Guide · Timekeeping

DCAA Timekeeping Requirements: Sample Policy and Floor Check Questions

The regulations require a timekeeping system that identifies each employee’s labor by contract or indirect cost objective, and a labor distribution system that charges it correctly. DCAA’s guidance adds the how: record time daily, record every hour, get supervisor approval, document every change. Below are the rules with sources, a free sample policy and the floor check questions your staff should be able to answer.

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By Alexander Mungov, CPA, former DCAA Supervisory Auditor
Last updated: September 13, 2026

What the rules actually require

Two regulatory criteria cover timekeeping. Everything else you’ve heard is DCAA guidance or common practice, and it helps to know which is which.

SF 1408. The pre-award survey form, Standard Form 1408 (Rev. 1/2014), lists a timekeeping system that identifies employees’ labor by intermediate or final cost objectives (item 2e) and a labor distribution system that charges direct and indirect labor to the appropriate cost objectives (item 2f).

DFARS. The same two criteria are items (c)(9) and (c)(10) of DFARS 252.242-7006, Accounting System Administration. DoD Class Deviation 2026-O0050, effective March 16, 2026, renumbered the clause 252.242-7999 in DoD’s overhaul text of DFARS Part 242. The timekeeping and labor distribution wording didn’t change.

FAR 31.201-2(d). Under FAR 31.201-2, you must keep records, including supporting documentation, adequate to show that costs claimed were incurred, are allocable to the contract and follow the cost principles. The contracting officer may disallow costs that aren’t adequately supported. For labor, the timesheet is that support.

DCAA guidance. DCAA Manual 7641.90, Information for Contractors (November 14, 2023), has a Labor Charging System section listing the controls DCAA expects. It makes a point every owner should hear: unlike most costs, labor has no outside document behind it, so the employee’s own record is the evidence. The current Contract Audit Manual, Chapter 6 (August 19, 2026) lists verifying that labor is supported by proper timekeeping, payroll and personnel records among incurred cost audit steps.

Rule or practice

Which DCAA timesheet requirements are regulation, and which are practice

Many “DCAA timekeeping rules” online are habits, not law. Here’s where each one really comes from.

Requirement	Source	Type
Time tracked by cost objective	SF 1408 item 2e; DFARS 252.242-7006(c)(9)	Regulation
Labor charged to the right objectives	SF 1408 item 2f; DFARS 252.242-7006(c)(10)	Regulation
Records that support labor claimed	FAR 31.201-2(d)	Regulation
Uncompensated overtime disclosed in proposals	FAR 52.237-10, when the solicitation includes it	Regulation
Record time daily	DCAA Manual 7641.90	DCAA guidance
Record all hours, paid or not	DCAA Manual 7641.90	DCAA guidance
Employee signs, supervisor approves	DCAA Manual 7641.90	DCAA guidance
No one else fills in your time	DCAA Manual 7641.90 (exception: prolonged authorized leave)	DCAA guidance
Changes show original, corrected and concurrence	DCAA Manual 7641.90	DCAA guidance
Work, not funding, decides the code	DCAA Manual 7641.90	DCAA guidance
Timekeeping separate from payroll	DCAA Manual 7641.90, which notes a very small company may not manage it	DCAA guidance
A written reason on every correction	Our recommendation; makes the change history readable	Practice
Annual signed acknowledgment	Our recommendation; DCAA asks that employees be kept aware of controls	Practice
Ink, 15-minute increments, a named software	Not in any regulation or DCAA guidance we cite	Myth

The daily rule

DCAA timekeeping requirements, daily: what “daily” means

Enter today’s hours today. No regulation says “daily”, but DCAA’s manual says employees record their time on a timesheet on a daily basis, and that’s the standard an auditor applies. A timesheet filled in on Friday from memory is a reconstruction, not a record.

Daily also rules out pre-filling. A timesheet showing eight hours on Thursday when it’s Tuesday is the first thing a floor check catches. For employees who can’t reach the system each day (offsite, secure facilities), DCAA’s guidance says the company should have procedures to reduce the risk of mischarging. A daily written note entered at the first chance works.

Everyone keeps a timesheet, including salaried staff and owners

Labor distribution means all labor, not just hourly staff on contracts. An owner’s salary is charged somewhere: to a contract, to overhead, to G&A. Without a timesheet, nothing supports that split, and FAR 31.201-2(d) puts the burden of support on you. The same goes for exempt engineers, part-timers and the office manager.

Total time accounting and uncompensated overtime

Record every hour worked, paid or not. DCAA’s manual says labor costs and overhead are affected by total hours worked, not just paid hours, so labor rate computations should reflect all hours. Unpaid hours worked are uncompensated overtime.

