DCAA Compliance Checklist for Time Tracking

Government contract work can be lucrative and fascinating work. Navigating the government contract process can be very tricky. It’s important to stay up to date on Defense Contract Audit Agency (DCAA) compliance regulations. It’s also critical to ensure you meet DCAA timekeeping requirements if you want to work with any federal government organization. Hour Timesheet does our best to explain DCAA compliance and we offer a product that is always up to date with regulations. The DCAA will run a pre-award audit in order to award any government contracts. You should prepare for this audit and create a list of compliance regulations for the DCAA.

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What is DCAA compliance?

The DCAA was established in the 1960s to normalize the government’s contract auditing process, and to ensure the American taxpayer was getting good value for its money.

Initially, the DCAA was originally overseeing military and intelligence contracts for the U.S. Department of Defense. Later, it oversaw many other kinds of labor and service contracts that the federal government signs with commercial suppliers.

If and when you win a government contract, the DCAA timesheet compliance rules will apply to everyone in your company. Regardless of the size of your organization, this can be a big task with many training implications. It’s worth your while to make DCAA compliant time tracking as straightforward as possible. Do your research ahead of time, and try to create a DCAA compliance checklist.

Suppose the DCAA were ever to audit you. In that case, they would check three main areas to see if you comply: how accounts are established, the flow of transactions in accounting systems, and the computations derived from them.

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1. How Accounts are Established

A DCAA Compliant Chart of Accounts

You will need to separate which financial transactions are direct, indirect, and unallowable. The DCAA will also examine your Chart of Accounts to ensure you’re adhering to the Generally Accepted Accounting Principles (GAAP). Having Accounts Payable, Prepaid Expenses, and Unearned Revenue will indicate that you’re accounting for cost and revenue on an accrual basis.

2. The Flow of Transactions in Accounting System

Trial Balance Hour Timesheet will allow you to print a Trial Balance that summarizes your accounts’ debits and credit balances. The latter will reveal details such as the opening balance, transactions, transfers, and closing balance. The former will summarize the debits and credit balances on each of your accounts.

General Ledger Detail The general ledger detail within the Hour Timesheet software will be able to provide you with the beginning balances for each government contract over a limited period.

3. Cost & Reporting

The DCAA will audit processes used for allocating revenue and costs to projects, in addition to the way you calculate indirect rates. Many companies use QuickBooks for most of their accounting, and Hour Timesheet makes sure this doesn’t have to change. We can help make your QuickBooks DCAA complaint, ensuring it follows the rules laid out so far, and the following rules about computing revenue and expenses.

Loss & Profit by Job An essential requirement highlighted in the pre-award survey is your accounting system’s ability to accumulate costs by project. Loss & Profit by Job reports gives assurance that this can be done accurately when they agree with the standard Profit & Loss statements. Hour Timesheet also integrates directly with ADP and QuickBooks. This will help lessen manual data entry across platforms.

Labor Distribution Report Labor distribution is the process of allocating and measuring labor costs both direct and indirect to the total time recorded on timesheets. Hour Timesheet allows you to directly tie both direct and indirect hours to the accounts within your accounting system. DCAA needs to see that labor costs are equally distributed among customers, both government and commercial. They want to know that no one is favored or has received a cost subsidy.

Contract Backlog Report This type of summary allows you to see the percentage of work completed. It also shows the remaining cost to complete each job in your backlog. This type of report indicates how much money is left on a contract, as well as potential contract overrun. It also shows if there are corrective actions required as a result.

Direct Vs Indirect Labor Tracking Contract employees must consistently track both direct and indirect costs. A direct cost is identifiable to one and only one cost objective. It is normally required or necessary for contract performance. Cost objective is a regulatory term that can include a contract, a project, a task, a contract line item.

To be compliant, government contractors must accumulate costs into indirect cost pools. This can be things such as a bid and proposal or an independent research and development project. Hour Timesheet allows a contractor to track time and keep track of all accumulated costs. This is all costs related to hours worked, such as direct costs, any unallowable costs, or indirect costs. Indirect costs are all costs that are not identifiable or incurred for the benefit of one cost objective.

