Taking on government projects is a big undertaking, representing a huge investment of time and money, not only for your company but also for the government itself. Being a federal contractor obligates you to conform to financial reporting standards like Defense Contract Audit Agency (DCAA) compliance. These standards require your time tracking system to capture all the essential information regarding work hours involved in the contract. Let’s take a look at these specific time tracking requirements.
Why Time Tracking is Required for Government Compliance
Time card tracking and management are essential for government projects. One of the spending factors of the contract itself involves work hours and the amount of time applied to contract tasks. Therefore, timekeeping is a central component of DCAA compliance. You need a streamlined system for recording and monitoring work hours to ensure funds are being paid accordingly and work is done within contract terms. If the hours and costs are not aligned with these terms, the contract is breached and your company becomes open to serious repercussions.
If the time cards aren’t recorded properly, federal auditors will shut down your operation in order to uncover and validate financial information. During this time, you and your staff are not getting paid. Operations will be delayed and your business could face other scrutinies that could hamper future bids for projects. However, these time tracking requirements will also help you organize your contract’s accounting and help you improve your financial management going forward. You just need an accounting/time-tracking system that can accommodate these requirements.
Time Tracking Requirements for Government Contractors
Your time tracking has to be totally accurate, which is why process visibility is a major requirement in the software you choose. Non-approved staff cannot have access to individual time cards and when changes are made, this information must be approved and all these details recorded alongside the actual time stamps. Auditors need to be able to track and view all activities, dates, and amounts surrounding the time card. Here are the specific DCAA time tracking requirements:
- Whenever changes are made to the time sheet, there must be an automated prompt to explain why. This must also include the date and signature of the approver initiating the alteration.
- All staff must have exclusive access to their time cards, preventing unapproved employees from making changes.
- The time sheets only list the exact hours worked daily.
- Time cards must allow key documents to be attached in order to provide relevant details.
- Time sheets need to be password protected and also prompt staff to change passwords two times every calendar year.
- Time sheets must have an audit trail that records all the relevant details associated with transactions including employees, approvals with time stamps, dates, time charged, project numbers, changes (including corrections, as well as the approver who made the change), and time stamped submissions.
Being DCAA Compliant and following these time tracking standards aren’t options, these are mandatory to legally operate as a federal contractor. To do this, you’ll need to have software solutions that can help you meet these standards.
Use the Right Accounting Software
Your timekeeping needs to be integrated into your accounting system. However, a better option would be to use an accounting system that comes equipped with time tracking functionality. Here’s why: if the accounting system is equipped with time tracking, that’s one less software integration to worry about. Not to mention, it’s less expensive. Additionally, the chance of data consistency errors is greatly reduced because all your project costs are consolidated in a single secure space.
Key accounting features you should also look for in a system are audit trail and drill-down functionalities. These help you track all the details, users, events, transaction amounts, and any other data associated with the account. To this extent, you should also look into how well the accounting system enables your team to collaborate and view data effectively. Being able to quickly identify errors and work with your team to make corrections or document changes is very important for keeping your timekeeping and finances accurate.
You’ll also want your accounting and time tracking system to emphasize automation. This makes reporting and general financial management much easier. Automation also keeps your data accurate and consistent throughout the system.
As is common in the government contracting world, you may need to customize some aspects of any software you use to fully meet your individual needs. Therefore, your accounting system should be highly flexible, allowing you to configure and customize software functionalities to meet key requirements.
All of these features will help you remain compliant with DCAA standards while ensuring your contract’s accounting information is secure and easy to manage. For more information on how your accounting system should meet DCAA compliance, check out our free guide below.
Time Tracking with Accounting Seed
In addition to having the time tracking features you need to pass the DCAA audits, Accounting Seed offers the flexible, automated accounting solution you need to maximize your contract’s financial management. Schedule a free, custom demo today!