If you’re a government contractor, you’ve likely heard the term “DCAA-compliant timekeeping.” But what does it really mean—and why does it matter? In this guide, we’ll break down the essentials and show how Hour Timesheet simplifies compliance without the headaches.
What Is DCAA Compliance? The Defense Contract Audit Agency (DCAA) ensures that contractors working with the U.S. government follow strict accounting and timekeeping standards. DCAA-compliant timekeeping means tracking every hour worked—accurately, transparently, and in real time.
Why It Matters: Failure to comply can result in rejected invoices, failed audits, or even disqualification from future contracts. That’s why having a system like Hour Timesheet is critical.
Key Requirements Include:
- Daily time entry by employees Daily time entry by employees is a critical component of DCAA-compliant timekeeping. Employees must log their hours worked each day without delay, ensuring that records are accurate and up to date. This practice not only maintains compliance but also reduces errors and ensures transparency in labor reporting, which is vital for government contract audits. By implementing a robust system that facilitates real-time entries, like Hour Timesheet, contractors can meet these requirements efficiently while fostering accountability among team members.
- Supervisor approval of timesheets Supervisor approval of timesheets is another fundamental aspect of DCAA-compliant timekeeping. After employees submit their daily time entries, supervisors must review and approve the records to ensure accuracy and adherence to contract requirements. This step establishes accountability and prevents discrepancies that could hinder audits or invoice submissions. By utilizing a system like Hour Timesheet, organizations can streamline the approval process, automate notifications, and maintain comprehensive oversight, all while staying aligned with DCAA standards.
- Clear distinction between direct and indirect labor A clear distinction between direct and indirect labor is essential for DCAA-compliant timekeeping. Direct labor refers to hours worked on specific government contracts and must be meticulously tracked to ensure transparency and adherence to contract requirements. On the other hand, indirect labor encompasses tasks that support general business operations, such as administrative duties or training, which are not directly billable to a government contract. By accurately categorizing and documenting these two types of labor, organizations can maintain compliance, simplify audits, and ensure proper allocation of costs. Tools like Hour Timesheet provide features that facilitate this distinction, offering users the ability to assign labor categories, generate detailed reports, and safeguard traceability with audit-ready records.
- Audit-ready records with full traceability Audit-ready records with full traceability are a cornerstone of effective DCAA-compliant timekeeping. These records ensure that every time entry, labor category, and approval step is documented and stored securely, providing an unbroken chain of evidence that can withstand even the most rigorous audits. By implementing a system that automatically captures changes, tracks edits, and logs approvals, contractors can significantly reduce the risk of non-compliance. Furthermore, audit-ready records streamline the reporting process by offering detailed insights into labor allocation and project costs, enabling organizations to maintain accountability and transparency. With platforms like Hour Timesheet, businesses can leverage advanced features such as historical data tracking, exportable reports, and integrated dashboards to simplify compliance and enhance operational efficiency.
How Hour Timesheet Helps: Our platform is built with DCAA compliance in mind—from mobile time tracking to QuickBooks integration and audit trail reporting. Learn more about our DCAA-compliant features and how we support your team.
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