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DCAA Compliance With QuickBooks Software

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.

QuickBooks Timesheet Integration

Why Use Hour Timesheet

Instead of the QuickBooks Timesheet feature?

Detailed audit trail of all timesheet entries. Hour Timesheet contains an activity log that tracks each entry made to the employee time card. The QuickBooks Online time card feature does not.

Multiple supervisor signatures. Hour Timesheet allows for more than one supervisor to sign or approve each time card. Employees in a cross functional (matrix) organization can have each manager approve or reject each timesheet. The QuickBooks timesheet feature does not.

Authorized charges. Hour Timesheet includes the ability to limit employees to only see charge codes they are authorized to record hours worked against. Limiting what the employee can see on the timesheet eliminates the possibility of employees charging to unauthorized codes. The QuickBooks timesheet feature does not.

Reason required. Employees and contractors who don't log time worked daily can be prompted to enter a reason for the tardy entry. Hour Timesheet also requires the user to enter a reason for editing previously entered time on a timesheet The QuickBooks timesheet feature does not.

Correction timesheet process. Hour Timesheet includes a correction time tracking process providing alerts (emails) to supervisors and site admins when correction timesheet data is created.  This feature assures that payroll is notified of any changes that effects payroll cost from prior payroll periods. The QuickBooks timesheet feature does not.

DCAA Compliant. Hour Timesheet is a fully featured software app that checks all of the boxes for DCAA compliance for both small businesses and large. The QuickBooks timesheet feature does not.

Visit our listing in the Intuit Marketplace

With a click of a button Hour Timesheet syncs all of your QuickBooks Timesheet data to/from QuickBooks. Enter new employees, job codes, service items and class list in QuickBooks and use the sync tool to populate the same data into Hour Timesheet. Once time cards are submitted and approved by supervisors, all employee time data is populated back into QuickBooks Timesheet entries.

Question? What kind of data does the Web Connector sync with Hour Timesheet?

Answer: Employee List, Vendors (1099's), Customers & Jobs, Payroll Items, Service Items, Classes

Enter data ONCE in QuickBooks. Use the import tool inside Hour Timesheet to populate your site.  The import tool can be used to update your data ANYTIME you add new data to QuickBooks.

After timesheets are completed, Hour Timesheet will import the data back into your company QuickBooks file by using the import tool as an admin from within Hour Timesheet.

Question: What does Hour Timesheet Send to QuickBooks?

Answer: The Timesheet Export process will populate the weekly time cards in your company QuickBooks file with the following data.

Employee Name, Date of Entry, Hours by Day/date, Customer, Job, Service Item, Class, and Payroll Item charged to on timesheet.

Employee Timekeeping Software for Small Businesses

Employee Timekeeping Software Top 5 Advice Tips

Get it Right the First Time

  1. Make sure your employee handbook includes a section on employee time tracking. Highlight honesty and various examples of timekeeping fraud. Include definitions of work time and expectations from business owners
  2. Train your managers. Hold training sessions on laws and regulations pertaining to FLSA & employee overtime policies. Also train users how to use your company's time tracking software and mobile app.
  3. Make everyone accountable. Require 2 sets of signatures on each time card. Both employees and managers need to sign each timesheet.
  4. Schedule internal timesheet audits Communicate objectives for supervisors who manage employees and need to approve time cards, as well as the definition of total hours and employee time tracking expectations.
  5. Require employees to sign-off on any updates made by management.. All timesheets edits should be acknowledged by the employee. This can include employees using the web based time card app, the mobile time tracking app or users on the time clock.

DCAA Timekeeping Requirements

We've got you covered | Simple Employee real time tracking by Hour Timesheet

  1. Authorized Charge Codes - employee timesheets only display codes assigned by management.
  2. Reason Required - System requires employees to enter a reason for late timesheet entries.
  3. Timesheet Audit Trail - All timesheets keep track of employee timesheet entries and edits. The detailed audit trail that captures every change made to a timesheet.
  4. Daily email reminders- send reminders to those employees who forget to enter time daily or weekly.
  5. Correction Timesheets- After you run payroll there are possibilities that timesheet data might need to change. Hour Timesheet includes a detailed and auditable record of all revised/corrected timesheets.
Additional Resources

Federal Acquisition Regulation Full Download

Federal Timekeeping Policies for Government Contractors (chron.com)

Record-keeping Requirements under the Fair Labor Standards Act

Measure Costs Right: Make the Right Decisions

How To Calculate And Track Overhead Costs

How do I Calculate Overhead Costs?

What Makes Hour Timesheet a DCAA Compliant Time Tracking Software

What Makes Hour Timesheet

a DCAA Compliant Time Tracking Software Solution

DAILY EMAIL REMINDERS
1

DAILY EMAIL REMINDERS

Hour Timesheet will send daily email reminders to those employees who don't enter hours worked daily.

REASON REQUIRED
2

REASON REQUIRED

Employees who don't enter daily time entries can be prompted to enter a reason for the tardy entry. Hour Timesheet also requires the user to enter a reason for editing worked hours previously entered data on a timesheet.

CORRECTION TIMESHEET PROCESS
3

CORRECTION TIMESHEET PROCESS

Hour Timesheet includes a correction timesheet process providing alerts (emails) to supervisors and site admins when correction timesheets are created.

DETAILED AUDIT LOG
4

DETAILED AUDIT LOG

Hour Timesheet includes a real-time detailed employee timesheet audit trail that captures all entries, edits and corrections. The detailed audit trail captures an IP address and a time and date stamp of each entry made to the time card.

CUSTOM SETTINGS
5

CUSTOM SETTINGS

Hour Timesheet includes the option of having an 8-day timesheet for those hourly employee needing to track 9-10 hour days without charging to overtime.

Need some help with setting up your accounting software to integrate with your DCAA (Defense Contract Audit Agency) Compliant timekeeping Software Solution? Ask one of our many referral partners who have decades of experience with DCAA timekeeping requirements and timekeeping procedures and DCAA audit procedures.

Government contracting requires all hours to be tracked by both hourly and salaried employees. Hour Timesheet includes the ability for employees are able to track time again overhead, G&A, B&P as well as any other non-billable codes and billable labor cost.

Check out Hour Timesheet with full DCAA compliance and allow your employees to track time on the internet, mobile app or any remote device.

Check out our  DCAA Compliant Time Tracking Software Solution listing in the Apps for QuickBooks Desktop Marketplace website.

$8/user with NO setup Fees, NO support fees and NO contract.

Start your 30-day free trail now.

Additional Resources

Can managers change employee timesheets?

Google Play Timekeeping App Listing