DCAA stands for “Defense Contract Audit Agency”, which is the government agency responsible for auditing Department of Defense (DoD) contracts.  DCAA can also be brought in by other government agencies to provide accounting and financial advisory services and to assist with their audits. Every year the DCAA audits DoD contracts of all sizes – up to billions of dollars – to make sure the military and taxpayers get what they are paying for. This motivation is described in their mission statement: “Supporting the Warfighter and Protecting the Taxpayer”.  For more information about DCAA visit their website at http://www.dcaa.mil/.

In government contracting, the primary accounting concern is cost. There’s a big difference between accounting conducted by a commercial firm and a government contractor in terms of how costs are classified, segregated, allocated and reported.  Some of the common items being scrutinized during an audit are: Allowable costs, unallowable costs, direct costs, indirect costs, cost pools and pooling of indirect costs.  All of this and everything else being scrutinized during an audit is spelled out in FAR.

The DCAA Information for Contractors guide provides an overview of DCAA audit processes and the types of audits DCAA conducts, links to checklists, and what you can expect in a DCAA audit. In addition to this guide, DCAA offers targeted information to assist with audit issues that relate to small businesses. Access DCAA presentations below for help on specific topics important for smaller contractors. For additional questions contact the DCAA Small Business Focal Point (571) 448-2008.

If your company opts to use an electronic timekeeping method, it will still be DCAA compliant. However, there are other special requirements that must be met when the timekeeping is being done electronically, such as:

Password protection must be required for logging into the electronic timekeeping system and passwords should be changed at least every 6 months.

Employees must maintain personal control over the timesheet, to ensure that no unapproved changes can be made by anyone else.

Employees must log the hours that they have worked daily, but must not make any entries in advance of working.

The electronic system should include an audit trail feature that documents all transactions within the timekeeping system. This includes all dates, time charges, employees, project numbers, approvals and time stamped submissions. It should record all changes made for corrections, as well as the employee who made the change, approvals, reason for change, etc.

The system must have a feature that automatically prompts the employee to write a reason whenever any change is made to a timesheet. This reason must be recorded in the history of the timesheet.

The electronic timekeeping system should allow for additional documents to be stored and scanned alongside the timesheet to provide additional information.