DCAA Timekeeping Requirements - Part 1

For many new government contractors and/or small government contractors, it may be confusing as to what is required and why it is required relative to timekeeping and timekeeping records.  This is a very important topic to the government and the government contractor should not underestimate the importance or the need to do it in accordance with what the government expects.  In our experience, issues related to timekeeping account for easily the majority of audit findings by the DCAA.  Failure to meet these expectations will most certainly result in some stiff lessons, including delayed payment and/or refusal of future contracts.  So what is exactly required by the government?  

If you look in the FAR, there is not a real specific guideline for timekeeping.  You might look at FAR 31.201-2(d) which states:

A contractor is responsible for accounting for costs appropriately and for maintaining records, including supporting documentation, adequate to demonstrate that costs claimed have been incurred, are allocable to the contract, and comply with applicable cost principles in this subpart and agency supplements. The contracting officer may disallow all or part of a claimed cost that is inadequately supported.

If you look in part 52 of the FAR, there are several paragraphs that indicate records of times worked are required like FAR 52.222-8. The real definition of what is required is found in the DCAA Contractor Audit Manual and The Standard Form SF-1408.  These documents state the requirements that the government is truely looking for.  It seems a little backward that the contractor is being held to mostly meeting FAR requirements but the audit will audit to requirements in the CAM which may not be referenced in the contract.

If you look in the DCAA Contract Audit Manual Chapter 5 you will find very specific requirements that the DCAA will look for in a timekeeping system (Para 5-908 & 909).  This requires procedures for the proper use, controls, preparation of and recording of actual times worked.  DCAA auditors will be looking to see that:

  1. All hours worked for all employees are recorded (this includes all direct and all indirect work)
  2. The proper job assignments are made by different individuals than are performing the work (to the extent practical)
  3. Daily recording of time worked by the employee
  4. An audit trail for any & all changes exists
  5. Employee review and approval of the time recorded
  6. Supervisor review and approval of the employee's time recorded
  7. Evaluation of labor distribution
  8. Reconciliations between the distribution summary and the labor charges
  9. Procedures to assure all hours worked (even if they are not billable) are recorded

This seems fairly simple to read but it is always difficult to implement.  ReliAscent has set up numerous compliant timekeeping systems for our clients and have some "boilerplate" procedures that can be adopted to almost any situation.  ReliAscent is well versed in both Manual as well as Automated or Electronic timekeeping systems.  There are quite a few variables to look at for the contractor to determine which type of timekeeping system will be the optimum for the contractor.  Once a system is selected, it must be proceduralized and then followed.  The difficult part becomes in following the procedures as all employees must be compliant.  Training is a big part but then enforcement of the company's procedure is imperative to assure compliance.  The more employees a company has, the more difficult it becomes to be consistent and, as a result, the higher the risk of the DCAA finding your system non-compliant.  Timekeeping seems simple but it can cause a lot of problems as we've outlined.  Most companies could use some help in this are. 

Look for Part 2 of this series where I will talk about the different types of systems.

Update: 5/20/16

DCAA Timekeeping

ReliAscent would like to remind contractors that we have a large number of helpful resources regarding DCAA compliant timekeeping systems, DCAA timesheets and DCAA compliant timekeeping software. From short videos, to white papers, and our partnerships with companies like SpringAhead, Cappricio Fuzion, GHG and TSheets, we have the expertise and resources you need to help you understand DCAA requirements, install and manage your compliant timekeeping system. Listed below are links to several of these resources:

1) DCAA Timekeeping Requirements White Paper

2) Preparing your Timekeeping System for a DCAA Audit (White Paper)

3) Uncompensated Overtime: a DCAA Hot-Button Issue (White Paper)


1) DCAA Compliant Timekeeping - YouTube Video

2) SpringAhead (DCAA Compliant Accounting System) Demo - YouTube Video

If you would like to learn more about DCAA Timekeeping Requirements and Systems, please click the button, and one of our experts will contact you shortly:

I Need DCAA Compliant  Timekeeping Help!



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