AGC: Accounting & Job Costing for Construction Industry

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AGC: Accounting & Job Costing for Construction Industry

  1. 1. http://www.teamtag.net/Job Costing and Accounting Workshop #2 February 27, 2013 Presented by Rob Scherer & Olivia Roemer
  2. 2. Beyond the Numbers…TAG provides valued financial and business resources &counsel for companies and individuals on the move. TAG supports and strengthens your company’s accounting department and management with outsourced bookkeeping, controller, and CFO services. Whether you are a CFO who could use a quality controller once a week, a controller who needs bookkeeping assistance, or an office manager looking for higher level finance and accounting oversight, TAG can fill the need. From sales to implementation, training to consulting, TAG’s team of certified consultants work to improve your efficiency and reporting capabilities with the best accounting software for the building industry. TAG is an Authorized Reseller with a team of Certified Consultants for Sage Timberline Office, Sage Master Builder and Contractor V.
  3. 3. January 30, 2013 - Understanding Your Construction Financial StatementsFebruary 27, 2013 - Job Costing & AccountingMarch 27, 2013 – Banking & Bonding ManagementApril 24, 2013 – Tracking your Field ProductionMay 29, 2013 – Best Practices in Construction Accounting SoftwareJune 26, 2013 – Construction Financial Management Boot Camp
  4. 4. Purpose:The primary purpose of accounting is to provide asystem for tracking the financial activities of a businessand to provide management with meaningful andrelevant information to make business decisions. Thesecondary purpose is to provide financial information tothird parties regarding the financial position of thebusiness.
  5. 5. Accounting CycleThe accounting cycle is usually twelve monthlyperiods within a year. A Corporation can choose acalendar year or a fiscal year, however an individual,partnership, or S Corporation typically must use acalendar year.
  6. 6. Keys to Accounting:There are a few keys to accounting that can help toprovide an accurate and relevant accounting system such as: KISS (Keep it Simple Stupid!) Cash Is King Billings are Money Accounts Payable Process Payroll Processing Reconcile and Review
  7. 7. KISS (Keep it Simple Stupid!):There is no need to overcomplicate the process. Ifyou don’t understand how it’s working, you won’tunderstand what it’s telling you. Keeping this in mindmay also keep the cost to produce the informationmuch more manageable. An inexpensive systemsuch as QuickBooks may accomplish the objectiveinstead of a more powerful and expensive program.
  8. 8. Cash is KingAccounting for the money received and the moneyspent will accomplish the major portion of theprocess. Reconciling the bank account activity to theaccounting records on a monthly basis will help toensure that all cash activity has been captured.
  9. 9. Billings are Money: Timely and accurate billing is the key step to creatingcash. Billing should be done on a regular basis and thecollection of those billings should be closely monitored.
  10. 10. Accounts Payable Process:Nobody likes to pay out money, however the worst partis paying bills you didn’t think you owed (like taxes).Payables that are not processed timely and accuratelywill result in: billings being processed late; planning andbudgeting will be useless; and unwanted surprises thatpersist.
  11. 11. Payroll Processing:
  12. 12. Reconcile and Review:Cash, investments, accounts receivable, accountspayable, credit card liabilities, and other significantbalance sheet accounts should be reconciled to a thirdparty statement on a monthly basis. The activity inthese accounts and the overall financial statementsshould be reviewed on a monthly basis forreasonableness and used as a basis for planning andfor making business decisions.
  13. 13. Users Of Financial Statements: Besides management, there are other people ororganizations that request and/or review the financial statement of the company. A few examples are as follows: • Bankers •Surety Company •Shareholders •Tax Agencies
  14. 14. Purpose:The purpose of job costing is to provideaccounting of contract performance and toassist in managing the job, as well as toprovide management with relevant informationregarding contract activity in order to makebusiness decisions .
  15. 15. Contract Cycle:Contract cycles can vary significantly fromcontract to contract as well as from the type ofwork performed. Shorter contract periods maymake the job costing process a little moredifficult, but no less important.
  16. 16. Keys to Job Costing: The “keys to accounting” previously discussed alsoapplies here, however, there are a few other issues to consider such as: Identify Key Cost Components Tracking Cost Components Performance Measurements Monitor Results Make Adjustments
  17. 17. Identify Key Cost Components: Labor, materials, equipment, subcontractor costs arethe typical components of job costs. Identify any other significant costs that relate to your contractperformance. These would typically be the same costs you estimate in the bid process.
  18. 18. Tracking Cost Components: Determine a method to track the costs by job keeping in mind the keys to accounting discussed above. Consideration should be given to the accounting systemin place and its ability to generate and/or track cost flows. Include bid and revised estimates within the job cost system.
  19. 19. Performance Measurements: When designing the system, consideration should begiven to including performance criteria within the job cost system. Items such as pounds/yards, etc.; per manhours; material per square foot, etc. These performance measurements may provide you with additional information as to job performance outside the typical cost information.
  20. 20. Monitor Results: Review the results on the job to assist in evaluatingperformance, as well as assist in estimating future bids and making business decisions.
  21. 21. Make Adjustments:As the business and/or the jobs change, the job cost system may need to be modified to meet the newchanges. If you’re monitoring the results on a regular basis, the adjustments needed should come to light
  22. 22. Accounting & Job Costing- Rule of Thumb Strategy:1. Keep the accounting and job cost process simple.2. The information produced should be relevant and understandable.3. Review and use the information to make individuals accountable and to make business decision.4. Accounting and job costing are not the answers but they can assist in getting you the answers.
  23. 23. January 30, 2013 - Understanding Your Construction Financial StatementsFebruary 27, 2013 - Job Costing & AccountingMarch 27, 2013 – Banking & Bonding ManagementApril 24, 2013 – Tracking your Field ProductionMay 29, 2013 – Best Practices in Construction Accounting SoftwareJune 26, 2013 – Construction Financial Management Boot Camp

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