What is DCAA Floor Check?

Definition

DCAA Floor Check is an audit procedure used by the Defense Contract Audit Agency to evaluate contractor labor and timekeeping controls. It involves observing or interviewing selected employees to determine whether they are working as represented, performing in their assigned labor capacity, and charging time to the appropriate job or indirect account. DCAA identifies labor floor checks as part of its audit work for evaluating the reliability of employee time records and labor charges. :contentReference[oaicite:0]{index=0}

A floor check is therefore more than a physical walkthrough. It connects what an employee is actually doing with the timekeeping records, labor distribution, payroll information, and contract cost objectives maintained by the contractor.

Table of Contents

How a DCAA Floor Check Works

DCAA auditors select employees and conduct floor checks either in person, by telephone, or through video conferencing, depending on the circumstances. In-person reviews can involve identifying employees at their work locations, discussing their current work, and comparing observations with labor records. DCAA's current audit programs also allow scheduled, unannounced, or combined approaches. :contentReference[oaicite:1]{index=1}

  • Employee identification: The auditor verifies the selected employee against a control list, roster, or other identifying information.
  • Work observation: The auditor discusses and observes the employee's actual work to evaluate the applicable direct or indirect labor classification.
  • Timekeeping review: The employee explains how time is received, recorded, assigned, and submitted.
  • Charge verification: The auditor evaluates whether recorded labor is charged to the proper contract, project, or indirect cost objective.
  • Record reconciliation: Observations can be compared with payroll and labor distribution records, with discrepancies followed up for explanation.

What DCAA Floor Checks Examine

The central purpose is to test the reliability of labor charges and the contractor's timekeeping internal controls. DCAA guidance identifies three important areas: whether employees are actually at work, whether they are performing in their assigned job classifications, and whether their time is charged to the appropriate job or indirect account. :contentReference[oaicite:2]{index=2}

Auditors may also ask employees about timecard procedures, charge numbers, work assignments, and the process for completing and submitting time records. These discussions help connect written procedures with actual employee practices. :contentReference[oaicite:3]{index=3}

For example, if an employee's prior-period labor was charged to Project A but the employee is observed working on Project B, the auditor may ask about the work assignment and investigate whether the difference is explained by normal job changes or requires additional analysis. :contentReference[oaicite:4]{index=4}

Timekeeping Controls Supporting a Floor Check

Contractors should maintain clear procedures governing daily time entry, charge-code selection, corrections, employee certification, and supervisory approval. DCAA guidance states that the nature of the work should determine the proper distribution of time rather than funding availability or contract type. It also calls for employees to record their time daily and for changes to timesheets to document both the original and corrected charges. :contentReference[oaicite:5]{index=5}

All hours worked should be recorded, including unpaid hours where applicable. DCAA guidance identifies unpaid hours worked as uncompensated overtime and notes specific disclosure requirements for certain solicitations. :contentReference[oaicite:6]{index=6}

A well-maintained audit trail allows a contractor to explain why labor was charged to a particular cost objective and how any subsequent correction was authorized and documented.

DCAA Floor Checks and Accounting Systems

A floor check can connect operational observations with the contractor's broader accounting environment. An ERP should preserve consistent relationships between employee time, labor distributions, payroll, project accounting, and contract cost information.

The DCAA-Compliant ERP: 2026 Buyer's Guide + AI Audit Tips provides guidance on ERP capabilities and audit-readiness considerations for government contractors. The broader ERP for Government Contractors: The Complete Guide (2026) also addresses ERP selection, integration, and finance workflows in government contracting.

Transaction controls can complement labor controls. Dupliction Check can support field-level invoice checks and purchase-order matching, while Duplicaton Check can identify duplicate purchase requests using existing request and inventory information. These controls address transaction integrity rather than replacing labor floor-check procedures.

Reconciliation and Financial Evidence

After a floor check, observations may need to be reconciled with subsequent payroll or labor distribution records. This helps determine whether an apparent difference represents a legitimate change in assignment, a timing issue, or a timekeeping matter requiring additional investigation. DCAA's current audit programs specifically include reconciliation of observations with payroll and labor distribution records. :contentReference[oaicite:7]{index=7}

Financial reconciliation principles apply elsewhere as well. Check Reonciliation supports matching check activity with related invoices and tracking payment status, while Pament Processing By Check addresses controlled check-payment workflows. These are separate financial processes, but both rely on accurate records and traceable supporting information.

For educational context, DCAA Timekeeping & Labor Cost Tracking Guide explains the broader subject of DCAA timekeeping, labor-cost tracking, and audit-readiness practices. It can help contractors understand how floor checks fit within a wider labor-accounting framework.

DCAA floor checks should not be confused with other financial terms that contain the word “floor” or “check.” An Interest Rate Floor is a contractual minimum interest rate used in certain financial arrangements, while a Credit Check evaluates creditworthiness or payment capacity. Neither term describes the labor audit procedure performed by DCAA.

Shop Floor Control is also different. It concerns the monitoring and coordination of manufacturing operations, including production activities and work-center information. A DCAA floor check instead focuses on employee labor, timekeeping procedures, and the accuracy of contract or indirect labor charges.

Best Practices for Contractors

  • Maintain written timekeeping procedures that clearly explain charge codes, daily recording, approvals, and corrections.
  • Ensure employees understand the cost objectives and project identifiers associated with their assignments.
  • Require employees to certify their time and supervisors to review and approve timesheets according to established procedures.
  • Document corrections with the original charge, corrected charge, reason, and appropriate employee support.
  • Reconcile labor records with payroll and accounting data so discrepancies can be explained promptly.
  • Train employees to describe their timekeeping responsibilities accurately during an audit interview.

These practices create a consistent evidence trail from actual work performed through timekeeping, labor distribution, payroll, and contract-cost reporting.

Summary

DCAA Floor Check is a labor audit procedure used to evaluate employee timekeeping controls and the accuracy of labor charges. DCAA auditors may observe employees, conduct interviews, review work assignments, examine timekeeping practices, and reconcile observations with payroll or labor records. Contractors that maintain accurate daily time records, clear charge-code procedures, documented corrections, employee certifications, and supervisory approvals are better positioned to provide reliable evidence about labor costs during DCAA audit activities. :contentReference[oaicite:8]{index=8}

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DCAA-Compliant ERP: 2026 Buyer's Guide + AI Audit Tips DCAA Timekeeping & Labor Cost Tracking Guide (2026) Straight-Through Invoice Processing: Reality Check GL Coding for Expenses: From Manual Checks to Continuous AI Audits