Updated November 2026 · VG CPA PC advisors
Core requirements
Employees should record their own time daily, to the correct charge codes, for all hours worked including uncompensated overtime. Supervisors review and approve timesheets, and the system ties approved time to payroll through a labor distribution.
Written policies should explain how to record time, what charge codes mean, and the consequences of mischarging. Training should be documented at hire and periodically.
Corrections and controls
Changes to time after entry must be made by the employee or with the employee's acknowledgment, with a documented reason and supervisor approval, and the system should keep an audit trail of the original entry.
Total time accounting, recording all hours rather than just 40, ensures that indirect and direct costs are allocated correctly when employees work extra hours.
Floor checks
DCAA may perform unannounced floor checks, asking employees what they are working on and comparing the answer with their timesheets. Employees should be able to explain their charge codes.
Repeated timekeeping problems can lead to findings of significant deficiencies in the accounting system, which may result in payment withholds on DFARS-covered contracts.