There are many tasks involved in preparing for DCAA auditors to analyze your accounting functions. It can be helpful to create a compliance checklist for government contracting work. Especially if you’re business is receiving government funding, such as through the SBIR and STTR programs. It’s vital that the companies participating remain DCAA compliant in order to receive their funding.

Overall, it’s important to maintain audit trails and detailed reports for all employee timesheets and time accounting. Also, make sure to always use a DCAA compliant time entry.

Hour Timesheet and DCAA Compliance Resources

Achieving DCAA audit compliance takes effort, time, and specialist knowledge. Even if you understand the regulations, you’ll also need to arrange your Chart of Accounts and configure Hour Timesheet accordingly. Having a DCAA timecard audit checklist can help you achieve DCAA compliant timekeeping, without all of the confusion. Even better, choosing a timekeeping system with DCAA-compliant features will help you in the long run.

Contact us today for a free, no commitment, 30-day trial of our software. With our years of experience, we can help you avoid potential DCAA compliance issues before an audit begins.

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DCAA Compliant Timesheet Integration with QuickBooks and ADP

Three Solutions Working Together – If you use ADP Run, ADP Total Source or ADP Workforce Now as your payroll provider and do your invoicing in QuickBooks, you’re in luck. The Hour Timesheet integration with QuickBooks and ADP is simple and fully DCAA Compliant. This time tracking software gives you everything you need to track time & attendance, create invoices, and do payroll in minutes without having to key in data.

Hour Timesheet includes a feature-rich time and attendance solution and mobile functionality that is geared for small businesses. Our SaaS solutions give your organization affordable, easy-to-use web-based solutions. Plus, our timekeeping software is fully DCAA compliant. Our professional services are designed to help your time tracking and accounting stay organized and prepared in the event of a DCAA audit.

Main Features & Benefits of Hour Timesheet Payroll Integration

Mobile App (iOS and Android) –Hour Timesheet offers mobile time tracking in the Hour Timesheet Mobile App. As a result, Hour Timesheet integration with QuickBooks and ADP is easier than ever.

Managing Employee Leave – Manage leave balances, track leave or time off requests, and more directly in Hour Timesheet’s software. All data is stored and tracked, and easily transferable between platforms.

Manage Overtime Hours- Aside from tracking regular hours and job performance, the time tracking software complies with all DOL overtime regulations.

Job Costing – Track and manage job costs, labor costs, and other information directly on the platform. You can view employee profiles, job codes, and other payroll processes.

Quick Access to Time Cards – Hour Timesheet is a SaaS solution, so employee timesheets are stored safely. To-the-second, real-time data is ready and available on the cloud whenever you need it. Hour Timesheet makes extra efforts to ensure all employee time entries are accurate, on time, and employee attendance can improve.

Daily Time Entry Reminders – Hour Timesheet uses daily reminders and notifications to ensure all employees are tracking time as they’re doing it, rather than after the fact.

Location Tracking – Available on the Hour Timesheet mobile app, managers can keep track of employee location when working at home or off-site.

Quick Payroll Processing – With Hour Timesheet and ADP Platform integration, you eliminate the double-entry of data and ensure that your staff is paid accurately and on time.

Time To Eliminate Data Entry For Good – The QuickBooks “one-click” sync imports employee data and customer/job data into Hour Timesheet for quick employee profile setup. No more manual data entry for every new job or contract.

Decades of Experience At Your Fingertips

The 25 years of experience you get by choosing Hour Timesheet means that you’ll have experienced, knowledgeable customer service at your fingertips. We’re always ready and eager to help you troubleshoot your way through any problem or figure out new ways we can help your business succeed! Even if you’re not a government contractor looking to achieve DCAA compliance and prepare for DCAA audits, Hour Timesheet can help your business save time. If you’re unsure, request a demo today to see what Hour Timesheet can do for your business.

