Winning a federal contract can create growth opportunities for your business, but it also brings unique rules, especially around labor tracking. Each year, the Defense Contract Audit Agency (DCAA) audits billions of dollars in federal spending, with a sharp focus on labor costs. If you’re a government contractor, your ability to pass a DCAA audit can impact your future contract eligibility.
Here’s how you can improve your audit readiness using practical tools and practices, and where AutoTime fits in.
What Does the DCAA Expect?
The DCAA looks closely at your costs, especially labor. Labor is often the largest contract expense, so the agency wants clear, accurate, and consistent records. You need systems that help you track every hour worked and support that data with an audit trail.
Look for a timekeeping solution that:
- Prevents system abuse through security controls and data validations
- Is easy for your team to learn and use
- Reconciles payroll and labor records automatically
- Logs every change and shows who made it
- Includes clear processes for submitting, reviewing, and approving time
- Supports different security levels and flexible labor rules
Beyond software, your internal processes matter too. Make sure to:
- Train employees on timekeeping expectations and updates
- Assign clear roles for time tracking, payroll, and billing
- Review your processes often to keep them effective
- Give written guidance on how to enter and correct time
These practices reduce risk and keep your records clean if you’re audited.
What Happens If You Fail a DCAA Audit?
The consequences can be serious:
- You may lose current contracts and future opportunities
- You could face criminal or civil penalties
- You might have to repay funds already received
- You risk fines under the False Claims Act
These outcomes can damage your business financially and legally. Staying compliant helps protect your organization and ensures continued access to government work.
Using AutoTime to Support DCAA Compliance
AutoTime is designed to help government contractors manage labor and time tracking. You can capture and review labor data with full transparency, configure the system to match your internal policies, and integrate it with your ERP.
AutoTime gives you control over who can see, manipulate, or approve time records, helping you maintain a secure and reliable labor tracking environment.
Tracking All Types of Workers
Many contracts involve temporary staff or subcontractors. AutoTime lets you track everyone, while clearly separating employee time from non-employee time. Here’s how that helps:
- Employees log time, which is approved or corrected by managers
- Contractors log time too, but it’s reviewed by their agency, not your team
- Only approved users can review invoices, and they can’t alter the data
This separation lowers your risk of misreporting or fraud.
Total Time Accounting (TTA)
DCAA expects you to record all hours worked—paid and unpaid—and allocate labor costs accurately. That includes overtime or extra hours exempt employees might work.
AutoTime supports TTA with tools that:
- Calculate labor charges automatically
- Account for both paid and unpaid time
- Can be run manually or at the end of each pay period
This setup reduces manual effort and helps your payroll stay compliant.
Real-World Use Cases: How AutoTime Helps You Stay Audit-Ready
Here’s how AutoTime aligns with specific DCAA audit requirements:
| Audit Area | How AutoTime Helps |
| Management Review | Real-time dashboards help managers review time entries and labor activity efficiently. |
| Employee Training | Message alerts can be sent to timeclocks or online, keeping staff informed. |
| Labor Authorization | Managers approve timecards electronically; job access can be pre-filtered. |
| Timekeeping | Timesheets show payroll and labor data on one screen; records are auto-reconciled. |
| Labor Distribution | Employees log what they did, where, and for how long. Data flows to your ERP system. |
| Labor Cost Accounting | TTA features make sure exempt employee costs are spread proportionally. |
| Payroll Preparation | Rules engine calculates time and premiums; data flows to your payroll provider. |
| Labor Adjustments | All changes are tracked, who made them, when, and why, via audit trail. |
Key Takeaways for Your Compliance Strategy
If you’re managing federal contracts, labor tracking isn’t optional. It’s a critical part of your compliance strategy. AutoTime helps by:
- Syncing with your ERP
- Providing real-time and historical audit trails
- Supporting flexible labor tracking
- Automating time, absence, and schedule management
- Offering system-generated and custom reports
- Letting you set user-specific security roles
These tools give you more control over labor data and support your ability to pass DCAA audits.
What steps will you take today to improve your audit readiness?
Explore how AutoTime can help you simplify labor tracking and reduce your compliance risk.