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DCAA-related timekeeping compliance is not a certification you obtain by buying a particular app. It is part of a contractor’s accounting system: labor must be identified and charged to the right cost objectives, supported by adequate records, and handled under the clauses in the contract. The practical goal is a traceable record of who performed work, when, and for which contract, project, indirect, or other objective.
What DCAA timekeeping rules actually require
The controlling requirements come from federal cost and accounting rules, not from a DCAA-approved product list. For covered contracts, DFARS 252.242-7006(c)(9) requires “A timekeeping system that identifies employees’ labor by intermediate or final cost objectives.” The same accounting-system criteria require labor distribution to appropriate cost objectives, monthly determination of contract costs, and reconciliation and control practices within the broader accounting system. DFARS 252.242-7006
FAR 31.201-2 requires contractors to support claimed costs with adequate records and documentation showing that costs were incurred, allocable to the contract, and compliant with applicable cost principles, accounting standards, contract terms, and limitations. A contracting officer may disallow costs that are inadequately supported. FAR 31.201-2
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These requirements focus on the accounting system and evidence behind labor charges. They do not, by themselves, certify a commercial application or make a software purchase sufficient for compliance.
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Which contracts may require an accounting system
Applicability depends on the solicitation and awarded contract. DFARS 242.7502 addresses accounting-system requirements for contractors with cost-reimbursement, incentive-type, time-and-materials, labor-hour, and certain cost-based progress-payment contracts. DFARS 242.7503 prescribes the accounting-system clause when those contract types are contemplated. Check the actual contract for applicable clauses, agency supplements, and deviations rather than assuming every federal contract has identical requirements. DFARS 242.7502 and 242.7503
What a DCAA-compliant timesheet should show
A timesheet should let the contractor and an auditor follow labor from the employee’s entry to the cost objective and the related accounting records. DCAA’s guidance discusses paper and electronic methods; the medium matters less than whether the process identifies labor to cost objectives and provides adequate traceability. DCAA Contract Audit Manual, Chapter 5
- Employee and work period: Identify whose hours are recorded and the dates or period covered.
- Hours by objective: Record hours against the contract, project, indirect account, leave, or other applicable cost objective that reflects the work actually performed.
- Certification and approval: Have employees certify their entries and supervisors review and approve them, consistent with written procedures.
- Correction history: Preserve the original entry and a traceable record of edits, including the reason, date, and approver under the organization’s procedures.
- Supporting context: Retain the work authorization or other documentation needed to connect direct labor to authorized work and explain the charge.
The rules cited here do not prescribe a universal timesheet layout, correction form, or correction deadline. The relevant test is whether the records reliably support labor identification, distribution, and the claimed costs.
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Write procedures employees can follow
Document how employees choose contract, project, indirect, leave, and other cost objectives; what to do when work changes; how to correct missed or miscoded entries; and who reviews and approves records. Train employees and supervisors on those procedures, then periodically review whether actual practice matches them. DCAA guidance describes evaluating compliance with established procedures and management review or internal audit controls. DCAA Contract Audit Manual, Chapter 5
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Record work performed, not a presumed allocation
Employees should charge hours to the objective for the work they actually performed. A project code, default allocation, or automatically generated entry is not evidence on its own that the labor was charged correctly; the underlying identification and documentation still need to support the charge.
Make review and correction traceable
Employee certification and supervisor approval create useful checkpoints, especially when the system retains who made or approved an edit. Establish a prompt process for late, missed, or miscoded entries. Preserve the original entry and document the correction and its approval. This is a practical way to support the FAR’s adequate-records requirement; the cited sources do not set one deadline or form for all contractors.
Reconcile labor distribution with payroll and accounting
Routinely reconcile labor distribution to payroll and accounting records, investigate discrepancies, and retain evidence of review. DFARS places labor distribution and reconciliation within the wider accounting-system criteria, alongside monthly contract-cost determination. DFARS 252.242-7006
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Retain records that can be explained
Keep timesheets, approvals, correction histories, and supporting documents in a form that allows labor entries to be traced and explained. The retention period depends on applicable contract clauses and record requirements; the sources cited here do not establish a single duration for every contractor.
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What happens during a DCAA floor check
DCAA may use interviews or floor checks to verify that employees exist, assess whether they follow timekeeping procedures, and evaluate the accuracy of labor-hour charges. Auditors may review procedures, observe or interview employees, reconcile observations with payroll, and trace labor to contract requirements. These are possible audit approaches, not steps guaranteed in every review. DCAA contractor guidance on floor checks
DCAA’s Chapter 6 describes labor-cost-charging evaluations as assessing compliance with policies and controls, reliability of the labor accounting system, and accuracy of hours charged to contracts, indirect accounts, and other objectives. Timing and extent depend on risk and auditor judgment; the manual says testing close to the work is preferred where practical. DCAA Contract Audit Manual, Chapter 6
Practical preparation
- Make current timekeeping procedures available to employees and reviewers.
- Ensure employees can explain how they record time and select cost objectives.
- Be able to trace sampled time entries through approvals, payroll, labor distribution, and supporting work authorization where applicable.
- Investigate inconsistencies between recorded hours, employee explanations, payroll, and contract requirements; retain the explanation and resolution.
Paper or electronic timekeeping: how to evaluate the process
DCAA guidance allows paper or electronic timekeeping. Choose and configure the method around the controls and evidence your contract and accounting system require, not around a claim that a particular format is automatically compliant.
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| Cost objectives | Employee-level entries by contract, project, indirect account, and other relevant objectives. |
| Certification and approval | Employee certification, supervisor approval, and traceable records of edits and approvals. |
| Labor distribution | Distribution to appropriate objectives and reconciliation with payroll and accounting. |
| Work context | Connection to contract-specific work authorization and labor-category context where relevant. |
| Auditability | Useful audit trails and reports that make entries and changes traceable. |
| Access and records | Access controls, exports, and retention practices suited to the contractor’s requirements. |
No particular vendor or product is endorsed by the cited government requirements. A system is only one part of the control environment; written procedures, employee behavior, review, reconciliation, and supporting records also matter.
Check the current rules before relying on a detail
Contract clauses and audit guidance can change. DCAA’s CAM index lists Chapters 5 and 6 as updated in August 2026, and DCAA notes that guidance memoranda may provide current audit guidance not yet incorporated into the manual. Before relying on a procedural detail, check the latest CAM chapter and relevant memo, as well as the clauses in the specific contract. DCAA Contract Audit Manual index
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