DCAA Compliance

Overview

The Defense Contract Audit Agency (DCAA) performs contract audits for the Department of Defense (DoD) and other government agencies. Contractors working on the contracts or projects for these government agencies must comply with the DCAA guidelines. A prime concern of the DCAA is the Labor Charging System or timekeeping procedures adopted by contractors. Detailed labor and cost tracking is required because, unlike other cost items, labor is not supported by external documentation or physical evidence (for example, invoice, purchase order, receipt).

There are other DCAA compliant software in the market covering different aspects of the audit, including timekeeping and accounting. Using DCAA-compliant software is important in the audit process because it shows DCAA that your company is professional, efficient and organized. The most important factor in passing a DCAA audit is a good record-keeping system that is customizable to your business type and has all the features that meets the DCAA requirements.

Core offers DCAA-compliant time and expense tracking, project management, and accounting capabilities. The best part is that Core enables you to implement the DCAA compliant settings with a single click via Global Settings. When you check the DCAA complaint option in Global Settings, Core automatically overrides the existing or default security settings of all users to ensure DCAA compliance. However, DCAA compliance does not apply to the Vendor Bills, Checks and Credit Cards screens. You can also set up Core in compliance with the DCAA guidelines manually. Click to watch this video on making Core DCAA compliant.

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The key link in an effective time tracking system is the individual employee. It is critical that management educates employees on their independent responsibility for accurately recording time charges. This is required by the DCAA to guard against fraud and waste in the labor charging system.

Note: For more information about the DCAA related publications, check DCAA website and DCAA Blog. Check out Core-DCAA Compliance for more on how Core meets the DCAA requirements.

Basic Tasks

Set Up DCAA Compliance Automatically

Advanced Tasks

Set up DCAA Compliance Manually

Set Up DCAA Compliance Automatically

You can provide default settings for DCAA compliance here and implement this security feature with a single click. For security reasons, this setting is password-protected and hence you must set a DCAA password for it so that no one turns it off accidentally. However, DCAA compliance does not apply to the Vendor Bills, Checks and Credit Cards screens.

To do so, watch this video or follow these steps:

    1. Open the Global Settings screen from your company menu > Settings > Global Settings.

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    1. Click Security on the left.

    2. On the Security panel, select the option: Make this application DCAA complaint (Government contractors and agencies require their time tracking systems to be DCAA compliant. Core provides a single-click option that makes the program comply with their requirements.).

    3. On the Change DCAA Password dialog, enter the new password and click Save.

    4. You can also select other security options that help in complying with the DCAA requirements:

      • Password required when closing date is changed

      • Users must agree to the disclaimer when submitting time and expense...

    5. Click Save.

Set up DCAA Compliance Manually

You can manually set up Core in compliance with the DCAA requirements. Core allows you to set up rules and options that support DCAA compliance. Some of them are required for DCAA compliance while others are optional.

    1. In the Global Settings screen, you can specify options that support DCAA requirements, such as time and expenses, their approval, processing and billing. These global settings apply company-wide to all Core users. See Global Settings for more.

Setting

Description

Location

Standard Employee Hours: Per Day/Per Week

If you want Core to track overtime or comp time automatically, enter the standard number of hours employees work per day and per week. This default value carries to each new employee record. You can also enter this information in the Employees screen.

Global Settings > Master Information

Smallest time increment for time entry/start and stop time

Government contracts might define a minimum time increment, or you can choose to define one for all timekeepers. Enter that increment here (e.g., 15 minutes). You can apply the increment to Hours, Client Hours, or both.

Global Settings > Time & Expenses

Time entry should not be saved/deleted if older/newer than

Enter the desired number of days in the past or future for the date of a time entry. This applies to new and existing entries. This setting ensures that employees enter or edit their time within the days specified by you, e.g., 7 days before or after the current day.

 

The past or future period should be consistent with your company policy for recording, submitting, reviewing, editing and approving time entries. A timekeeper cannot edit a rejected entry outside the past or future period without temporarily disabling this option. We recommend that you allow for normal delays that might occur to avoid extraordinary procedures.

Global Settings > Time & Expenses

Allow negative time entries

Check this option to allow recording of negative hours for time entry. Combined with security permissions, this creates an audit trail for all time entry edits.

Global Settings > Time & Expenses

Auto approve time entries for projects

Uncheck this option so that time entries are not approved automatically for all projects. Before they can be billed, entries must be submitted and approved.

Global Settings > Time & Expenses

Auto approve time entries for employees

Uncheck this option so that time entries are not approved automatically for all employees. Before they can be billed, entries must be submitted and approved.

Global Settings > Time & Expenses

Time/expense entry memo required

Check these options for Time Entry and Expense Entry so that all timekeepers add memos to track details about the entries.

Global Settings > Time & Expenses

    1. To ensure DCAA compliance, you can customize the default security settings from the Security screen. If needed, you can even copy these settings to other similar users. You can use the information below to fine-tune the permissions for a security profile, user, or a group of users by checking or unchecking the permissions according to the level of control required. See Security for more.
Module Name Permissions
Time Entry

Turn off or uncheck the following permissions for timekeepers:

Allow Delete

Allow Access to Entries of all Employees

Allow to Approve Entry

Allow Change Billable/Non-Billable

Allow Batch Change

Allow Adjust Date Beyond Global Setting Restriction

Allow Edit Billed Entry

Allow Edit Memo

Show Bill Rate and Cost Rates

Allow Edit Approved Entry

Allow Access to Employees I Manage

Allow Approve My Entries

Show WUD

Show Amount

Show Cost Rate

Turn on or check the following permission for timekeepers:

Limit Editing to Self Only

    1. For companies requiring DCAA compliance, note the following option in the Company Profile screen.

Setting

Description

Location

Closing Date Enter a closing date for the last accounting period. This prevents untimely editing of data in Core after the financial year closing date. This option can be password-protected.

