Critical Warning: DCAA compliance is mandatory for government contractors. In 2021, DCAA questioned over $847 million in costs due to inadequate labor accounting systems. Use this checklist to ensure your time tracking system meets all requirements.
High Priority (Critical) - Required for compliance
Medium Priority (Warning) - Strongly recommended
Best Practice (Complete) - Enhanced compliance
Daily Time Recording Requirements
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Employees record time daily
Time must be recorded on the same day work is performed per federal requirements
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Employees personally enter their own time
Supervisors cannot enter time on behalf of employees
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Record all hours worked
Both billable and non-billable hours must be recorded
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No pre-posting or post-dating
Time cannot be entered for future dates or batched weekly
System Controls & Security
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Complete audit trail
All changes, corrections, and approvals must be tracked with timestamps and user identification
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Supervisor approval workflow
All timesheets require documented supervisor review and approval
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Individual user accounts
No shared logins; each employee must have unique credentials
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Dual-signature capability
Employee and supervisor electronic signatures on timesheets
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System prevents unauthorized changes
Post-approval modifications require documentation and re-approval
Labor Distribution & Cost Accounting
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Proper cost objective allocation
Time charged to appropriate contracts, projects, and task orders
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Direct vs. indirect labor segregation
Clear distinction between direct contract work and indirect activities
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Unallowable cost identification
System identifies and segregates unallowable costs per FAR 31
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Job codes match contracts
Labor categories align with contract requirements and rates
Documentation & Policies
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Written timekeeping procedures
Documented policies for time entry, approval, and correction processes
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Employee training records
Documentation showing all employees trained on timekeeping procedures
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Employee acknowledgment
Signed statements acknowledging understanding of timekeeping policies
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Correction procedures documented
Clear process for timesheet corrections with required approvals
Reporting & Reconciliation
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Total time reconciles to payroll
Hours in timekeeping system match payroll records exactly
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Labor distribution reports available
Can generate reports showing labor costs by contract/project
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Exception reports
System identifies missing timesheets, unapproved entries, unusual patterns
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Historical data retention
Maintain timesheet records for required retention period (typically 3-7 years)
Mobile & Remote Work
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Mobile time entry capability
Employees can enter time from remote locations
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Offline capability with sync
Can record time offline and sync when connected
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Location tracking (if required)
GPS or other verification for field work locations
Audit Readiness
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System demonstration ready
Can demonstrate all compliance features to DCAA auditors
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Standard DCAA reports available
Can generate reports in formats expected by auditors
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Floor check procedures
Process for responding to DCAA floor checks and interviews
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Internal audit program
Regular internal reviews to ensure ongoing compliance
Common Violations to Avoid
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Weekly batch time entry
Recording all time at week's end violates daily recording requirement
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Supervisor entering employee time
Each employee must personally enter their own time
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No audit trail
All changes must be tracked and documented
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Estimating or rounding hours
Actual time worked must be recorded precisely
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Budget-based time allocation
Time must reflect actual work performed, not budget percentages