# What DCAA compliance actually means

- URL: https://www.usewisecost.com/help/dcaa-compliance/what-dcaa-compliance-actually-means
- Audience: Admins
- Last updated: 2026-07-27
- Part of the WiseCost Help Center: https://www.usewisecost.com/help

> DCAA compliance means your accounting system can segregate costs, keep daily timekeeping, distribute labor to contracts and leave a full audit trail.

DCAA compliance means your accounting system meets the standards the Defense Contract Audit Agency uses when it reviews government contractors. There's no official certification and no "DCAA-approved software" list. What exists is an evaluation of capabilities: can your system track costs the way the government requires?

The checklist auditors work from is the **SF-1408**, the pre-award accounting system survey. In practice, it comes down to a few capabilities:

- **Cost segregation:** direct costs separated by contract, and indirect costs grouped into pools (fringe, overhead, G&A). In WiseCost, contracts come from your QuickBooks classes and projects, and accounts are assigned to cost pools.
- **Compliant timekeeping:** every employee records their own hours, daily, by contract and cost category, with supervisor approval. This is WiseCost's Time Tracker and approval workflow.
- **Labor distribution:** recorded hours translated into labor costs allocated to each contract, posted to your general ledger. This is WiseCost's labor distribution engine, posting directly to QuickBooks.
- **Audit trail:** every action logged, nothing deleted, corrections through reversals. This is WiseCost's immutable Audit Trail.

The important mindset shift: compliance is not a document you get once, it's how your system operates every day. An auditor doesn't ask "which software do you use?"; they ask "show me how an hour worked becomes a cost on this contract, and prove nobody could quietly change it along the way."

For the full picture, including what happens in an audit and how to prepare for a pre-award survey, read our [Complete Guide to DCAA-Compliant Accounting Systems](https://www.usewisecost.com/blog/dcaa-compliant-accounting-system-guide) or join a [DCAA Ready webinar](https://www.usewisecost.com/webinars).

## Further reading

- [What Is the SF-1408? A Plain-English Guide for Government Contractors](https://www.usewisecost.com/blog/what-is-sf-1408-government-contract)
- [Which DCAA Audit Will You Actually Face? A Small Contractor's Map](https://www.usewisecost.com/blog/which-dcaa-audit-will-you-face)