How to be DCAA Compliant

If you or your company has been fortunate enough to win a government contract you will have to be able to remain compliant with the Defense Contract Audit Agency. There are some important steps that you can take to ensure that you and your company will not have any problems if and when you face an audit.


In order to show your compliance your company needs to have documented policies and procedures that are strictly followed. You must also have a system in place that keeps track of hourly labor charges.


Costs need to be collected and accumulated separately in different sections such as direct and indirect costs, accounting costs, billing costs, human resource costs, to name a few. These costs need to be documented at all times so that your company stays on top of all monies. These costs should be published in a report no less than on a monthly basis.



Only a person in a supervisory role should sign and approve all timecards. Your company should have a policy in place that covers timecards, which states in effect that it is the employee’s job to ensure that their timecards are accurate and if they are not they could face disciplinary action through the company or by any relevant government regulations.

Is Software the Answer?

Many companies will offer software that they will claim will make your company DCAA compliant just by installing it. However, this is not the case. Your company still has to keep policies and procedures in place in order to keep employees on the right track. There is no use of investing in the software if employees do not follow company rules to ensure compliance.

What the software that is available does for a company is help to keep track of various reports that the DCAA wants to see during an audit. These include comprehensive time and labor reports, effective cost cutting and allocation methods, and an easy to follow chart of accounts. What is important to remember is that the software is to be used as a device to aid in your company’s compliance not to supplant any rules and regulations that you have already put in place to keep compliant.

Stay Informed

When you or your company do business with the government it is important that you know all of the ins and outs. It is up to you to stay on top of any changes that DCAA makes in how it operates. One additional resource that you can use is to get a copy of the DCAA Contract Audit Manual (CAM). This is an instructional manual for auditors that work for the government and discusses the standards of how to conduct an audit and what to look for. This manual is available for free download online and due to its size, over a thousand pages, it is easier stored on a computer than on your desk.

Just by following a few simple steps and ensuring that your company and employees adhere to the standards that are set by your company and by the government you should not have any problems when facing an audit.