How to Build Timesheet Approval Workflows That Pass Compliance Audits
Here is a number that should make every operations director pause: 67% of government contract audits flag timesheet deficiencies as a primary finding. Not fraud. Not mischarging. Simple procedural gaps — missing approvals, undocumented corrections, approval chains that skip levels. The Defense Contract Audit Agency alone disallows billions in costs annually, and the most common root cause is not dishonesty but disorganization.
If your timesheet approval workflow cannot produce a complete, timestamped record of who submitted what, who approved it, when corrections were made, and why — you are not audit-ready. You are audit-vulnerable.
This guide walks you through exactly how to build timesheet approval workflows that satisfy DCAA requirements, ISO compliance standards, and the growing expectations of commercial clients who demand the same rigor.
Why Most Timesheet Approval Workflows Fail Audits
The gap between "we have an approval process" and "we have an audit-proof approval process" is wider than most companies realize. Auditors do not care that your manager clicks "approve" on a timesheet. They care about the evidence trail surrounding that approval.
Common failures include:
- No separation of duties — the person who submits time also has the ability to approve it
- Missing timestamps — approvals exist but there is no record of when they occurred
- Retroactive edits without documentation — corrections are made after approval with no audit trail showing what changed and why
- Single-level approval — one manager approves all time with no secondary review for compliance
- No lockdown after approval — approved timesheets can be modified without triggering re-approval
Each of these is a finding waiting to happen. The fix is not more bureaucracy — it is better workflow design.
The Five Pillars of a Compliance-Ready Approval Workflow
Whether you are targeting DCAA compliance, ISO 27001 controls, or SOC 2 operational requirements, audit-ready timesheet workflows share five characteristics:
- Multi-level approval chains — at minimum, direct supervisor approval followed by project-level or finance review
- Immutable audit trails — every action (submit, approve, reject, edit, re-submit) is logged with user identity and timestamp
- Role-based access controls — employees can only see and edit their own time; managers can only approve for their teams; admins have oversight but cannot silently modify entries
- Automatic locking — once a timesheet period is approved, entries are locked against modification without a documented correction workflow
- Exception documentation — when corrections are necessary, the original entry is preserved and the change is logged with a reason code
If your current system handles all five, you are ahead of 90% of organizations. If it handles three or fewer, you have audit exposure. For a deeper look at how approval chains work in practice, see our guide on writing timesheet entries that get approved.
Designing Your Approval Chain: Roles and Routing
The approval chain is where compliance lives or dies. A well-designed chain balances speed (employees should not wait days for approval) with rigor (no single point of failure).
A proven three-tier model looks like this:
- Tier 1 — Direct Manager: Reviews daily entries for accuracy, confirms hours match project assignments, checks for reasonable work patterns
- Tier 2 — Project Manager or Client Lead: Validates that billed hours align with project scope, deliverables, and contractual limits
- Tier 3 — Finance or Compliance Officer: Spot-checks for policy compliance, reviews flagged entries, and locks the period for payroll processing
Not every entry needs all three tiers. Configure routing rules based on risk: entries over 10 hours per day, weekend work, or entries against contracts with audit clauses should trigger additional review. Standard entries can follow a streamlined two-tier path.
The key principle is separation of duties. The person logging time must never be the same person giving final approval. This is not optional for DCAA compliance — it is a hard requirement.
Building an Audit Trail That Actually Holds Up
An audit trail is not a log file. It is a legal record. Auditors expect to reconstruct the complete lifecycle of any timesheet entry: creation, modification, submission, approval, and any post-approval corrections.
Your audit trail must capture:
- Who created the entry (user ID, not just a name)
- When it was created and when it was last modified
- The original values and any changes (before/after comparison)
- Who approved or rejected it, with timestamps
- Any comments or reason codes attached to rejections or corrections
- System-generated events like auto-locking, deadline warnings, and escalation triggers
This data must be immutable. If your system allows audit log entries to be deleted or modified, you do not have an audit trail — you have a suggestion. For organizations that need to verify billable hours against external systems, our article on proving billable hours with GitHub and Jira verification covers cross-referencing strategies that auditors respect.
Auto-Locking and Period Controls: Preventing After-the-Fact Problems
One of the most common audit findings is unauthorized modification of approved timesheets. An employee goes back and shifts hours between projects after the period closes. A manager "fixes" an entry without documenting the change. These modifications create discrepancies that auditors flag as potential fraud — even when the intent was innocent.
Auto-locking solves this by enforcing period boundaries:
- Submission deadlines — entries must be submitted by end-of-day Monday for the prior week. Late submissions are flagged and require manager override with documented justification.
- Approval deadlines — managers have 48 hours to approve or reject. Unapproved entries escalate automatically to the next level.
- Period locking — once finance closes a period, all entries become read-only. Corrections require a formal adjustment entry in the next period, preserving the original record.
This is not about being rigid. It is about creating a system where auditors can trust that the records they are reviewing have not been tampered with after the fact.