Detailed Audit Trail

Daily Timesheet Reminders

Correction Timesheet Workflow

Required Reason for late or edited entries

Supervisor Approvals

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If you’d like help getting the ADP or QuickBooks Time Tracking integration setup, we’ve got you covered. We’ll be right there with you via phone, email, or screen-sharing session to make sure you are successful. Call us anytime at 832.942.9556.

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QuickBooks Desktop Timesheet Integration

If you are a loyal QuickBooks Desktop user, you certainly understand it has some benefits not available on other platforms. Though the push has been for everything to be cloud-based, you know that QuickBooks Desktop serves your needs. The good news is that Hour Timesheet’s time tracking software flawlessly integrates with QuickBooks Desktop. This integration of systems ensures that your time tracking and financial efforts for your small business can be as accurate as possible, adhere to DCAA protocols, and not take all afternoon copy-pasting from spreadsheets!

Hour Timesheet + QuickBooks Desktop integration tool – how does it work?

As an Hour Timesheet client, our DCAA compliant software will seamlessly import all your timesheet data to the QuickBooks desktop employee time tracking feature. We will utilize the QuickBooks Web Connector to update your data to and from your QuickBooks file. This data will include some of the following information:

Customers & jobs

Payroll items

Classes

Services

What are the advantages of QuickBooks desktop integration?

1. Eradicate Charging Errors

QuickBooks Desktop integration with Hour Timesheet tightens employee time tracking. That’s because it only authorizes the charge codes that you, the manager, have allowed. From customer jobs and classes to types of leaves and service items, if you’ve not approved it, employees will not be able to charge them.

2. Eliminate lost timesheets

The days of lost timesheets are a thing of the past. Using Hour Timesheet Integration with QuickBooks Desktop alongside with the web connector, managers can view all timesheets from vendors to employees at any time of the day. Each timesheet can be signed by a single manager or by several depending on the approval needs.

3. Eradicate Manual Entry

QuickBooks Desktop app eliminates the need for a time-consuming manual entry. It features 2-way data sync. This means information such as employees, vendors, customers/jobs, classes, service, and payroll items only need to be entered once into QuickBooks. With a single click, the data is populated into Hour Timesheet using QuickBooks Web Connector. This means, no more exporting and uploading spreadsheets all the time to just to see data in both Hour Timesheet and Quickbooks.

4. Does Away with the Shock of Overtime

The desktop app allows employees to track time by payroll items. They can handle unplanned overtime with real-time reporting features that include daily summary reports. This allows for both employees and managers up-to-date data to make informed decisions about overtime work.

QuickBooks Desktop app

We hope we’ve given you a better understanding of how Hour Timesheet flawlessly integrates with QuickBooks Desktop. Together they offer the best most user-friendly DCAA time tracking compliant software on the market.

Hour Timesheet Software Meets DCAA Compliance Regulations for SBIR & STTR Programs

Imagine securing the necessary funding so your research and development could finally become a product? It’s possible thanks to the federal government programs SBIR and STTR and Hour Timesheet. Together SBIR and SBTTR are responsible for bringing some of the most innovative technologies to market. These new technologies have the potential for commercialization in the international market. Without a DCAA compliant time tracking software, this opportunity wouldn’t exist. Hour Timesheet offers such a software, and helps these companies qualify for the programs to present their ideas.

What are the SBIR and STTR programs?

The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs encourage participation in federal research. They present American-owned businesses the opportunity to research and develop new ideas, with the potential for commercialization. The SBIR and STTR programs have developed an awards-based program that presents funding opportunities to small businesses. The research institutions encourage these businesses to explore their technological innovation potential. The program then challenges them to provide the necessary incentive to profit from its marketing. The goal is to inspire high-tech innovation, by including small business in the country’s research and development industry. The entrepreneurial spirit to meet specific research and development needs will seep the country.

What does DCAA compliant timekeeping mean?

‘DCAA’ is an acronym and stands for the “Defense Contract Audit Agency”. It is the government agency responsible for the auditing of the department of defense and its contractors. Other government agencies often bring in a DCAA auditor to provide financial and accounting services. Specifically, in the event they need help with their auditing procedures.

