DCAA compliance requirements for Timesheet

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/or lose government contracts.

DCAA requirements is about implementing procedures for time keeping (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 and need to be treated as such.

From the DCAA document DCAAP 7641.90 (http://www.dcaa.mil/dcaap7641.90.pdf ), DCAA's major 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 financial 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 has setup 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 mentioned as to why those changes are made.

In addition, there are 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.

According to a research done by Microsoft, there is no silver bullet solution that guarantees compliance with the DCAA. Instead contractors needs to invest in proper procedures using the guidelines of the DCAA and FAR procedures. Note that creating 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 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 that can be followed (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. All timesheet must be approved by the supervisor and all changes logged
4. An auditor may be able to see the history of all changes made to the timesheet
5. System should be able to create reports regarding the employee timesheet to make sure that they are filled on time
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 save and can be produced easily to the auditors.

One of the most important aspects for the auditors is to get the information they need at their fingertips. This also reduces painful delay in the future. Using a time keeping 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 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 save time will automatically prompt the employee to write a reason code. This is then recorded in the timekeeping history and cannot be changed.
3. Timesheet Approval : OfficeClip Web Timesheet allows approval of timesheet 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 is 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 Charg ing time against charge code - In OfficeClip Timesheet each employee can only see the charge codes they are supposed to bill against. This reduces some inadvertent billing against incorrect charge codes.
7. Manual or Electronic Signature : In a properly 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. In addition, timesheets can be printed out and physically signed by the supervisor if needed.
8. Supplemental Documents : OfficeClip allows supplemental documents to be scanned and stored along with the timesheet for future reference.

 To see a video on how the OfficeClip Timesheet works with DCAA, click below: