Although the specifications of DCAA are extensive, their timekeeping requirements are critical to your success with contracts. Failure to meet the terms can lead to significant penalties.
If you are not already aware of the components to DCAA compliance for timekeeping, this quick guide will outline the essential information you must know to keep your timekeeping system DCAA compliant.
What Is DCAA?
Defense Contract Audit Agency, also known as the DCAA, offers various financial and audit advisory services to the United States Department of Defense and other federal entities liable for contract administration and acquisition. The agency operates under the charge of the Under Secretary of Defense.
The DCAA is essential to make sure that each dollar spent on defense contracting is accurately allocated. The DCAA provides regulated contract audit solutions to ensure that all suppliers meet the specific guidelines. These may cover contract parts, including timekeeping.
Advantages Of DCAA Compliant Timekeeping
The DCAA requirements for timekeeping regulate employee working hours’ documentation. From a governmental standpoint, time tracking documents substantiate that the employees did not commit any fraud or waste any time regarding work hours.
DCAA conducts unannounced audits to determine whether contractors abide by the regulations set for timekeeping. Their representatives may also visit your organization and speak to employees to confirm compliance. This audit is often referred to as a “floor check”.
A DCAA audit evaluates companies on government contracts to ensure the following:
- Daily time tracking
- Keep accurate records with audit lines for all changes
- Extensive reporting
- Acquire certain supervisor approvals
When you follow the DCAA timekeeping requirements, it can offer many advantages in addition to safeguarding your government contract.
Here are some of the benefits of DCAA compliant timekeeping:
- Streamlined workflows and processes. Having a solid timekeeping policy allows everyone to prioritize, stay organized, and distribute their jobs into manageable tasks.
- No delayed payments. Your time tracking processes ensure all essential documentation, such as invoices and reports, are promptly sent to your clients.
- Increased efficiency. Frequent time tracking enables you to gauge how employees are spending their work hours and if there is room for increased effectiveness and efficiency.
- Get a permit for upcoming contracts. Passing your DCAA audits with distinction increases your chances of obtaining another government contract in the future.
- Data-driven decisions. Having comprehensive insights into the manner in which employees devote their time allows you to better prioritize tasks while making well-informed decisions regarding future projects.
- More transparency in operations. Employees are responsible for their timesheets, referring to them at any time.
How To Ensure A DCAA Compliant Timekeeping System?
Formulate A DCAA Compliant Timekeeping Strategy
A formal procedure or policy document should be provided to the employees which details the steps for meeting the DCAA timekeeping requirements. This also includes those who are not working openly on government projects. Also, all employees must get an annual review of the time-tracking policies. It is vital that these policies are followed exactly as they are written in the policies & procedures.
Make Sure To Monitor Time Day-To-Day
All employees must submit their time daily and not monitor time before doing so. This helps to ensure the information is of the highest degree of accuracy. Furthermore, supervisors are not permitted to do this on behalf of their employees (unless a situation arises that prevents an employee from submitting their timecard in a timely manner).
Inform Everybody Of The Policy
All supervisors and employees must be familiar with and well-aware of the policy. Any employee operating in the company may be questioned on their understanding of this policy during a DCAA audit. Equally important is that employees should be abreast of any annual amendments to the policy.
Make Notes Of Changes
If a change to a previous time tracking document is necessary, it should include a reason for that amendment. This reason must have the alteration’s description, time and the date it was made. This is what is often referred to as an “Audit Trail”.
Be Precise With Reporting
To have a DCAA-compliant timekeeping system, confirm that employees document every hour of their day, establish whether or not the staff is exempted from overtime pay and take note of their leave times. This includes holidays, sick days or vacations. Instances of time in and out must also be recorded under the correct project name and label.
Approve Time Tracking Info
Once employees complete their time tracking, a supervisor must sign an approval of the time tracking and submit it for the next step of the procedure. This step is essential in order for time-tracking documents to be approved.
Certifying the hours of employees on the timesheet reflects the hours they worked and the suitable cost objective at the close of every work period.
There are various basic certifications concerning the accuracy of time punched and amendments, The time recorded must be reflective of the actual time spent working on the project. Also, it should include uncompensated overtime. Moreover, the employees must be well aware of the repercussions and consequences of falsifying their work hours.
Keep Records Of Data
Companies should keep their timekeeping documents for a minimum of two years in case any information must be verified later. Really, a company should hold on to all data related to a contract until that contract has gone through the contract closeout process.
Connect With A CPA To Ensure DCAA Compliance
Winning government contracts can be a significant victory for any company, presenting exciting revenue opportunities. However, it can also require additional complexities, such as operating with the Defense Contract Audit Agency and abiding by their timekeeping requirements.
Your timekeeping system must be compliant with the DCAA regulations. Certified public accountants (CPAs) can help you enhance your business processes while ensuring your company follows all necessary business laws and minimizing risks.
Professional CPAs can also help you with strategizing, planning and consulting services and provide practical solutions for many contractor issues.