This is precisely what happens with the SBIR and STTR programs fund. The programs aware small businesses with the money necessary to move from Phase I (Concept Development Level) to Phase II (Prototype level). Then, the federal government requests an audit of all participating small businesses. They undergo a DCAA pre-award “survey,” otherwise known as DCAA audits.

In the first phase, Federal agencies usually expect small businesses to have a basic time tracking system in place. This is because the Phase I awards are relatively small. In Phase II, there is more money at stake. There is approximately $1 million per award as opposed to $150,000 in Phase I. The contracting officers need to be confident you’ve accurately estimated your incurred costs and indirect rate. They also want to ensure you can accurately differentiate indirect from direct costs in your accounting systems. This is why Hour Timesheet offers a DCAA compliant time tracking software, that is easy to use and understand.

How does Hour Timesheet meet DCAA compliance requirements for the SBIR and STTR programs?

1. Detailed audit trails for any companies working with government programs.

It’s one thing to say that your timekeeping software is DCAA compliant, but it’s another to explain what that means. At Hour Timesheet, our audit trail lists a detailed activity log of every contractor’s activity. It includes their username, IP address, time, and date stamp of all the entries made to the timesheet. This helps capture both hours worked and paid-time-off entries.

2. The software sends automated daily reminders. This keeps employees accountable to tracking their hours on time, and with DCAA regulations.

DCAA compliance states that employees must enter and track time daily. Hour Timesheet will send employees who forget to do this an automatic daily reminder. It’s quick and easy to set up and can be a great tool. Specifically, this works well for those who sometimes let their day “get away from themselves.”

3. Tracking indirect (non-billable) time acquired while working in these programs.

Employees must track all hours in a DCAA compliant time keeping system. This ensures that all hours are precise, and meet DCAA requirements. Hour Timesheet allows users to track direct costs, indirect costs, and unallowable costs entries within the timesheet. Assign non-billable codes to users, including overhead, labor costs, business development, and others.

4. Multiple supervisor signatures required for any time entries.

According to regulations, each timesheet requires two signatures. One from the employee and the second must come from the supervisor. Hour Timesheet allows for signatures at both of those levels on each time entry.

5. Authorization is required for any charges when working on government contracts or programs.

Hour Timesheet allows managers to limit visibility on certain charge codes. They can hide codes from employees who aren’t authorized on that project. This feature is accessible to both full-time employees and timesheet information for government contractors.

6. DCAA compliance requires a reason to be provided for any late time entries.

Hour Timesheet requires a reason entry when there is no daily time entries. The program will prompt employees to enter a reason for the late entry. Hour Timesheet also requires the user to enter a reason for editing previously, inputted data on a timesheet.

Hour Timesheet DCAA Compliance Software and the SBIR & STTR Programs

The federally funded STTR program & SBIR program are both an excellent way to fund ideas and inventions. Directed at small business in the United States, it allows for the spread of new ideas. These businesses may never have the opportunity to market otherwise due to business concerns. These programs allow for companies with technical merit to enter the national arena. The programs give small businesses an opportunity with a big commercial potential for their innovations. Part of that process is ensuring their business remains DCAA compliant. These are very competitive programs, and that is where Hour Timesheet can help. We provide a DCAA Compliant timesheet software that meets the all DCAA timekeeping requirements. We’re here to help American innovation move forward.

DCAA Compliance Explained

The term ‘DCAA compliance’ when referring to your timekeeping procedures is often just thrown around. If you don’t understand what that means or how to verify that you are DCAA compliant, Hour Timesheet can help.

Simply put, DCAA stands for Defense Contract Audit Agency. This is the federal government agency responsible for conducting DCAA audits of the Department of Defense (DoD) contracts. As imagined, the DoD is very strict about its rules and regulations surrounding DCAA compliance and timekeeping. The DoD will award government contracts to businesses that use web-based timekeeping if they meet all requirements.

