Deltek Insight 2011: GCS Premier Revenue Reconciliation

GCS-103GCS Premier Revenue ReconciliationTips & Tricks

By : Robin Prausa

04/18/20232

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©2011 Deltek, Inc. All Rights Reserved

04/18/20233 ©2011 Deltek, Inc. All Rights Reserved

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Agenda Quick Refresher of GCS Revenue Methods Identify Revenue Errors Key Reports to Assist in Revenue Reconciliation Troubleshooting Revenue Errors

• Run Key Reports to look at contract from all angles • Contract Master File (CMF) Settings • Budgets/Non Labor Budgets/Summary Budgets & Ceilings (“Summary

Budgets”)

Correcting and Validating Corrections by Contract


Revenue Methods Refresher

Normal Method- Most automated, system does the work Based on Billing- Common, but overrides system abilities Based on G/L- Infrequent, overrides all system abilities Based on Delivery- FP contracts using Form 1443 Progress Billings


What “Normal Method” means for different contract types:

• Fixed Price (FP)

• burdened costs + fees as set up

• Estimate At Completion** (EAC)

• Estimate To Complete** (ETC)

• Contract Backlog**• Cost Plus (CPFF)

• burdened costs + fees as set up• Time & Materials (T&M)

• rates per hour + ODCs + burdens + fees, if any

** for CPFF contracts too


We will assume Automatic Calculation is “on” (box checked):

Revenue calculations by contract type: FP: Fiscal Year to Date CPFF: Fiscal Year to Date T&M: Month to Date

Critical to understand these calculation methods!


Identifying Revenue Errors How do we know if Revenue is wrong?

Odd fees/profits (too high, too low) on Contract Revenue Summary or JSR Odd backlog results on Contract Revenue Summary (particularly “negative”

backlog) The existence of an unexplained unbilled AR


Look for unusual fees, both dollars and percentsLook for odd backlog amounts, particularly negative backlog amounts

`


Key Reports to Assist in Revenue Reconciliation Job Status Report (JSR) Contract Revenue Summary (CRS) General Ledger Detail Time & Materials Sales Worksheet for “allowed ODCs” (part of JSR reports)


Key Reports to Assist in Revenue Reconciliation “As if” Reports -

Reflect latest “Compute Costs & Revenue” process May or may not be posted—be careful!

Job Status Report Contract Revenue Summary Time & Materials Sales Worksheets

Posted (i.e. “real”) Records General Ledger Detail

Understand what stage your reports are in before you begin your troubleshooting and corrections!


Troubleshooting Revenue Errors• GL Detail, CRS & JSR Reports• Contract Master File Settings• Budgets / Non Labor Budgets

Summary Budgets & Ceilings


GL Detail and CRS Reports

They match so it means revenue has been fully posted$13,256.25


JSR

JSR also shows the YTD revenue that matches the GL, thus it is fully posted


Time & Materials Sales Worksheet “Allowed ODCs”

“Allowed” (for revenue & billing) vs. “Incurred” (spent) ODCs


T&M Sales Worksheet

Limit on G&A rate (8% vs. 11% target)

“Allowed” ODC $’s and Burden Rates


T&M Sales Worksheet“Incurred” (i.e. spent) ODCs and burdens, excess is adjustment “out”

a

b

(a+ b)


Troubleshooting Reports Recap• JSR

• CRS

• GL Detail

• T&M Sales Worksheet Examine these reports carefully before beginning any correction process


Contract Master File (CMF) Settings Contract Value (CV) amounts Task Revenue/Task AR settings Revenue method “Automatic” vs. manually computed revenue Revenue adjustments Fee percentages on FP & CPFF Maximum revenues and fees on CPFF T&M Contracts: buttons for ODCs, burdens and fees


CMF: Contract Value (CV) Amounts Fixed Price Contracts

CV caps revenue Cost Plus Contracts

“Maximum Revenue” caps revenue If “maximum revenue” = 0.00, then NO cap on revenue!

Time & Material Contracts CV caps revenue unless “exceed revenue by $___ amount” has a value


Fixed Price

Contract Value Caps Revenue


If 0.00 , then revenue will accrue with no limit!

CPFF


Revenue can exceed CV by this $20,000

Time & Materials


CMF: Task Revenue/Task AR buttons Rolled Revenue/Billing

CV must be on task 000

Task Revenue/ Rolled Billing CV must be at task level

Task Revenue/Task AR CV must be at task level


CMF: Revenue Method

Normal: system settings determine revenueBilling: billing must be posted to get revenueGL: a manual journal entry creates revenueDelivery: used for FP/Progress billing only

Recommend Normal Method in most cases!


