Tommy Associates Pty Ltd
Tommy Logo

How to Comply With DCAA Timekeeping Guidelines


If you win a government contract, it’s crucial to comply with the regulations imposed on you. The Defense Contract Audit Agency (DCAA) has stringent guidelines in place that you should study if you have a defense contract.

To help you out, here’s a guide to being DCAA-compliant and improving your timekeeping.

DCAA Timekeeping Requirements ⏳

The DCAA provides financial and advisory services to federal entities like the US Department of Defense (DOD). It regulates contract audit services to ensure all contractors pass the requirements, checking that each dollar used was appropriately allocated.

As a result, the DCAA mandates timekeeping compliance for its contractors. Knowing how to do it properly is essential for audit purposes; read about the DCAA timekeeping requirements below.


1. Make a Policy That Complies With DCAA 📝

Write a policy document noting the actions to comply with DCAA. This includes noting labor distribution and a way to document hours and dollars by employee, project name or job code. Make sure the policy is complete, thorough, and easy to understand.

2. Tell Everyone About the Policy 🗣

You also need to ensure everyone knows the policy. It’s crucial to inform all staff and supervisors and update them if there are changes.

Provide annual training about time-tracking to remind everyone of the policy.

3. Track Time Every Day 🕜

Employees must submit timesheets every day and should not do so in advance or at the end of the week. For accuracy, consider using a time tracking software that automatically reconciles information and performs timesheet approvals. That way, there is little room for error.

4. Compute Labor Cost 🧑‍💻

DCAA determines your project cost based on the number of working hours. Ensure you calculate labor costs based on time.

5. Record Overtime and Paid Time-off 🌴

There are two types of overtime:

  • Uncompensated: Applies to employees with a fixed salary who are not compensated for additional hours.
  • Unpaid: Applies to employees who are paid per hour. Their overtime is compensated.

Both types must be recorded for DCAA compliance.

Furthermore, you must record paid time off, including:

  • Vacation
  • Holidays
  • Sick leave
  • Bereavement leave

Failure to do so may be considered labor accounting fraud.

6. Record Tasks and Projects 🗄

DCAA audits also require a record of tasks and projects. If you use software, select an option that reminds staff to indicate the project they are working on.


7. Take Note of Changes or Corrections ⛔️

If you must change the time-tracking document, indicate the change, the reason behind it, and the time and date it was made. This should be approved by a supervisor.

8. Employees Must Sign Off Entries 👍

If your business uses an automatic time-tracker, your employees should personally sign off the time entries to ensure they’re aware of their working hours. Or, use a time-clock kiosk.

9. Review and Approve Time Records ✅

When your employees approve the timesheets, they should submit them to their superiors for approval. Remember, time records become legal documents, so check them carefully.

10. Separate Timekeeping and Payroll 💵

Keep timekeeping and payroll separate, even though they’re connected. Non-compliance is an offense called “labor discharge” that can result in a maximum of 5 years in prison.

Have separate teams to handle payroll and timesheets. Furthermore, employees shouldn’t adjust their time data to suit payroll capacity.

DCAA Timekeeping Checklist

This handy checklist will help your business remain DCAA compliant.


Timekeeping Procedures

  • Keep timekeeping separate from payroll.
  • Implement a clear policy for submission and approval of data.
  • Keep everyone aware of the policy, procedure, and requirements.
  • Give continuous training to ensure awareness.

Preparing Timesheets

  • Everyone in the company must track time (whether they’re part of the government contract or not) to produce a thorough audit trail
  • Employees must record working hours themselves, including overtime and paid time off
  • Time should be logged daily and indicate the task or project worked on

Timekeeping Policies

  • Superiors cannot fill up a timesheet unless the employee is on paid leave or is gone for a long time
  • The employee and superior must review and approve the timesheet
  • Appoint a system administrator to review timesheets and check for errors. Record reasons, date, and time for each change.
  • Publish timesheets every month or more frequently.
  • Be prepared for random inspections.

Timekeeping Systems

There are two types of timekeeping systems: manual and automatic. Automatic systems include software, and they’re useful for businesses with more than three employees. They reduce the room for error and can help you ensure DCAA compliance.

Conduct research to help you choose the best software for DCAA-compliant timekeeping.

One option is Tommy. It can help you with DCAA compliance with an automated time-tracking system. You can select a package depending on your needs and budget, ensuring you get the best software for your needs.

Improve Your Timekeeping with Tommy 🐶

DCAA guidelines require government contractors to maintain an accurate record of the time their employees spend on contracts. If your business has a contract, it’s a good idea to maintain accurate records of all work completed for all employees in the business in case of an audit.

You can use an automatic time-tracker like Tommy to keep your records up to scratch. Just make sure all your staff are aware of the time tracking policy. Thankfully, with Tommy, recording time is easy!

Maintaining compliance doesn’t have to be time-consuming and stressful. Take the hassle out of it with Tommy. Check out our features here.