When It Comes to Timekeeping Compliance, March to DCAA’s Drum

In the competitive world of GovCon, timekeeping may seem like a mundane detail as you focus on your mission to support agency clients and build a thriving business. However, to Uncle Sam, timekeeping is an important tool to ensure that American taxpayers get their money’s worth from federal contracts. Failure to comply with strict timekeeping requirements can derail a GovCon’s accounting system adequacy and hinder your market-conquering strategy.

Why Timekeeping Is So Important

Tracking employee hours is important for your own accounting, HR, and strategic purposes. You cannot refine your operations if you don’t know how your team members spend their time.

When it comes to complying with Defense Contract Audit Agency (DCAA) regulations, accurate timekeeping is a matter of regulation.  It shows that you can properly track and accumulate labor costs for federal contracts.  Here is what can result from failure to comply with DCAA procedures:

  • Terminated or voided contracts.
  • Suspension from doing business with the federal government.
  • Listing in the Excluded Parties List System, an electronic record of disbarred parties excluded from receiving federal contracts, certain subcontracts, and certain types of federal financial and non-financial assistance and benefits.
  • Civil penalties, calculated per violation and per invoice. The federal government can recoup the money, and the contractor may pay as much as three times the damage.
  • With a prison term of as much as five years for violating the False Claims Act.

Clearly, timekeeping compliance is critical for your internal operations, legal standing, and reputation with current and potential federal clients.

What Constitutes DCAA Timekeeping Compliance?

The following checklist provides an overview of the most important DCAA timekeeping rules. These apply to both paper and electronic systems:

  • Create a formal policy document that spells out the procedures in place for timekeeping compliance. Make sure staff and supervisors are familiar with the policy and schedule annual training to inform them of updates. DCAA auditors can conduct unannounced inspections called “floor checks” to confirm that employees are actually working, working on the correct project, are familiar with timekeeping procedures, and are keeping accurate timesheets.
  • Record time daily.
  • Make sure each employee has possession of his/her own timecard or unique access to the labor charging system. Employees should record their own time, including vacation, holidays, sick days, other leave, and confirm whether he/she is exempt from overtime pay.
  • Ensure employees attribute hours to specific projects. Project codes should be assigned by a person’s manager.
  • See that time is a record of only work that is completed under total time accounting. DCAA prohibits employees from recording work hours in advance.
  • Ensure that employees sign and supervisors approve time tracking. If a change needs to be made in time that has already been tracked, documentation must include a reason and description of the change along with the date and time it was made. Creating this audit trail is a must.
  • Keep timekeeping records readily available in the event of an audit.

DIY Floor Checks Keep You Ahead of DCAA

Do not be blindsided by DCAA audits. Perform your own internal floor checks for a regular assessment of employees’ timekeeping practices. Make sure everyone is:

  • Entering time daily.
  • Using the appropriate charge code.
  • Signing paper or digital timesheets.
  • Submitting timecards in a timely manner.
  • Know what projects they are assigned to and who is their project manager.
  • Know their job title and duties.

DCAA requirements can be daunting, and timekeeping is no exception. CAVU’s experienced GovCon accountants are well versed in how to set up your system for maximum benefit to your business plans as well as DCAA compliance. Contact us to find out more.