A simple illustration: an exempt engineer paid $2,000 a week works 50 hours, 30 on Contract A and 20 on indirect work. Record only 40 hours and the split of her pay is guesswork. Record all 50 and one common method spreads her pay at $40 an hour: $1,200 to Contract A, $800 to indirect. Whatever method you use, write it down and apply it the same way every period.

If a solicitation includes FAR 52.237-10, Identification of Uncompensated Overtime, you must disclose uncompensated overtime in your proposal, and the practices you use to estimate it must be consistent with the cost accounting practices you use to accumulate and report it.

Charge codes, approvals and corrections

The nature of the work decides the code, not which contract has money left. DCAA’s manual says employees should have the list of project numbers and descriptions, sign their own timesheets, and have a supervisor approve and cosign them. Supervisors shouldn’t fill in an employee’s time except during prolonged authorized leave, and the employee then submits a replacement.

Corrections are normal. Undocumented corrections are the problem. DCAA’s guidance says each change should identify the original charge, the corrected charge and the employee’s concurrence. We add a written reason and a supervisor approval, and your system should keep the history rather than overwrite it.

Free template

Sample DCAA timekeeping policy

Copy this, replace the bracketed items and cut anything you don’t do. It’s written in plain language because employees are the ones who have to follow it.

1. Purpose

[Company] performs work under government contracts. Labor is our largest cost, and the government pays for it or prices it from our timesheets. This policy sets the rules for recording time so every hour is charged to the work actually performed.

2. Scope

This policy applies to every employee: full-time or part-time, hourly or salaried, exempt or nonexempt, including officers and owners. It covers all hours worked, on government work or not.

3. Daily recording

Record your time in [timekeeping system] every day you work, by the end of that day. Enter only time already worked; never enter hours for future days, except leave approved in advance. If you can’t reach the system (travel, a customer site, a secure facility), keep a daily written note of hours and charge codes and enter it on the first day you have access, with a note explaining the delay.

4. Charge codes

Charge each hour to the project, task or indirect code that describes the work you did. The nature of the work decides the code, never which contract has budget or funding left, the contract type, or what anyone expects to see. The current code list and descriptions are at [location]. If you aren’t sure which code applies, ask [accounting contact] before you submit. Only accounting opens and closes codes.

5. Direct and indirect time

Direct time is work for a specific contract or project. Indirect time is the work that runs the company: administration, management, business development and proposals, training and internal projects. Each has its own code, and owners and managers record indirect time as carefully as direct time.

6. All hours worked and uncompensated overtime

Record every hour you work, including hours beyond your normal schedule that you are not paid extra for. Salaried employees do not stop at 40 hours. [Company] spreads salaried pay over total hours worked using the method in [procedure]. Nonexempt employees need approval before working overtime and are paid for it under [Company]’s pay policy.

7. Review and approval

At the end of each [weekly] period, sign or electronically certify that your timesheet is accurate and complete. Your supervisor reviews and approves it by [day], checking hours and codes against the work assigned. Supervisors do not change your entries. No one enters time for you, except a supervisor while you are on extended authorized leave; when you return, you review that time and submit your own timesheet in its place.

8. Corrections

After an entry is saved, only you may change it, or someone else with your written agreement. Every change needs a reason. The system or correction form keeps the original entry, the corrected entry, who changed it, when, and who approved it. Your supervisor approves every correction, and changes after payroll has run also go to [accounting contact] so the labor distribution is adjusted. Never delete or overwrite a record in a way that hides the original.

9. Leave and holidays

Record vacation, sick leave, holidays and other paid or unpaid absence with the leave codes in [system] for the day they occur. Leave is never charged to a project code.

10. Remote and offsite work

Remote, traveling and customer-site employees follow the same daily rule. Supervisors of remote staff compare timesheets with assigned work and deliverables.

11. Training and annual acknowledgment

New employees are trained on this policy before their first timesheet. Every employee re-reads it and signs an acknowledgment each year and whenever it changes. Accounting keeps the signed copies.

12. Consequences

Accurate timesheets are each employee’s personal responsibility. Mischarging time, knowingly or through repeated carelessness, can lead to discipline up to and including termination, and knowingly false charges on government contracts can violate federal law. Report suspected mischarging to [contact]. [Company] does not retaliate against good-faith reports.

Acknowledgment

I have read and understand this timekeeping policy and agree to follow it. Name, signature, date.

Adapt before you use it. This sample is a starting point, not legal advice. The auditor compares your written policy with what employees actually do, so it has to describe your real system and software. Have employment counsel review the overtime and discipline language for the states where you have employees.

Floor checks

DCAA floor check questions employees should be able to answer

A floor check is an unannounced visit where a DCAA auditor observes work areas and interviews employees. DCAA’s Information for Contractors manual says the goal is to determine whether employees are actually at work, performing in their assigned job classification, and charging time to the appropriate job or indirect account. DCAA does them at contractors with cost-reimbursable, time-and-materials and labor-hour contracts.

