For government contractors, timekeeping is one of the most heavily scrutinized areas during a DCAA audit. Even contractors with well-designed accounting systems can face findings if timekeeping practices are inconsistent, undocumented, or poorly integrated with QuickBooks Online.
DCAA views timekeeping as a core internal control because labor is often the largest cost charged to government contracts. This article explains key timekeeping requirements, best practices for daily entry, how QuickBooks Time integrates with QuickBooks Online, and common compliance risks auditors look for.
DCAA auditors rely on timekeeping records to confirm that:
When timekeeping fails, auditors often question all related labor costs, not just individual entries.
While specific expectations may vary, DCAA generally requires that contractors maintain timekeeping systems that:
Compliance depends on both system configuration and employee behavior.
Daily time entry is one of the most common audit focus areas.
Employees should record time each day worked, not at the end of the week. Delayed entry increases the risk of errors and audit findings.
Time entries must reflect actual hours worked, not scheduled or estimated time. Estimates undermine credibility during audits.
Employees must understand that timekeeping is a compliance requirement — not just an administrative task. Training should cover:
QuickBooks Time can support DCAA-aligned timekeeping when configured and managed properly.
Key Integration Considerations
Integration failures often occur when systems are connected technically but not aligned procedurally.
Corrections are sometimes necessary — but how they are handled matters.
Best Practices for Corrections
Unexplained or frequent corrections raise red flags during audits.
DCAA auditors frequently flag the following issues:
Time entered days or weeks later undermines reliability.
Labor charged inconsistently across contracts or tasks creates allocation concerns.
Adjusting payroll without reconciling to timekeeping records raises immediate questions.
Without documented timekeeping policies, contractors cannot demonstrate compliance expectations.
Timekeeping is only one part of labor compliance. Labor distribution must:
Regular reconciliation helps identify issues early and reduces audit stress.
Written timekeeping policies connect system configuration to daily behavior. Effective policies should define:
Policies are only effective when supported by training and enforcement.
Final Thoughts
Timekeeping compliance is not about perfection — it is about consistency, documentation, and discipline. When QuickBooks Online and QuickBooks Time are configured correctly and supported by trained staff and clear policies, contractors significantly reduce audit risk.
Strong timekeeping practices protect labor costs, support accurate billing, and build confidence during audits and prime contractor reviews.
About GovCon
GovCon supports government contractors with QuickBooks Online configuration, DCAA-aligned timekeeping practices, accounting services, audit support, and training. With over 21 years of experience, we help contractors build compliant systems that stan
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