The Transparency Principle: Why Showing Gaps Builds Trust
There is a line from the Ukrainian national anthem — "Shche ne vmerla Ukrainy" — which translates to "Ukraine has not yet perished." It is a statement of radical, almost defiant transparency about position. Not a boast of invincibility, but an honest acknowledgment: we are still here, still standing, and we are not hiding from reality.
Compliance works the same way. The organizations that pass audits are not the ones with perfect records. They are the ones transparent enough to show exactly where the gaps are. An auditor who finds a well-documented correction with a reason code and re-approval trail sees a mature organization. An auditor who finds a mysteriously clean record with no exceptions, no rejections, and no corrections sees a red flag.
Build your workflows to surface exceptions, not hide them. Document rejected entries. Log override justifications. Make the messy reality visible, because that visibility is what proves the system works.
How BetterFlow Handles Compliance-Ready Timesheet Approvals
BetterFlow was built by BetterQA, an ISO 27001 certified QA company and NATO NCIA BOA holder — and BetterQA runs its own timesheets through the same platform. That is not a marketing line. It means every approval workflow feature was designed by a team that faces real compliance requirements on government and defense-adjacent contracts.
Here is how BetterFlow addresses each pillar of audit-ready timesheet management:
- Multi-level approval workflows — configure approval chains by project, department, or contract type. Route high-risk entries through additional review tiers automatically.
- Immutable audit trail — every action is logged with user identity, timestamp, and before/after values. Audit logs cannot be modified or deleted, even by administrators.
- Role-based access control — five distinct roles (Super Admin, Admin, Project Manager, Employee, Client) with granular permissions. Employees see only their entries. Managers approve only their teams. Clients see only what is shared through the client portal.
- Auto-locking — approved periods lock automatically. Corrections follow a documented adjustment workflow that preserves the original record and requires re-approval.
- Client portal transparency — give clients direct visibility into approved hours and project progress without exposing internal data. This satisfies client audit requirements and reduces back-and-forth during reviews.
BetterQA built BetterFlow because existing tools did not meet the compliance bar required for ISO 27001 and NATO contract work. If you are managing government contracts, regulated industries, or clients who demand audit-ready documentation, the platform was designed for exactly that scenario.
What Records Do DCAA Auditors Actually Check During a Timesheet Audit?
DCAA auditors focus on five areas: daily time recording (entries must be made contemporaneously, not after the fact), total accounting for all hours (every hour in the day must be accounted for, not just billable time), supervisory approval with documented evidence, separation of direct and indirect costs, and correction procedures that preserve original records. They will also verify that your system enforces these controls consistently — spotty compliance is treated the same as no compliance.
How Often Should Timesheet Approvals Happen for Compliance?
For DCAA compliance, timesheets must be approved at least weekly. Many organizations default to biweekly or monthly approval cycles, which creates a gap that auditors will flag. Weekly approval ensures that entries are reviewed while the work is still fresh, reduces the likelihood of inaccurate time allocation, and produces a tighter audit trail. If weekly feels burdensome, the problem is likely your tooling, not your process — modern approval workflows with automated routing and one-click approval make weekly cycles practical even for large teams.
Can Spreadsheet-Based Timesheets Pass a Compliance Audit?
Technically, yes — but practically, almost never. Spreadsheets lack native audit trails, access controls, and locking mechanisms. Every cell is editable by anyone with file access. There is no separation of duties enforcement and no way to prove that an entry was not modified after approval. Auditors know this, and spreadsheet-based systems receive significantly more scrutiny. For any organization billing more than $500,000 annually on contracts with audit clauses, dedicated audit-ready timesheet software is not a luxury — it is a cost of doing business.
What Is the Difference Between an Approval Workflow and an Audit Trail?
The approval workflow is the process — who reviews time entries, in what order, and what happens when entries are rejected or corrected. The audit trail is the record — the complete, immutable log of every action taken within that process. You need both. An approval workflow without an audit trail is unverifiable. An audit trail without a proper approval workflow just documents a broken process in great detail. Together, they create compliance-ready documentation. Tools like BetterFlow and complementary platforms like BugBoard for QA tracking help organizations build both layers into their daily operations.
How Do You Handle Timesheet Corrections After a Period Is Locked?
The correct approach is an adjustment entry in the current open period that references the original entry. The original approved timesheet remains untouched — it is a historical record. The adjustment entry documents what changed, why, who authorized it, and links back to the original. This creates a clear chain of custody that auditors can follow. Never overwrite historical entries, even if the correction is minor. The paper trail matters more than the cleanliness of the data.
Build approval workflows that auditors love.
Try BetterFlow free for 30 days — multi-level approval workflows, immutable audit trails, and auto-locking for compliance-ready timesheets. Built by BetterQA, an ISO 27001 certified QA company and NATO NCIA BOA holder that runs its own timesheets through BetterFlow's approval workflows.
Published by BetterQA, an ISO 27001 and ISO 9001 certified company with 8+ years of experience in software quality assurance. According to research by McKinsey, data-driven project management improves team productivity by up to 25%. Last updated on .
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