As the fiscal year concludes, construction companies must undertake the meticulous task of preparing year-end books and records. This process is not merely a compliance exercise but a strategic opportunity to refine financial accuracy and project insights.
A critical component is the Work in Progress (WIP) schedule.
This document is more than a mere ledger; it is a dynamic tool that reflects the financial pulse of ongoing projects. Ensuring precision in the WIP schedule is paramount, as it influences both financial statements and tax obligations. Experienced professionals understand that discrepancies here can cascade into significant financial misstatements.
Addressing claims and job losses is another sophisticated task.
Outstanding claims must be scrutinized and resolved with a keen eye on their impact on project profitability and cash flow. Recording job losses accurately is essential for a realistic assessment of project performance and future planning.
Under and over billings require a nuanced approach.
These variances, where billed amounts diverge from actual work completed, must be reconciled meticulously. This reconciliation is not just about balancing books but about providing a true reflection of project status and financial health.
Conditional retainage, often a significant figure in construction accounting, must be accounted for with precision.
This involves not just recording the amounts withheld but understanding their implications on cash flow and project completion timelines.
Uninstalled inventory, including materials and supplies yet to be utilized, should be carefully reviewed.
Proper accounting for uninstalled inventory ensures an accurate depiction of company assets and liabilities, which is crucial for both internal assessments and external reporting.
In conclusion, preparing year-end books and records for a construction company is a complex, multi-faceted process. By focusing on the WIP schedule, claims, job losses, under and over billings, conditional retainage, and uninstalled inventory, experienced professionals can ensure financial records are not only accurate but also insightful, paving the way for strategic decision-making in the new fiscal year.
About Schneider Downs Construction ServicesÂ
Led by a diverse group of shareholders and managers, Schneider Downs provides strategic and practical solutions for our construction clients in all facets of their business. Our dedicated team of more than 350 professionals have a wide background of tax, accounting, technological and business experience in the region, specifically in Pittsburgh and Columbus.Â
To learn more, visit our Construction Industry Group page. Â
