DCAA Timekeeping Requirements: What Your Timesheets Must Show

DCAA doesn’t care if you track time to the minute in a sophisticated system — it cares whether your timekeeping proves, with a credible audit trail, that the labor you billed the government is the labor that actually happened on the contract it was charged to. Get timekeeping wrong and it isn’t a paperwork nitpick; it’s disallowed costs, and in serious cases, a business system flagged as inadequate.

The Core Rule: Daily Recording, Not After-the-Fact Reconstruction

DCAA’s foundational expectation is that employees record their time as they work, day by day — not at the end of the week from memory, and not estimated in blocks after the fact. A timesheet filled in Friday afternoon reconstructing what someone thinks they did Monday through Thursday doesn’t meet this standard, even if the final numbers happen to be accurate, because the system itself isn’t contemporaneous.

Employees Record Their Own Time

Time entries have to be made by the employee performing the work, not entered on their behalf by a supervisor, timekeeper, or administrative assistant based on a verbal report. Self-recording is a structural requirement of an adequate timekeeping system, not just a best practice — a system where someone else routinely enters time for employees is a documented deficiency DCAA auditors look for specifically.

Supervisor Review and Approval

After an employee records their own time, a supervisor with direct knowledge of that employee’s actual work has to review and approve it before it flows into billing. This isn’t a rubber-stamp step — the supervisor is expected to actually know what the employee worked on and catch discrepancies, which means supervisors need to be engaged enough in day-to-day assignments to meaningfully review the entries they’re approving.

Charging Labor to the Correct Cost Objective

Every hour has to be charged to the specific contract, task, or CLIN the work actually supported — and direct labor has to be clearly segregated from indirect labor (overhead and G&A functions) through your job coding structure. An employee splitting time across two contracts in a day needs to record that split accurately as it happens, not allocate hours after the fact based on a rough estimate of how the week probably broke down.

Corrections Need a Real Audit Trail

When a timesheet entry needs correcting, your system needs a documented process: who made the change, when, and why, with the correction visible rather than silently overwriting the original entry. A system that lets an entry be edited with no trace of the original value or who changed it doesn’t meet DCAA’s expectations for an auditable record, regardless of whether the underlying correction was legitimate.

What Auditors Are Actually Checking

A DCAA timekeeping review is generally looking at whether daily recording is actually happening (not just technically possible in the system), whether the approval chain is real and documented, whether direct and indirect labor are properly segregated by job code, and whether the audit trail for any corrections holds up to scrutiny. This review can happen as part of an SF1408 pre-award survey for a new contractor, or as part of ongoing business systems review tied to DFARS business systems criteria for larger or more established contractors.

Where Specific Statistics Run Out

This article draws on documented DCAA timekeeping requirements rather than a sourced, citable list of the single most common audit findings or deficiency statistics — that specific data wasn’t available in a form worth citing here. Treat the risk areas above (late or batch-recorded time, supervisor approval that isn’t genuinely substantive, poor cost-objective segregation, and uncorrectable or untraceable edits) as the general categories DCAA guidance and timekeeping-system vendors consistently flag, not as a ranked list backed by published audit data.

Setting Up a System That Holds Up

If you’re a newer contractor building your timekeeping system from scratch, look for software built specifically for government contractors rather than adapting a generic commercial time-tracking tool — purpose-built systems typically have the daily-recording enforcement, supervisor approval workflow, and correction audit trail built in by default, rather than requiring you to configure (and hope you configured correctly) those controls yourself. Document your timekeeping policy in writing regardless of which system you use, since DCAA reviews the written policy alongside the actual system behavior.

Training Employees on Why This Matters

Employees who’ve never worked a government contract often don’t understand why timekeeping here is stricter than a typical commercial job, and that gap shows up as late entries, vague task descriptions, or casual corrections without documentation. A short, direct explanation — this isn’t bureaucracy for its own sake, it’s what lets the company legally bill the government for your work — tends to get better compliance than a policy document alone.

Handling Mixed Direct and Indirect Time in the Same Day

One of the more common real-world complications is an employee who splits a single day between direct contract work and indirect activities like administrative tasks, training, or business development — and the timekeeping system needs to capture that split accurately as it happens, not as a rough end-of-week estimate of how the hours probably broke down. A system that only supports one job code per day, or that makes switching codes mid-day cumbersome enough that employees avoid doing it accurately, will systematically misstate your direct-to-indirect labor ratio over time. This matters beyond simple compliance risk: your indirect rates (overhead and G&A) are calculated from this data, so inaccurate time coding doesn’t just create an audit finding, it can distort the rates you’re actually billing on every contract.

Remote and Field Employees Need the Same Rigor

If your contractors or employees work from a client site, a field location, or remotely rather than a central office, the daily self-recording and supervisor-approval requirements don’t relax just because direct observation is harder. Use a timekeeping system accessible from wherever people actually work, and make sure supervisors reviewing remote employees’ time are genuinely checking it against known assignments and deliverables rather than approving it as a formality because they can’t see the person’s day directly. DCAA doesn’t carve out a lighter standard for distributed teams, so build your remote timekeeping process to the same daily-recording and substantive-review bar as an on-site team from the start.

Bottom Line

DCAA-adequate timekeeping comes down to daily self-recorded entries, genuine supervisor review, accurate charging to the correct contract or cost objective, and a documented, traceable correction process — build your system around those four pillars from day one, because retrofitting compliance into a system after a weak SF1408 pre-award survey or a flagged business system review is a much harder position to recover from.

Official sources: Defense Contract Audit Agency (DCAA) · SAM.gov