CMF: “Automatic” vs. Manual Revenue

If automatic:

If manual, then you will have to enter revenue into “Revenue Is”:

Remember, manual “Revenue Is” must be

Fiscal Year to Date Current Period

FP and CPFF T&M


Special Considerations for T&M Contracts

Manual “Revenue Is” number must be removed after monthly close in one of two ways:1. Manually zeroed out after close by entering 0.002. Removed as part of month end close process by choosing proper option

in GL Close Period Failure to remove or adjust manual revenue calculations will cause them to

post each month until they are removed!


Special Considerations for T&Ms

Checking this box during both month end and year end processing will “automatically” zero out manual “revenue is” calculations on T&M contracts.


CMF: Revenue Adjustments Increase or decrease system automated revenue calculations

Increase Revenue: positive number Decrease Revenue: negative number Revenue Adjustments must be:

Fiscal Year to Date Current Period

FP & CPFF T&M


Special Considerations for T&M Contracts Revenue Adjustments on T&Ms (only!) must be manually zeroed out

after each month end close or they will duplicate in the next month. Impromptu/Dataport report can help remind you to do this

Best practice would be to clear these out immediately after closing the period.


CMF: Fee Percentages for FP and CPFFs

FP contracts: estimate of profit expected to be earned on contract

CPFF contracts: fixed fee represented as a percentage

On both FP & CPFF—a new fee will be projected across current fiscal year only

Use a revenue adjustment to adjust a prior year fee


CMF: Maximum Revenue and Fee Ceilings on CPFFs


CMF: Maximum Revenue and Fee Ceilings on CPFFs

Remember a CPFF will accrue revenue and fee even if there is NO contract value entered!

To limit revenue and/or fee: Enter a value in “Maximum Revenue” Check the “Fee Ceiling” box (this limits fee to that entered in Fee Amount

Column) To further limit fee, enter a fee in “fee amount ceiling”

Very common error: forgetting to update these after a contract modification


CMF: T&M Buttons for ODCs, burdens and fees

• Bill some or all ODCs? Check box.• Burden ODCs? Check box.• Add fee to ODCs? Check box and enter fee.


CMF: T&M Buttons for ODCs, burdens and feesNow we need to:

• Turn ODC’s “on” or “off” for billing and revenue purposes• Set limits on ODC’s • Set limits on burden rates

Where do we do this?

• Budgeting / Non-Labor Budgets / Summary Budgets & Ceiling


Summary Budgets & Ceiling:


Summary Budgets & Ceiling:


Summary Budgets & Ceiling:• Two Tabs:

1. Suffix Set limits (turn “on” “off”) by suffix Allows fee by suffix Helpful to exclude subk costs from revenue when revenue is already

taken based on subk hours worked on T&M

2. Pools Set limits on indirect burdens used or override rates

• Works for all contract types

• Works with both revenue and billing


Summary Budgets & Ceiling: Suffix Tab Amount: Sets suffix limit or budget on ODCs

“Ceil” looks to “Amount” column for limit Code: 1. Fee, Ceil

2. Fee, No Ceil (Default) Allows fee, no limits on amounts billed3. No Fee, Ceil4. No Fee, No Ceil


Summary Budgets & Ceiling: Pools Tab Optional rate available on T&M contracts for G&A burden on ODCs where

billing and revenue is different than target rate. Code is called “Special Handling” and will be used instead of target rates on

JSRs and in billing

Must be enabled in Contract Control File


Recap: Troubleshooting Revenue

“Automated” revenue settings

• Most revenue errors are due to contract settings on: Contract Value Summary Budgets “buttons” Failure to clear out T&M Revenue Adjustments

“Manual” revenue settings

• Revenue errors result from forgetting to manually update revenue

• Failure to clear out manual T&M “revenue is” amounts

• Lack of understanding of what stage revenue is in (posted or not)


Correcting and Validating Corrections by Contract Do Revenue Adjustments in CMF, not general ledger journal entries, to correct

revenue if fixing the settings does not correct problem JE’s for revenue only work if your method is “Based on G/L”

Re-compute revenue and review Contract Revenue Summary and JSR Remember these are “as if” reports Must actually post revenue to keep correction—once posted, will be in GL


Correcting and Validating Corrections by Contract Can recalculate and post revenue as many times as desired in a month

Recheck JSR, CRS and GL to ensure corrections worked Corrections for prior year errors must usually be done via “revenue adjustment” in

CMF Pay attention to revenue calculation method for each contract type


Summary of Key Contract Differences

FP CPFF T&M

Revenue Limit Contract Value"Maximum Revenue"

Contract Value, unless "exceeds

revenue by ____" is used

Revenue Calculation

FYTD FYTD Current Period

Manual "Revenue Is"

FYTD FYTD Current Period, clear out each month

Revenue Adjustments

FYTD, clear out manually

at beginning of each new fiscal

year

FYTD, clear out manually

at beginning of each new fiscal

year

Current Period, clear out manually

each month


ReferencesGCS Premier Special Topics

CT-5 How Contract Revenues Are Computed

CT-6 Computing Contract Revenues

CT-14 Method to Change Task Revenue Setup


Questions?

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