DCAA Issues Guidance on Accomplishing Timekeeping Review Requirements
The Defense Contract Audit Agency issued new guidance addressing how often auditors should test both major and non-major contractors’ timekeeping practices as well as performing risk assessments at major contractor locations to determine whether to perform labor floorchecks or labor interviews. Auditors are responsible for testing the reliability of employee time records, verifying that employees are actually at work, they are performing in assigned job classifications and that time is charged to the proper cost objective – these requirements are covered under their Mandatory Annual Audit Requirements (MAAR) No. 6. The guidance states that MAAR NO. 6 can be accomplished by conducting floorchecks and/or labor interviews.
At major contractors, the decision whether to perform floorchecks or interviews or a combination of both depends on the level of assessed risk which is ascertained after performing a risk assessment specified in Chapter 6-402 of the DCAA Contract Audit Manual. For non-major contractors who are not considered “low risk” contractors MAAR No. 6 would generally be accomplished by conducting annual labor floorchecks while for low risk non-major contractors, floorchecks should be performed every three years (03-PPD-046(R).
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