How to select a timekeeping system for DCAA compliance

We have the opportunity to evaluate quite a few electronic timekeeping systems throughout the course of any given month.  Our service that configures Quickbooks to be DCAA-compliant brings us into contact with dozens of companies each month, providing us a chance to review many of the timekeeping systems on the market.

Not all timekeeping systems are the same. Many claim to be "DCAA-compliant", but exactly what does this mean? Will the one you select provide the optimal solution for your company?

Here are a few items to consider:

What is required for DCAA Compliance?

An electronic timekeeping system will need the following features to satisfy DCAA.

Password Protected

Does the system require a unique password for each user to access the timesheet? Although this is a common feature today with almost all systems, there are still a few systems out there that lack this feature. Most notably are the timesheet screen in Quickbooks. Anyone with access to the accounting system has access to all the timesheets. To overcome this limitation of the timesheets in Quickbooks, you'll need a third-party system that is password protected.

Audit Trail

Is there an audit trail report that shows time stamps of all changes to the timesheet, including who made the changes. This feature is important because DCAA will want to ensure that the time entered by the employee is not being altered by the supervisor, to prevent time sheet fraud. All changes will require a reason to be logged on the audit trail report.  The time and date of the entry or change are important to DCAA to ensure that time is being recorded daily.

Approval System

Both the employee and the employee's supervisor will need to approve the timesheet. Your timekeeping system should have an automated way of routing the timesheet for approvals. The approvals will need to be time stamped with a signature (electronic is ok). 

Charge Code Assignment

Is the timekeeping system able to assign only the relevant charge codes to employees? The system should be able to prevent employees from charging projects for which they have not been assigned. This internal control feature helps to ensure timesheet accuracy.

What are some really nice features to have?

While the following are not required for DCAA compliance, I recommend you give consideration to certain features that will make the operation of your system more efficient.

Integration with Quickbooks

Not all DCAA-compliant systems are fully integrated with Quickbooks. Some simply do not import into Quickbooks, or if they do, require data files to be manipulated and manually imported. Many do not import all of the required data. You will want a system that imports not only the hours and project codes but also the service items and payroll items. This is important because the most efficient way to maintain DCAA compliance is to run your labor distribution from timesheets in Quickbooks.

Multiple Service Items

A service item in Quickbooks is used as a line item on customer invoices, vendor bills, and contract budgets. It is the link that ties all this data together to make your Quickbooks system DCAA-compliant. On many federal contracts, you will need to track multiple line items, CLINs, or labor categories. A timekeeping system that can handle multiple service items per project will help keep your system under manageable control.

Mobile App

Do you have a mobile workforce? Sometimes getting back to a desktop computer each day is difficult for your employees. If this is the case, a system with a mobile app that allows time entry from a smart phone or tablet will help ensure that time is entered daily, a DCAA requirement.

Project Management Reports

The ability to see time spent on projects may be critical managing your projects for profitability. Timekeeping systems have a varying degree of user-friendly project management reports and the ability to distribute or segment the reports by project manager. I recommend carefully reviewing the types of reports available before committing to a new timekeeping system.


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