DCAA Timekeeping Requirements - Blog 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 in 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.  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 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, 5) employee review/approval, 6) supervisor review/approval, 7) evaluation of labor distribution, 8) reconciliations between the distribution summary and the labor charges and 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.  Tech Biz has set up numerous compliant timekeeping systems for our clients and have some "boilerplate" procedures that can be adopted to almost any situation.  The difficult part becomes in following the procedures.  Look for Part 2 of this series where I will talk about the different types of systems including manual and automated systems.