DCAA Compliant Timekeeping: What Contractors Need to Know

The Verdict

If you have a cost-reimbursable government contract, you must follow Defense Contract Audit Agency (DCAA) rules. The core principle is 'Total Time Accounting'—every employee must record every hour worked (including unpaid overtime) daily, with a clear audit trail of any changes.

The Golden Rules of DCAA

DCAA auditors look for consistency and control. Your system must prevent retroactive creation of timesheets and ensure that employees control their own time recording.

Daily Entry is Mandatory

"Employees must record their time *daily*. Filling out a timesheet at the end of the week is a fast track to failing an audit."

Critical System Requirements

Excel won't cut it. You need software that supports:

1

Audit Trails

Any change to a time card must capture: Who made the change, When it was made, and a Reason for the change.

2

Project Coding

Time must be charged against specific charge codes (CLINS) authorized in the contract.

3

Employee Certification

At the end of each period, the employee must digitally sign/certify the timesheet is correct.

Total Time Accounting

You must record ALL hours worked, even if you are salaried and only paid for 40. This is to ensure that the effective hourly rate charged to the government is accurate and not inflated.

Frequently Asked Questions

Can I use QuickBooks for DCAA?

Standard QuickBooks Time *can* be compliant if configured correctly, but specialized tools often handle the audit trail and charge codes better.

Do I need DCAA compliance for Fixed Price contracts?

Technically no, but it is best practice. If you ever want to win a Cost-Plus contract in the future, having the system in place now helps.

Pass Your DCAA Audit

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