DCAA auditors periodically perform physical observations of work areas and interviews of employees to determine if:
- employees are actually at work
- employees are performing in their assigned job classification
- employee time is charged to the appropriate job or indirect account
These types of audits are referred to as labor floor checks or interviews. DCAA will perform unannounced floor checks to determine the adequacy and accuracy of the timekeeping system for reimbursement of labor costs under cost reimbursable, time and material (T&M), and labor hour contracts.
Penalties for Labor Mischarging:
(1) The manipulation of charges to a contract may be subject to criminal charges under 18 United States Code (U.S.C.) 1001.
(2) Subject to the facts surrounding participation, the following individuals can be held liable for the violation:
- Employees who fill in and sign the time sheets with the false information.
- Supervisors who approve the time sheets with the knowledge that they contain the false information.
- Managers and officers who know those facts and make the claim anyway by submitting the invoice based upon the false time sheet.
- The company, in a case where the falsification is known by individuals who submit or who have authority to submit or disapprove the submission of invoices, or who are of a sufficiently high enough level in the company that the court will impute their knowledge to the corporation.
(3) There does not have to be a direct contractual relationship between the Government and the employee who submitted the false time sheet for the employee to be liable. A person may be liable even though he or she did not submit the fraudulent claim presented to the U.S. Government.