1. The company must document all timekeeping procedures in a policy or procedure handbook.

The employee handbook must address all critical elements of an adequate timekeeping system. Companies must provide all employees with an up-to-date policy or procedure handbook regarding time entry procedures.

2. Every employee must record all of his/her time daily.

Attempting to track time worked in advance or days after the fact is not acceptable. Hour Timesheet comes equipped with reminders and alerts to ensure employee time is entered daily. This means that no matter the size of the company, Hour Timesheet is equipped for every employee to track time. This DCAA timekeeping feature is especially useful for any companies participating in SBIR and STTR programs. They may be smaller businesses, but they must ensure they remain DCAA compliant to qualify for their funding.

3. All employees must record 100% of the time worked.

Whether working on a government contract or commercial work, all time worked must be accounted for. With the Hour Timesheet mobile app the employees and 1099’s can add time from anywhere, whether they’re working from home or the office.

4. Employees must record all indirect time not identifiable to a given project to proper indirect cost accounts (Overhead, G&A, B&P, R&D, etc.)

One example of an indirect cost is overhead. This usually includes the indirect costs involved in support operations or direct production. These costs are directly related to a project or projects. However, they cannot be allocated to one specific contract. This is because they overlap across many different projects.

5. Employees must record all PTO, vacation, sick, holiday, and other leave time to the proper leave accounts.

Hour Timesheet allows for leave tracking any kind

6. The system administrator(s) should initiate all job codes that appear in the timekeeping system.

Charge codes must be provided to employees authorized to work on a given project.

7. All timesheet entries must be recorded by the employee.

An employee must record their time based on work completed. They should track all time entries, irrespective of whether the time is billable or non-billable. This must happen daily.

8. Employees must charge to the appropriate project

Whenever the employee completes work or tasks, they must charge it accurately and directly to that project. Hour Timesheet can be setup to restrict which codes an employee can charge their time; therefore, an employee cannot charge to a project they have not been assigned.

9. Employees may not work on indirect tasks and record time as direct costs

An indirect task is work that is not explicitly tied to a project. To remain DCAA, compliant employees must never charge the time it takes to complete these tasks to any project. This would violate DCAA compliance and regulations

10. The employee is required to initiate all correction timesheet entries.

The employee must record all corrected timesheet data that includes a detailed audit trail. An audit trail is critical to remaining DCAA compliant.

The employee’s supervisor must approve every correction time entry in a detailed report, in the event of a DCAA audit.

In the unusual circumstances where the employee cannot make the changes to timesheets, then the HTS administrator may make such changes with the employee’s consent. The DCAA may analyze each entry on an employee’s timesheet. Thanks to your detailed audit trail, the DCAA will see who edited a time card after it was submitted. They will also be able to see when the changes were made, and why. Hour Timesheet creates an un-editable audit log that proper documentation. This activity log will include all of all the additions, deletions, approvals, and modifications made to your employees’ timesheets.

11. The employee’s supervisor must approve all employee timesheet data.

Each timesheet requires two signatures, in order to comply with DCAA compliance regulations. Hour Timesheet allows for online signatures at both the employee and manager levels.

12. All employees should be provided documented timekeeping training.

The company’s employee handbook or new-hire orientation program typically includes this training. Either way the employee should become familiar with the company’s timekeeping policy before they begin working.

13. In order to be DCAA compliant, the company must retain timesheet data for at least two years.

That means the company must be keep their files in a secure and easily accessible location. Should the DCAA require you to produce copies of your timesheets, they should be available. Hour Timesheet keeps the timesheets indefinitely for all employees, current, and past.

14. The company must conduct audit or floor checks randomly throughout the year to monitor employee timekeeping compliance.

Unfortunately, DCAA timekeeping compliance is one of the primary reasons government contractors fail an audit. Hour Timesheet can help. We have the employee and contractor time tracking experience to ensure total compliance. Sign up for Hour Timesheet today and work with an experienced implementation rep to review your account for total compliance. All for FREE.