4.705-2 Pay administration records
Source: FAR 4.705-2 on acquisition.gov
Contractors must retain specific payroll and pay administration records for 2 to 4 years to comply with federal audit and oversight requirements.
Overview
FAR 4.705-2 specifies the minimum retention periods for various pay administration records related to government contracts. This section outlines how long contractors must keep payroll records, time and attendance documentation, and evidence of wage payments. The requirements ensure that records are available for audit, review, or investigation by government agencies, supporting compliance with labor and contract regulations.
Key Rules
- Payroll Records
- Payroll sheets, registers, or equivalent records, as well as change slips and tax withholding statements, must be retained for 4 years.
- Time and Attendance Records
- Clock cards or other time and attendance cards must be kept for 2 years.
- Evidence of Wage Payments
- Paid checks, cash receipts, or other proof of wage payments must be retained for 2 years.
Responsibilities
- Contracting Officers: Ensure contractors are aware of and comply with record retention requirements.
- Contractors: Maintain and securely store all required pay administration records for the specified periods.
- Agencies: May audit or request access to these records during or after contract performance.
Practical Implications
- This section exists to facilitate government oversight and ensure accurate labor cost reporting.
- Contractors must implement recordkeeping systems to meet these retention requirements, or risk noncompliance during audits.
- Common pitfalls include premature destruction of records or incomplete documentation, which can lead to penalties or disallowed costs.
(a) Payroll sheets, registers, or their equivalent, of salaries and wages paid to individual employees for each payroll period; change slips; and tax withholding statements: Retain 4 years.
(b) Clock cards or other time and attendance cards: Retain 2 years.
(c) Paid checks, receipts for wages paid in cash, or other evidence of payments for services rendered by employees: Retain 2 years.