Core Components of a Written Timekeeping Policy
A useful policy translates timekeeping requirements into specific employee actions rather than relying on general instructions. It should address the complete lifecycle of a time record, from initial entry through approval and retention.
- Time entry: Define when employees must record time and which system or approved method they must use.
- Labor charging: Explain how employees select contracts, projects, tasks, departments, or other applicable cost objectives.
- Corrections: Establish how errors are corrected, who approves adjustments, and how the original entry remains traceable.
- Approvals: Specify supervisor review responsibilities and required approval timing.
- Record retention: Define how timekeeping records and supporting documentation are preserved for required periods.
Timekeeping Compliance and Labor Cost Accuracy
A written policy is a foundation for Timekeeping Compliance because it gives employees a consistent procedure for recording labor and provides management with a documented control framework. Training should reinforce the difference between recording actual time worked and estimating or reallocating hours after the fact.
For government contractors, the DCAA Timekeeping & Labor Cost Tracking Guide can help finance and operational teams understand DCAA timekeeping requirements, labor cost tracking practices, compliance expectations, and audit-readiness considerations.
Supervisors should review time records for completeness, appropriate project allocation, unusual entries, and timely corrections. Finance teams can then use approved records as supporting information for payroll, job costing, contract billing, and financial reporting.
Corrections, Approvals, and Audit Evidence
The policy should explain that corrections are documented adjustments rather than silent changes to historical records. A correction process should identify the original entry, reason for the adjustment, person making the change, approver, and date of approval.
Maintaining an audit trail for accounting operations and control activities helps demonstrate how records were created, reviewed, and changed. This evidence can support auditability, financial reporting, general-ledger controls, and consistent application of accounting standards.
The policy should also define escalation procedures for repeated timekeeping exceptions. Managers can use documented exception patterns to identify training needs, clarify project coding instructions, and strengthen supervisory review.
Timekeeping and Related Finance Policies
Timekeeping does not operate independently from other financial policies. Labor records may feed payroll, contract costing, revenue calculations, and month-end accounting. When employee time relates to work performed but the associated expense has not yet been recorded, accruals may be needed to recognize the appropriate expense in the correct reporting period.
A Close Policy can define how finance teams coordinate time records with period-end activities, including cutoff dates, reconciliations, reviews, and adjustments. Similarly, an Expense Policy can establish broader rules for employee-related expenses that complement the timekeeping requirements.
Connecting Timekeeping With Procurement and Workflow Controls
Government contractors often operate integrated workflows in which labor, procurement, project accounting, and financial reporting interact. A purchase requisition may initiate procurement activity that eventually creates a project-related commitment or cost requiring appropriate accounting treatment.
Written policies should therefore clarify how timekeeping information interacts with project controls, approvals, and financial records. Employees should know which activities require separate documentation and which systems provide the authoritative record for each transaction.
Where finance workflows include accrual approvals, Configuring Accruals Policy can support policy-based treatment of recurring expenses, GL coding, and accrual processing. A Flexible Workflow can further support approval processes customized by business unit, department, and applicable thresholds.
Best Practices for Maintaining the Policy
- Make instructions specific: State exactly when, where, and how employees record time.
- Use role-based responsibilities: Separate employee entry, supervisor review, project oversight, and finance reconciliation duties.
- Document corrections: Require a clear reason and appropriate approval for changes to submitted time.
- Align systems: Keep timekeeping procedures consistent with payroll, project accounting, ERP, and reporting workflows.
- Refresh training: Update guidance when contracts, systems, organizational responsibilities, or applicable requirements change.
- Monitor exceptions: Review recurring late entries, unusual corrections, missing approvals, and inconsistent project coding.
Summary
A Written Timekeeping Policy establishes a consistent framework for recording labor, allocating time to appropriate cost objectives, approving entries, correcting errors, and preserving evidence. When integrated with compliance, accounting, procurement, and close procedures, it supports reliable labor-cost information, stronger financial controls, and audit-ready reporting.