DCAA-Compliant Timekeeping: Labor and Payroll Audit Trails
In addition to making sure that your contract labor is accounted for accurately and in accordance with DCAA standards, there are several key compliance and documentation steps to follow when utilizing captured labor hours for compensating employees and applicable subcontractors.
Create a Clear Audit Trail with Accurate Records
Creating a clear audit trail with accurate records is critical to maintaining transparency and DCAA compliance, and this detailed backup is especially important for employee and subcontractor labor, the cornerstone of many government contracts.
“Creating a clear audit trail with accurate records is critical to maintaining transparency and DCAA compliance, and this detailed backup is especially important for employee and subcontractor labor, the cornerstone of many government contracts.”
Audit trails should provide detailed chronological records and documentary evidence of the sequence of activities that have affected your operation, procedure, or event. These records are crucial for tracking the origin of data, understanding the lifecycle of a transaction, and providing a basis for financial and compliance auditing.
Audit trails also facilitate the process of financial reporting and compliance with regulations by enhancing the integrity of the organization's operational procedures. For example, a well-maintained audit trail ensures that auditors can track every transaction and modification in their financial records back to a source, supporting their financial statements and claims during government reimbursement.
This transparency helps in detecting and preventing errors, fraud, and mismanagement; it also builds trust among stakeholders, including government agencies, investors, and the public.
Furthermore, in the event of an audit, comprehensive, and clear audit trails significantly simplify the review process, enabling auditors to swiftly and seamlessly verify the accuracy and completeness of the organization’s financial and operational records.
The Importance of Meticulous Tracking and Payroll
As a government contractor, it’s important that your labor distribution system accurately document the employee labor hours from timesheets and dollar amounts from the payroll system. Your records should have those amounts organized by employee, by project name and job code, as well as by indirect accounts.
What makes tracking employee work hours so difficult is that there’s often no paper trail. Employee error or fraud can undermine your relationship with the agencies with which you’re doing business. To demonstrate to auditors that you’re taking DCAA’s prescriptions seriously, you’re going to need to ensure that you’re tracking all details related to payroll in a centralized database, such as Aspire Time, so that you can provide that information to auditors with confidence.
The Importance of Separate Payroll and Timekeeping
The responsibility for approving accurately recorded timesheets is heavy. Selecting the right person for the job can mean keeping you, your employees, and your company in business and away from fines, or even jail time for labor mischarging in extreme cases.
Ideally, you’d want to choose a member of management who has a direct relationship with his or her employees. Hopefully, this will result in zero changes to timesheets when they reach management approval, making after-record changes unnecessary.
If it’s apparent timesheets have been tampered with after recording, the government will want thorough details of any changes. To avoid spending a lot of extra time and paperwork, a time-tracking system should provide on-demand access to stored information that is secure, online, and available in real time. Aspire Time offers this immediate capability.
