TimeSolv DCAA Compliance
According to 5-900 -Section 9 of the DCAA Contract Audit Manual DCAA Contract Audit Manual, defense contractors must have controls for labor systems. This document describes the DCAA requirements for timekeeping systems and TimeSolv’s solutions to fulfill them.
5-902 Background Information
Reference: http://www.dcaa.mil/cam/Chapter_05_-_Audit_of_Accounting_and_Management_Systems.pdf
Labor costs are usually the most significant costs charged to Government contracts, and usually comprise the base, or the largest element in the base, used for allocating indirect costs. Historical labor costs are often used to estimate labor for follow-on or similar item Government contracts. Unlike other cost items, labor is not supported by third party documentation such as an invoice, purchase order, or receipt. Contractor personnel have complete control over the documents or devices of original entry, whether they consist of timecards, electronic media, or some other means. Responsibility for accuracy is diffused throughout the contractor’s organization. Consequently, the risks associated with the accurate recording, distribution, and payment of labor is almost always significant.
5-902 Requirements
No.
Requirement
TimeSolv’s Solution
1
An effective method to monitor the overall integrity of the Labor/Timekeeping System.
Security through use of 128 bit SSL encryption, Watch Guard Firewalls and password-protected accounts & configurable access control for each user.
2
An effective employee awareness training program to reasonably assure that all employees are aware of the importance of proper time charging.
3
Effective procedures for labor authorizations/approvals to facilitate the proper accumulation and recording of labor costs to cost objectives.
Automated approval workflow & email notifications.
Reports for employee & approver comments.
4
Effective procedures for timekeeping to reasonably assure that labor hours are accurately recorded and that corrections to timekeeping records are documented, authorized, and approved.
5
Effective procedures for labor distribution to reasonably assure the proper recording of labor costs to cost objectives.
6
Effective procedures for labor cost accounting to reasonably assure that labor charges to the Government are in compliance with promulgated Cost Accounting Standards, generally accepted accounting principles, and contract terms/clauses.
7
Effective procedures for payroll preparation and payment to reasonably assure independent preparation of the payroll, and that pay rates are appropriately authorized and accurate.
8
Effective procedures for labor transfers and adjustments to reasonably assure that they are documented and approved.
All entries and subsequent changes will go through the approval process. Notes can be added to document changes.
5-909.2 Automated Timekeeping Systems
No.
Requirement
TimeSolv’s Solution
a
Only the employee uses their labor charging instrument to access the labor system. (Every employee must record their own time charges)
b
Employee badge issuance is sufficiently controlled so that no number is duplicated and badges are not issued to unauthorized persons.
c
Procedures are in place which require the employee to report lost badges promptly.
d
Changes are initialed, authorized, and dated by the employee and supervisor and include a description of the reason for the change. This may be done electronically.
e
A verifiable audit trail process is in place that collects all initial entries and subsequent changes.
Miscellaneous Requirement
No.
Requirement
TimeSolv’s Solution
a
Identify direct project costs versus overhead costs.
b
To substantiate costs, sufficient records must be retained three years after the final contract billing.
c
Time entries must be recorded daily.
References
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