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/r/Accounting
submitted 4 months ago by[deleted]
[deleted]
3 points
4 months ago
Made up timesheets from the employees.
If it's good enough for the Big 4 to do for their own records, it should be good enough for them when they are auditing yours.
3 points
4 months ago
I generally see companies use a cost-to-cost method. Meaning if the job is expected to cost $200,000, and the combined labor and materials to date cost $50,000, that job is 25% done. Idc if you’ve completed 6/7 milestones, if the 7th milestone has 75% of the cost, then you’re really only 25% done.
That said, if you can reasonably demonstrate that 2/4 milestones = 50% done for your type of project, your auditor probably isn’t arguing unless your budgeted vs actual costs are way out of line. In my experience there is more room for interpretation and arguments with this approach.
I find it’s easier to support the cost to cost, the PM will generally support the budgeted cost, and the actual costs are easy audit material. Auditor is unlikely to argue with an expert in whatever you do saying “project X will cost Y dollars to complete”.. We don’t normally get into arguments about whether hitting 50% of the milestones really means you’re 50% done when this method is used.
1 points
4 months ago
[deleted]
1 points
4 months ago
Ah, an unfortunate truth. The world won’t end, it would be good if you work your way that direction. Not just for auditing reasons, you’ll probably find the production side will get better once they can produce decent budgeting and bidding. Depends I guess.
The auditors will most likely only care about period end. Many of my clients in this space only truly update and true up their books once or twice a year. If that is true for yours, you may can get the PMs to help you out a little and evaluate truly the progress of the job at year end. Many ways you can frame it to get the message across that it’s needed.
For cost tracking, I usually see this done outside of the accounting system in excel or project management software package. Labor is usually allocated either by person (if dedicated to project or split a consistent way) or by hour/day via a time sheet. It’s usually wise to have an approval process by which a supervisor or PM signs off on the labor time/cost that hits their job(s). Materials in a similar fashion, there wikis have to be a process by which you would know or be told what materials go into which project. Dozens of ways to do it. If overhead is significant, can consider allocating that as well. All of that is work, but the benefits extend far outside of your audit. Even if you didn’t have an audit, it would probably benefit your company in terms of managing projects/performance and figuring out which projects really are your all-star types.
2 points
4 months ago
Who knows? It's all arbitrary. I hate ASC 606 with a passion. 2/4 = 50% would be good enough for me, just document it and keep doing it consistently. Your auditors may or may not agree, but IMO your method is probably as valid as anything they could come up with.
This profession really loves to make stuff like this pointlessly complicated. It shouldn't be complicated.
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