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DCAA compliance requirements for Timesheet

by Admin 5. October 2009 13:10

All Employees (and consultants) of Government Contractors must comply with the DCAA (Defense Contract Audit Agency) regulations and Federal Accounting Regulations (FAR). Failure to comply with such rules may result in penalties and lose government contracts.

DCAA requirements are about implementing procedures for timekeeping (and accounting) in the organization to ensure prevention of fraudulent billing to the government. Note that this means that the submitted timesheets become legal documents of the company.

From the DCAA document DCAAP 7641.90, the primary area of emphasis includes:

  1. Internal control systems 
  2. Management policies
  3. Accuracy and reasonableness of cost representations
  4. Adequacy and reliability of records and accounting systems
  5. Financial capability, and
  6. Contractor compliance with contractual provisions having accounting or economic significance such as the Cost Principles

Timesheet is an important part of DCAA compliance because information generated from timesheets is also used for payroll, billing, project planning, cost accounting and pricing purposes.

DCAA Audits

DCAA has set up a goal of doing unannounced floor checks yearly (and sometimes as often as twice a year) at the government contractor site or the vendor work site. To comply with these audits, various guidelines provided by the DCAA. During these checks, DCAA may talk to the employees and look at whether the timesheets are completed daily (and not done backdated or in the future). If there is a change made to the timesheet, they will like to see the reason for the change.

Also, there is other contractor specific audits that may occur either in the proposal stage (generally for fixed-price contracts) or in project execution stage (for variable price contracts and Time and Labor contracts). These audits may cover accounting procedures, adequacy of the accounting systems etc.

Compliance Criteria

According to research done by Microsoft, no silver bullet solution guarantees compliance with the DCAA. Instead, contractors need to invest in proper procedures using the guidelines of the DCAA and FAR procedures. Note that creating a proper procedure in your company is more important than buying an expensive system that claims to do most of the things for you. Note that DCAA does not mandate the use of any timekeeping system for compliance. Paper-based system or Excel-based timesheet are equally good as long as they comply with the guidelines. The only problem with a proper paper-based or excel based system is that they are difficult to maintain and becomes more expensive in the long run.

Following are the general guidelines (but not limited to) for an accurate time capture system to comply with the DCAA audits.

  1. Timesheet must be filled in each day.

  2. Any change in already saved timesheet should also contain a reason.

  3. The supervisor must approve all timesheet and log all changes.

  4. An auditor may be able to see the history of all changes made to the timesheet. 

  5. The system should be able to create reports regarding the employee timesheet to make sure that they are filled in a timely fashion.

  6. Time charged against each charge code must be done accurately.

  7. All timesheet must be signed (manually or electronically) and a trail is kept. 

  8. No future logging of time is allowed. 

  9. Supplemental documents must be saved and can be produced to the auditors.

How OfficeClip Timesheet handles DCAA requirements

One of the critical aspects for the auditors is to get the information they need at their fingertips. Using a timekeeping system like OfficeClip Timesheet allows compliance in the following way:

  1. Recording time every day: OfficeClip Timesheet has a DCAA option and when enabled time can be saved on a daily basis and the Manager can also create a report of all time recorded even though the timesheet is sent for approval every week.

  2. Any Change must have a reason: Any changes to the recorded time should automatically prompt the employee to write a reason code. This reason code is then recorded in the timekeeping history.

  3. Timesheet Approval: Timesheet allows approval by the supervisor and each approval (or rejection) is recorded.

  4. History of Changes: When the DCAA mode is switched on, all changes to the timesheet are recorded. The recording shows the previous value (before change) and the new value (after change)

  5. Audit Reports: OfficeClip Timesheet has various reports and one specific audit report to give auditors up to date status of the timesheet.

  6. Accurate Charging time against charge code: Each employee can only see the charge codes they are supposed to bill. It reduces some inadvertent billing against incorrect charge codes.

  7. Manual or Electronic Signature: In an adequately audited electronic system, the signature is equivalent to user signing into the system using password and system storing all events in a non-editable format. OfficeClip follows this principle. Also, timesheets can be printed out and physically signed by the supervisor if needed.

  8. Supplemental Documents: OfficeClip allows additional documents to be scanned and stored along with the timesheet for future reference.

Reference: DCAA Real-Time Labor Evaluation Report

Click here to learn more about OfficeClip Timesheet 

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