DCAA floor checks can be a nerve-wracking experience for federal contractors. DCAA performs these surprise audits in order to make sure government contractors are accounting for their labor properly, and following required regulations.
Here are 9 common questions we hear frequently about DCAA floor checks, along with our answers to help you be best prepared in the event DCAA shows up unexpectedly to perform a floor check related to your government contracting business.
1. What Does DCAA Mean by a “Floor Check”?
Floor check audits are used by DCAA to ensure that a contractor’s timekeeping policies and controls on labor charges comply with regulations. This is accomplished by validating employees’ time records for integrity and correctness.
Labor is one of the Government’s largest contract costs. For this reason, the Government invests significant efforts to monitoring and auditing labor charges.
Government contractors should have well-documented policies and procedures for timekeeping and ensure the policies comply with Federal Acquisition Regulations (FAR), to be appropriately prepared for a floor check audit.
2. When Does DCAA Perform a Floor Check?
Floor checks are unannounced and occur at random times, by design. It’s the intention of DCAA to ensure timekeeping and labor charging controls are in place and enforced by government contractors on a routine basis.
3. What triggers a DCAA floor check audit?
DCAA audits are triggered by a number of events. Primarily, contracting officers’ or administrative contracting officers’ need to make decisions or meet regulatory requirements, and request the audits. However, DCAA also initiates audits by random sampling as well as in the event a concern arises regarding a specific contractor or practice.
DCAA does not perform audits at the request of a contractor. The agency only performs audits in response to requests from federal agencies and through self-initiation.
4. What is DCAA Looking for During a Floor Check?
DCAA is examining a contractor’s policies and procedures for providing employees work authorizations, implementing and enforcing timekeeping policies compliant with FAR, and reviewing overtime and uncompensated overtime policies. During the floor check, an auditor is likely to examine a contractor’s attendance policies, request an employee list from the contractor, and interview a sampling the employees to ensure that their schedules and work authorizations agree with the information shown on timecards or other records.
DCAA auditors will further interview employees about their timekeeping practices and verify this information against internal controls.
5. What kind of questions will an auditor ask in a labor interview?
Examples of common questions:
- Does the employee understand how to record time spent on various tasks?
- Was the employee made aware of her job responsibilities?
- Was the employee given written instructions on how to charge labor and distribute time among contracts and tasks?
These audits are intended to ensure that employees understand compliant timekeeping procedures and is performing his or her job correctly.
Auditors might request copies of work authorizations provided to employees. In order to aid in the compliance process and expedite any future audits, it is recommended that contractors implement policies and procedures for providing work authorizations to employees and document the process.
Auditors may also look at payroll records, timesheets, and review contract types, comparing the information to labor distribution costs and analyzing the data for discrepancies.
7. What happens if an employee can’t fill out a timesheet?
There are many reasons why a timekeeping system might not work—such as when the power goes out or there’s a server malfunction. But, regardless of what happens to your computer systems, you still have an obligation to keep track of employee hours manually. When the system is back up, copy your handwritten records of time worked into the electronic system.
8. What if the employee is out due to illness or personal circumstances?
Generally, supervisors should not initiate time records on behalf of employees. However, DCAA allows supervisors to do this if the employee is absent for a prolonged period on authorized leave or travel.
Employees should certify the timesheet completed by their supervisor and turn in their own timesheets upon returning from a business trip or time away due to leave or illness.
9. What happens if DCAA finds discrepancies during a floorcheck audit?
Discrepancies during a DCAA floor check audit can have a negative impact on your organization’s reputation and adversely affect its ability to procure contracts with government agencies. If discrepancies are found, DCAA will ask the contractor to create a plan for correction, and will schedule additional floor check audits to monitor the contractor’s corrective action plan.
If you have any further questions or need expertise and help with DCAA audits, you can contact us here right now.