bottom Line: Your Time is Invaluable

Don’t let manual processes hinder your business growth. Hour Timesheet revolutionizes the tedious task of tracking employee hours, transforming it into a streamlined and profitable operation. Work smarter, not harder, and let us handle the complexities while you focus on what truly matters – growing your business. Embark on a journey towards flawless time management with Hour Timesheet. Get started now and experience the pinnacle of efficiency and compliance.

Additional Resources

View QuickBooks Online Apps here

View QuickBooks Desktop Apps here

View HTS Mobile Download here

Learn More

Additional Resources

View QuickBooks Online Apps here

View QuickBooks Desktop Apps here

View HTS Mobile Download here

Learn More