Who Is The DCAA?
Signing a contract with a government organization is always a big deal. Cooperation with someone so important brings many benefits, also financial, to the business. However, when deciding to work with government organizations, you need to make sure you and your employees are following DCAA requirements.
So what is DCAA and why is it so important to comply with its requirements? DCAA is Defense Contract Audit Agency. It was established in 1965 and it performs audits of contracts of DOD (Department of Defense). Some government organizations may have their own internal agencies for performing audits but others may also use DCAA.
Following DCAA compliance is crucial when working on a government contract. It helps to keep your business from failure and make sure things are buttoned up.
What Is DCAA Compliance?
If you’re a government contractor, you should be particularly interested in DCAA compliance. DCAA compliance means that your company is following guidelines and recommendations set by the United States Government. It is required in order to avoid fraud in terms of worked hours and to make sure taxpayers’ money is spent in a proper way. It’s all about legitimate financial management.
These are the specific requirements and they concern accounting and timekeeping rules. In general, it means that your company has all the financial documentation and reports. These may include financial statements, contracts, timesheets, tax returns, invoices or any other data that is necessary for DCAA compliance. So when DCAA sends its agents for an audit, they can clearly see how your employees perform their work duties and how the money is being spent.
It’s extremely important because being DCAA compliant means the Agency has a proof of your activities and can see that your company’s procedures and policies are coherent and well-established.
Since as a government contractor you’re working with the taxpayers’ money, you have to be able to easily control and monitor how it is used under the contract. That’s why you need to have all the information in the form of reports. Also, you’ll need these reports for audits.
DCAA audits may happen at any time, even when you least expect them. Audits main goal is to check all the costs involved in your work. For more information on DCAA audits, you can visit DCAA official Contract Audit Manual.
There are various types of audits but the two most likely to happen audits are Pre-Award Survey, which aim is to demonstrate that you meet the criteria for working for the government, and the Floor Check, during which an Agent will check if everything works according to the requirements.
You can find all the information about DCAA compliance and audits on DCAA official website.
DCAA Timekeeping Requirements
To be DCAA compliant, you must be sure that your company is following DCAA timekeeping and financial requirements. At TimeCamp, we are aware of the fact, that some of our users are government contractors. For that reason, TimeCamp is a software that enables you to be compliant with the requirements.
DCAA compliant timekeeping software with features which not only can help you in managing timesheets but also in creating accurate financial reports.
But having the right software doesn’t mean you’re DCAA compliant. See our guide below on how to actually be compliant with the DCAA timekeeping requirements.
Every requirement on the following list includes TimeCamp’s features appropriate for the particular guideline. Make sure to check our guide to ensure you have the full documentation. This will help you be ready for an unexpected audit.
1. Everyone must be familiar with timekeeping procedures
Every employee in your company has to know timekeeping procedures and be able to outline all the rules. They should know why and how are you using time tracking software.
Not only is this helpful in maintaining order in reports and documentation but it is also necessary for unexpected audits.
Timekeeping in TimeCamp is really easy and your employees don’t need any training. All you have to do is set clear and strong rules on how to use the software.
2. All employees have to track time
It’s obligatory that everyone tracks time. DCAA regulations clearly state that they apply to every employee. There are no exceptions. Thus, all employees need to follow the rules and track time as this gives the government important insight into how long and on what people worked.
In TimeCamp, you can see which of your employees record their work. They can also use the desktop app which automatically tracks all activities.
3. Overtime must be recorded
Overtime is part of labor cost which means it needs to be included in reports. TimeCamp allows you to set a specific budget or time for tasks and projects so you don’t exceed the estimates. You can monitor the progress and get informed whenever employees start working in overtime.
4. Labor cost vs actual number of hours worked
When working in compliance with DCAA requirements, employees will get paid based on hours they actually worked, not the hours they get paid for.
With TimeCamp you can see exactly how many hours your employees worked. It is all visible in timesheets so you can present all the records during an audit.
5. Properly allocate time to tasks and projects
It’s very important that every task and project have properly allocated time so that the government can clearly see how much time was spent on each activity. It’s essential that you are able to show precisely what and for how long people have worked.
TimeCamp helps you allocate time to tasks and projects as it works in the real-time, is accurate to one second, and shows detailed information on tracked time – every activity, precise time, and all logs. Also, you can assign people to tasks and projects to be sure these are performed by appropriate people.
6. Time-off must be recorded
If you’re paying your employees for holidays or sick leave, you need to include that in your reports. DCAA requires you to keep records of paid time-off.
TimeCamp allows you to track time-off, no matter what type of absence it is. You can easily manage attendance in our software and later provide detailed records to the person performing an audit.
7. Have clear approval process
When you have a clear timesheet approval process, you can save a lot of energy and sanity on paperwork. Such a process allows you to keep documentation and procedures organized and transparent.
TimeCamp has a feature of daily and weekly timesheet approval. Also, you can assign one specific person to approve timesheets. In that way, they can go through every timesheet and analyze whether all the data is correct. This will help solve any issues immediately. Remember that if the person responsible for timesheets approval makes any change, they should inform the employee. And the employee should inform the manager about his changes. That will prevent misinformation.
8. Timekeeping and payroll should be managed separately
DCAA is very specific about timekeeping and payroll. They should be kept separately, “employee hours and payroll are not seen as being within the same internal function. Also, those that are in charge of payroll should have no control over employee hours.”
TimeCamp allows you to keep timesheets in one place. If you want to manage payroll, of course, you can do it simply by creating separate reports. However, there is nothing wrong in using TimeCamp as software for managing both timesheets and payroll. Remember to keep these two areas separate. You can also integrate TimeCamp with payroll tools such as Quickbooks and use the two to create accurate reports.
9. Track ALL changes
Whenever you decide to introduce a change to your time records, it has to be justified and tracked. The government wants to know the reason for changes, when they were introduced and how.
If you need to change, add or remove an entry, you can easily do it in TimeCamp. However, remember to keep track of it to later be able to show the modifications during an audit.
10. Keep records accurate
DCAA needs to have all the information regarding your company actions but it has to be accurate. That means all dates, work hours tracked, and budget must add up. The records have to include all the details because the government needs to be sure your data is integral.
When using TimeCamp, you can be sure all the data is always accurate. It tracks work in the real-time with the precision of up to one second. And if there’s a need, you can manually create time entries and change the data to include all the information about work in the reports.
11. Be ready for a DCAA audit
DCAA audit can happen when you least expect it. It may take a form of a call to one of your employees or a personal visit of the assigned person sent by the Agency. That’s why you should always be ready for it.
Following points 1-10 can tremendously help you with that. Make sure all your employees know the rules and procedures to be ready for unexpected inspection. Everybody should know the procedures and be able to answer all questions related to them. Have all the reports, invoices, and other necessary documents prepared for examination. Keep them all in one place so they’re easily accessible.
It will help you keep things organized and you will look credible in the Agency’s eyes.
Advantages of DCAA Compliance in Timekeeping
Proper timekeeping is crucial in terms of DCAA compliance. Following the requirements and using DCAA compliant time tracking software has only benefits. Here’s how TimeCamp can help you be a responsible government contractor:
- You can easily and quickly organize work.
- The procedures are clear for all employees of your company and followed every day (for example, thanks to the feature of daily timesheet approval or real-time automatic time tracking) so you are always ready for an audit.
- The software helps you gather the necessary documentation; invoices, timesheets, reports, etc.
- Everything is tracked in the real-time. The reports are always accurate.
⇓ Watch the video tutorial to see how TimeCamp works ⇓