What is DCAA Timekeeping Compliance?

The Defense Contract Audit Agency (“DCAA”) is tasked with ensuring that government contractors adhere to a set of time tracking and accounting rules.

DCAA-compliant contracts require daily time entry, meticulous records with an audit trail of changes, considerable reporting, supervisor approvals of daily time entries, and both employee and supervisor approvals of any time entry revisions, among other requirements.

Please be aware that the DCAA may perform an unannounced audit to inquire about compliance or may provide advance notice

Here’s a how-to to help you set-up Justworks Hours to assist in meeting the DCAA timekeeping compliance requirements.

Justworks Hours can be set up to assist with these key requirements for DCAA Timekeeping Compliance

Daily time entry is required.

In Justworks Hours, you can set the preference Manual shifts to Off to have your employees clock in and out, so that time is entered daily. The company’s timekeeping policy should establish clear requirements for its employees.

All hours need to be tracked, including both paid and unpaid hours.

Customers can create a separate pay code with a $0 for unpaid and idle hours.

Allocate the time an employee spends to a specific category of work for accounting and auditing purposes.

Customers can either use multiple pay rates if the work is paid at a different rate, or they can use Locations to create different codes and cost objectives.

An audit trail that documents all transactions and provides a complete record of entries and corrections is required.

Customers can use the audit trail in shifts, as well as a flag that highlights shifts that were changed by either the admin or the employee, and a Notes functionality to document the reason. Admins and employees will need to use Notes to provide the reason for the change. You can learn more about setting up and using audit trails in shifts here.

The contractor’s labor distribution system must accurately document the employee labor hours (from timesheets) and dollars (from payroll records) by employee, by project name or job code and indirect accounts. The labor distribution records should be reconcilable to the cost accumulation records (e.g., job cost ledgers or equivalent for direct labor and the general ledger for indirect labor).

Customers can use Locations and/or multiple pay rates for job costing to document these requirements. The Time Sheet Report will provide the hours and rates for your employees for shifts that have been approved in Justworks Hours. The payroll report in Justworks Hours will provide the hours worked by your team as well as their pay rates. If you’re also using Justworks as your PEO, use the payroll report for the most accurate payroll records.

There needs to be a division of responsibility between personnel responsible for the preparation of time and attendance records and those responsible for the preparation and distribution of the payroll.

A different admin needs to approve shifts in Justworks Hours vs. the admin who is approving payroll on Justworks vs. those who manage their budget. You will need to find and designate someone to be a cross-check, even if that person is the head of the site operations.

Other key aspects of DCAA timekeeping compliance you should consider

Written Timekeeping Policy

Customers should have a timekeeping policy that documents timekeeping procedures, and the policy should be provided to all employees and supervisors who will be using Justworks Hours for reporting and tracking work time with respect to a government contract. It is the customer’s responsibility to create their own company policy for time tracking and include these points in the policy

Employees should be responsible for tracking their own time.

Employees should enter their own time and not share their timekeeping password with any other employee. This requirement should be included in the written timekeeping policy and enforced. If an employee’s time is later revised, any revisions must be signed off by both the employee and the supervisor, following the steps for time entry revisions which can be found here.

Certifying the hours on the timesheet reflect hours worked and the appropriate cost objective at the end of each work period.

By adding a shift you’re certifying that the hours are correct. Justworks Hours offers basic certifications regarding the accuracy of time entered and adjustments, but the customer will need to supplement the certifications for other DCAA compliance.

Hours shown on time tickets or job cards need to be reconciled periodically with the hours recorded on attendance records and the total hours recorded on the payroll.

It is the customer’s responsibility to create their own company policy for time tracking and include these points in the policy.

Adequate rationale and supporting documentation for all significant labor transfers are required.

It is the customer’s responsibility to ensure that they have complied with this requirement and include the relevant points regarding this requirement in the customer’s timekeeping policy.

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