A 2021 DCAA article calls the labor floor check MAAR 6 and says auditors reconcile what they observe with payroll records and follow up on discrepancies. So the interview is only half of it. The other half is whether the answers match the timesheet and payroll.

These questions are written in our own words. They aren’t taken from any DCAA audit program; they follow what DCAA says a floor check tests. Every employee should be able to answer them honestly without help:

What’s your job title, and who is your supervisor?
What are you working on right now, and which charge code does it go to?
How do you know which code to use, and where is the code list?
How often do you record your time? When did you last enter it?
Can you show me this week’s timesheet? (Today’s hours should be there, and no future days.)
Do you record every hour you work, including hours over 40 you aren’t paid extra for?
Has anyone ever told you to charge a project you didn’t work on, or to charge by budget or funding?
What do you do when you’ve used the wrong code, and who approves the fix?
Who approves your timesheet, and how do you submit it?
Does anyone else ever enter or change your time?
How do you record time when you work from home, travel or sit at a customer site?
How do you record leave, holidays, proposal work, training and admin time?
Have you been trained on the timekeeping policy, and did you sign an acknowledgment?
If you saw someone mischarging time, who would you tell?

Don’t script answers. A rehearsed answer that doesn’t match the timesheet is worse than “I’d have to check.” Train the policy, make daily entry a habit, and the answers take care of themselves.

Self-check

DCAA compliant timekeeping checklist

If you can’t check every item, fix those first. Each one is something an auditor can test in an afternoon.

A written timekeeping policy that matches what people actually do.
Every employee, owners and salaried staff included, records time every day.
Every hour worked is recorded, including unpaid hours over 40.
Each hour goes to a contract, task or indirect code from a current, published list.
Employees certify their own timesheets and a supervisor approves each one.
No one enters time for anyone else, and no future days are filled in.
Every correction keeps the original entry, a reason, the employee’s agreement and an approval.
Approved hours tie to payroll and to the job cost ledger every month.
Salaried pay is spread over total hours with a written, consistent method.
Employees are trained and sign an acknowledgment each year.

How we help

A timekeeping policy and staff training, done for you

We write a timekeeping policy that matches how your company works and your software, then train your staff on it. Timekeeping policy plus staff training is from $1,200. We reply to any inquiry within one business day and send a written proposal within two business days after the intro call.

If we keep your books, timesheet review is part of every GovCon monthly tier, starting with Core from $800/month. We do the bookkeeping; you’re not getting a memo. And a CPA reviews every month-end close. Details are on our pricing page.

Timekeeping is one piece of a DCAA-compliant accounting system. If a pre-award survey is coming, start with our DCAA pre-award audit checklist.

Questions

Frequently asked

What are the DCAA timekeeping requirements?

The regulations require a timekeeping system that identifies each employee’s labor by contract or indirect cost objective, and a labor distribution system that charges that labor correctly (SF 1408 and DFARS 252.242-7006). DCAA’s published guidance adds daily recording, all hours worked, supervisor approval and documented corrections.

Does DCAA require daily timekeeping?

No regulation uses the word daily. DCAA’s Information for Contractors manual says employees record their time on a timesheet on a daily basis, and auditors test against that expectation. Treat daily entry as required in practice.

Do salaried employees and owners need to fill out timesheets?

Yes. Their pay is charged to contracts or to indirect pools, and without a timesheet nothing supports that split. Owners and salaried staff without timesheets are a common gap in small company systems.

What is total time accounting?

Recording every hour worked, paid or not, so labor cost and overhead are spread over the hours actually worked. DCAA’s guidance says labor rate computations and labor overhead should reflect all hours worked, not just paid hours.

How do you handle uncompensated overtime for DCAA?

Salaried exempt employees record every hour, including hours over 40 they are not paid extra for. Spread pay over total hours using a written method you apply consistently. If a solicitation includes FAR 52.237-10, you also disclose uncompensated overtime in your proposal.

What is a DCAA floor check?

An unannounced visit where a DCAA auditor observes work areas and interviews employees to confirm they are at work, doing their assigned jobs, and charging time to the right job or indirect account. The auditor then reconciles what was observed to payroll records.

Does DCAA approve timekeeping software?

No. DCAA does not approve or certify software. A tool helps if it records time by charge code, keeps a history of every change and supports approvals, but compliance depends on your policy and how people actually use the tool.

Can a supervisor correct an employee’s timesheet?

Not alone. DCAA’s guidance says a change should show the original charge, the corrected charge and the employee’s concurrence, and a supervisor should not complete an employee’s timesheet except during prolonged authorized leave.

DCAA-compliant accounting systems

Chart of accounts, jobs, timekeeping and rates set up to pass review.

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DCAA pre-award audit checklist

Every SF 1408 criterion and what the auditor asks to see.

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How to set up QuickBooks, including project timekeeping, for cost-type work.