Company Profile > General

    1. To increase productivity associated with timekeeping activities, you can activate appropriate User Preferences. These preferences apply to the individual user only and override Global Settings.

Setting

Description

Location

My time or expenses are approved/rejected

When checked, Core automatically sends an email or notification to you when your time and expense entries are approved or rejected.

User Preferences > Notifications & Reminders > Notification Settings

Time or expenses are submitted to me for approval

When checked, Core automatically sends an email or notification to you (reviewer) when time and expense entries are submitted to you for approval.

User Preferences > Notifications & Reminders > Notification Settings

Time/expenses require my review Check these options to receive reminders to review time and expenses submitted to you for approval. User Preferences > Notifications & Reminders > Reminder Settings
My time/expenses need to be submitted Check these options to receive reminders to submit your time and expenses for approval. User Preferences > Notifications & Reminders > Reminder Settings
    1. Employees and vendors can sign up for Core and be added as Core users to enter their time and expenses. On the Employees or Vendors screen, you should consider the settings mentioned below. These settings take precedence over the Global Settings and User Preferences.

Setting

Description

Location

Submit To

Select to whom employees (or vendors) should submit their time and expense entries for approval. If your company has a chain of approvers, this is the first person in the chain.

Employees > General > Rates & Options

Vendors > General > Rates & Options

Security

Select a standard security profile for the employee (or vendor).

Employees > General > Details

Vendors > General > Details

Bill Rate

Pay Rate

Enter the default bill rate and cost rate for the employee (or vendor). Pay Rate and Overhead Multiplier combine for the Cost Rate.

Employees > General > Rates & Options

Vendors > General > Rates & Options

Standard Hours: Per Day/Per Week

Enter the number of hours employees (or vendors) are required to work per day and per week (these carry from Global Settings).

If you turn on Automatic Overtime and Comp Time, Core determines when all or a part of a time entry is overtime. It applies the overtime rates to those hours. Comp time is accumulated as banked hours.

Employees > General > Dates & Hours

Vendors > General > Dates & Hours

Auto approve time/Expenses

Uncheck these options so that a designated manager reviews and then approves all the time and expense entries submitted by an employee (or vendor).

Employees > General > Rates & Options

Vendors > General > Rates & Options

    1. For effective job costing and profitability reporting, both billable and non-billable activities should be charged to the projects. In Core, you can set up default bill and cost rates by activity in the Activity Items screen. These rates apply to all employees who charge an activity to a project while entering time. Usage of activity rates is set on a project-by-project basis. For DCAA compliance, the following settings are important:

Setting

Description

Location

Cost Rate

Bill Rate

Enter the default cost rate and bill rate for the activity item. To activate this rate for a project, check that rule on the Projects screen.

Activity Items

Billable

Check or uncheck the billable status for each activity item (billable or non-billable).

Activity Items

    1. In Core, employees log activities and charge their time (hours worked) to a project or project phase. Each has its own contract type, contract amount, and so on. This ensures a correct distribution of time by project name or other identifiers as required by the DCAA. You can set some rules in the Projects screen that ensure DCAA compliance. These settings get precedence over Global Settings and User Preferences.

Setting

Description

Location

Project ID

Project Name

Enter a unique project ID and name. A timekeeper selects a Project ID or Name to charge hours.

Projects

Contract Type

Enter the appropriate contract type (billing arrangement) for the project. Fixed Fee and Hourly Not To Exceed contracts require a contract amount. In addition, Core automatically checks that time and expenses do not exceed the contract amount for these types.

Projects

Memo

Click Show Memo and enter project issues, events, billing decisions, change orders, and so on to track actions related to the project.

Projects > General > Details

Fee Schedule

Assign a fee schedule with special rates to the project, if required.

Projects > General > Billing Options

Auto approve expense/time entries

Make sure these options are unchecked. DCAA requirements do not allow automatic approval of time and expense entries.

Projects > General > Assignment

Memo is required for expense/time entry

Check these options so that timekeepers are required to add memos to track all the details related to their time and expense entries.

Projects > General > Assignment

Use bill rates from Activity Items screen

To apply activity rates to a project, check this option. These rates will be used if a fee schedule is not assigned to a project or there is no match in the schedule for the employee-activity combination.

Projects > General > Assignment

    1. In Core, features like Project Assignments and Employee Control restrict who can charge time and expenses to what activities on which projects. This makes drop-down lists shorter, thus improving the speed and accuracy of entry by timekeepers. It also reduces the review time.

Setting

Description

Location

Add Team Member/Activity Item/Expense Item Select the employees along with the activity and expense items that you want to assign to a project. Project Assignments
Add Project/Activity Items/Expense Items Select the projects along with the activity and expense items that you want to assign to an employee. When you have finished, make sure to uncheck the Disable Employee Control permission in the Security screen for the relevant employees and screens. Employee Control > Detail Security > Edit Profile

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