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Frequently Asked Questions Regarding DCAA Compliance and Time Tracking

Posted by Debbie Sabin on Mon, Aug 23, 2021 @ 11:00 AM

*The following post was contributed by Hour Timesheet's Debbie Sabin, as part of ReliAscent's Partnership Network Guest Blog Series. 

The federally funded STTR, SBIR, 8a and SBA programs were all created with the objective of assisting small business in obtaining new government contracts and increasing the possibility of working with the federal government. These programs allow for companies with technical merit to win proposals they would normally not have been exposed to. To participate in these programs, there are rules and regulations that each business must comply with. Most important is the requirement for a specific type of internal accounting (cost accounting), proper documentation, and very specific policies regarding tracking employee time worked.

Below is a list of frequently asked questions asked by small businesses looking to comply with the government’s DCAA compliance requirements:

  • How do I communicate the specific requirements to my employees surrounding DCAA compliance and the importance of timekeeping?
    • The employee handbook typically gives an overview of policies specific to your organization. This document sets the expectations for your employees while stating your legal obligations. The employee handbook must clearly address all critical elements of an adequate timekeeping system regarding the list of DCAA compliant timekeeping requirements.
  • Do employees need to track time spent in activities such as corporate training events or time spent on research and development that has nothing to do with the government contract that is requiring the DCAA compliant timekeeping?

    • All employees must record 100% of the time worked. This is true for all projects, whether working on a government contract, commercial work, or tracking corporate activities

  • How do I break down my time that is not directed to a specific contract or commercial product or service?

    • With contracts that require DCAA timekeeping, employees are required to charge time daily to both direct and indirect cost accounts.

Direct costs are expenses that can be traced directly to a cost objective (a cost objective can be a project, contract, contract line item, or a task).  Indirect costs are expenses that cannot directly be identified with a single cost objective. G&A and Overhead are indirect expenses because they are costs that are incurred to run your company and cannot directly be tied to a single contract.

Benefits such as paid time-off (Vacation, Sick, Holiday Leave) are also considered indirect charges and are required to be tracked for contracts that require DCAA compliant timekeeping systems. The good news is, with Hour Timesheet software, tracking any kind of leave time such as this is very easy and keeps you DCAA compliant.

  • How do I know what codes should be assigned to my employees in the timekeeping software? Wouldn’t it be easiest to just give them access to everything?

    • Project codes must be provided to employees authorized to work on a given project. To follow DCAA timekeeping requirements, every charge must directly relate to a specific contract and a task within that contract.

Whenever the employee completes work or tasks, they must charge it accurately and directly to that project. This is required to avoid falsely overcharging one project and undercharging another. Hour Timesheet can be setup to restrict which codes an employee can charge their time; therefore, an employee cannot charge to a project they have not been assigned.

  • Can supervisors correct or edit a timesheet for an employee?

    • The employee should enter all timesheet entries as well as make any corrections to timesheet entries. In the unusual circumstances where the employee cannot make the changes to timesheets, then accounting or the administrator may make such changes with the employee’s consent.

An audit trail is critical to remaining DCAA compliant. A DCAA auditor will use this audit trail will view each of the employee’s time entries. They will be looking to see when entries were made, when changes were made, and who they were made by. The Hour Timesheet software tool creates an un-editable audit log that will include all the additions, deletions, approvals, and modifications made to your employees’ timesheets.

  • Do timesheets have to be signed by a manager or supervisor?

    • Each timesheet requires two signatures to comply with DCAA compliance regulations. Hour Timesheet allows for online signatures at both the employee and manager levels.

  • How long am I required to keep old employee timesheets?

    • To be DCAA compliant, a company must maintain historical timesheet data for at least two years. Should the DCAA or any government agency require you to produce copies of archived timesheets, they should be available upon request. Hour Timesheet keeps the timesheets indefinitely for all employees, current and past.

  • How do I know that my employees are following the DCAA timekeeping guidelines?

    • We strongly encourage government contractors to conduct their own audit or floor checks randomly throughout the year to monitor employee timekeeping compliance. Unfortunately, DCAA timekeeping compliance is the reason most government contractors fail an audit, but this can be easily fixed with a user friendly, automated timekeeping system.

The Hour Timesheet sales and support team has the experience you need to ensure total compliance. Sign up today for your free 30-day trial (there are no hidden fees or contracts required to sign up).

 

Topics: DCAA compliance, dcaa compliant timekeeping, dcaa compliant timekeeping systems, DCAA time tracking, dcaa time tracking requirements