DCAA Timekeeping Requirements

The Defense Contract Audit Agency (DCAA) is very particular about the methods that companies use to track employee hours.  The goal of compliant DCAA timekeeping is to prevent government waste and fraud.  After all, taxpayer dollars are paying the bills, and the U.S. government must always be held accountable to the American public.

What makes the documentation process of most companies so challenging for the DCAA is that there is often no paper trail of the specific work hours for each employee.  Since a large majority of working Americans are salaried employees and no longer need to punch a time clock, the DCAA would have no proof that the government is being charged fairly and accurately.  Even in cases where government contractors have standardized timekeeping procedures involving time clocks, time sheets, or computer programs, these strategies are often highly susceptible to manipulation.

The eight requirements for DCAA timekeeping compliance

The DCAA provides volumes of highly detailed documentation to all government contractors on the proper methods for tracking labor charges.  One of the most important is the Federal Acquisition Regulation (FAR), which outlines eight very strict requirements for DCAA timekeeping compliance.  But this document is very difficult for many Human Resource Representatives to comprehend fully.

So the DCAA also offers the DCAA Contract Audit Manual as a supportive document meant to help clarify some of the legal jargon in the FAR document.  Unfortunately, the Audit Manual boasts fourteen lengthy chapters and ten different appendices. After a lot of hair-pulling and nail-biting, most reputable government contractors decide to hire a professional bookkeeping service like Techeon whose expertise is in DCAA timekeeping compliance, procedures, and documentation.

The eight requirements for DCAA compliance

According to Section 5-909 of the DCAA Contract Audit Manual, there are eight individual requirements that all government contractors must follow to be DCAA compliant.   At first glance, this doesn’t unusually sound all that complicated to most corporate managers, until they begin reading the fine print.  Here are the eight basic requirements:

1. Employees clocking in or out must be under the observation of a supervisor.
2. Employees must be in possession of their timecard.
3. Employees are responsible for preparing their timecards, and they must be completed using ink.
4. Each employee can only have one timecard per pay period.
5. Employee timecards will have special coding to define specific job identifications.
6. Employees who are direct labor must record their time daily.
7. Corrections to timecards must be made in ink, have an accompanying explanation for the change, be initialed by the employee, and have the proper authorization from a supervisor or manager.
8. Both an employee and a supervisor signature is required to verify the accuracy of the timecard.

However, many government contractors no longer use these types of manual systems for timekeeping.  Many employees keep no record at all of their time spent on the job.  Others utilize computerized systems.  So how do these eight requirements for DCAA timekeeping compliance apply in these types of cases?  That’s where Techeon Business Solutions can help.  Contact us today for more information.