CCIFP Overview Webcast 2013 Session 1.ppt · PDF file · 2014-11-12Contract Revenues in Estimates Independent Construction Audit Session 3 – October 3, 2013 ... CFMA’s Study Guide

CFMA’s

CCIFP Overview PARTICIPANT GUIDE

CONSTRUCTION FINANCIAL MANAGEMENT ASSOCIATION

© 2013 CFMA. All rights reserved.

CFMA’s CCIFP Overview Webcast Presenter Bios

HERB BROWNETT, CCIFP, is the CFO of Brubacher Excavating, Inc. Prior to joining Brubacher, he was Executive Vice President of Textura Corp. Herb was also Senior Vice President of Finance and Administration of The Norwood Company in West Chester, PA. and Vice President of Finance for The George Hyman Construction Company in Bethesda, MD before that. A construction financial professional for more than 30 years, he holds a BS and MBA in Finance/Accounting from Florida State University. Elected President of the Construction Financial Management Association (CFMA) in May 2003, Herb previously held national office as CFMA’s President-Elect and Secretary. He has also been Chairman of the ICCIFP and proudly holds CCIFP Certificate #1. A CFMA member since 1988, Herb is a past President of CFMA’s Greater Washington, D.C. Chapter and is currently active with the Philadelphia Chapter. HEATHER DUNN, CPA, CCIFP, is a Certified Public Accountant with ten years of experience in public accounting. In addition to her CPA designation, Heather is recognized as a Certified Construction Industry Financial Professional (CCIFP), and currently serves as a the National Secretary for the ICCIFP. Heather provides audit, accounting and consulting services to companies locally and nationally, particularly for closely held businesses in the construction industry. Ms. Dunn’s experience also includes audits of employee benefit plans. In addition to financial statement preparation and analysis, Ms. Dunn also oversees construction consulting engagements including, financial due diligence and contract compliance. Previously, Ms. Dunn gained experience with a big four accounting firm as well as a local firm which specialized in construction. Her background has provided her with the unique combination of technical expertise and industry knowledge critical to providing quality service to her clients. Ms. Dunn is currently a manager at Frazer, LLP, an independent firm associated with Moore Stephens, an international association consists of more than 300 independent accounting and consulting firms with more than 600 offices in almost 100 countries. KORY D. GEORGE has practiced law with Woods & Aitken LLP since 2003 and is a Partner in the Firm’s Construction Law Group. His practice primarily involves advising and representing contractors, specialty subcontractors, suppliers/manufacturers, sureties, owners, and design professionals in all phases of the construction process and in all aspects of claim and dispute resolution proceedings, including mediation, arbitration, and litigation at the state and federal court levels. Kory has made numerous presentations before various trade industry groups and professional organizations. He has authored and co-authored several articles published in periodicals such as The Construction Lawyer and The Journal of American College of Construction Lawyers. He is an active member of the American Bar Association Forum on the Construction Industry and is active in a number of local industry trade organizations. Kory is also member of several contract drafting working groups for ConsensusDocs. TIM GRAY CPA, CCIFP, is Market Development Manager of the Western Region for Viewpoint Construction Software. Tim has over 25 years of professional accounting experience with a focus on serving the construction industry as CFO and various leadership roles. He obtained his CPA while working with Ernst & Young and PricewaterhouseCoopers. He currently serves as Treasure on the Board of ABC Pacific Northwest and is the IT Chair for CFMA’s Portland Chapter.

© 2013 CFMA. All rights reserved.

DAVID JAMES, CPA, CCIFP, is the Chief Financial Officer of FNF Construction, Inc. FNF, headquartered in Tempe, Arizona, is a heavy highway contractor, with projects in Arizona, New Mexico, California and North Dakota. David has over 30 years of experience in the Construction Industry, including vertical construction, heavy highway and insurance/bonding. In addition to the financial services area, David is responsible for the Human Resource and IT departments at FNF. David is a graduate of the University of Kansas, was on the founding board of the Valley of the Sun chapter of CFMA, and has been active nationally with CFMA and the ICCIFP. KERRY KESTER, has practiced law with Woods & Aitken LLP since 1981 focusing on construction contracting, construction dispute resolution, and counseling of construction contractors, owners, subcontractors and suppliers. Kerry’s experience includes counseling clients regarding claims and dispute avoidance, lien and bond claims, contract negotiations and project management. It also includes mediation, arbitration, and appeals before state and federal courts, administrative agencies, and the federal boards of contract appeals. He has handled disputes on local, state and federal projects as well as on private projects. Kerry is deeply involved in professional and industry organizations and is a frequent speaker and writer on construction related topics. He serves on the Governing Committee of the ABA’s Forum on the Construction Industry, is the past Chair of the Project Delivery Division (4) of the Forum, and is Lead Editor of the Forum’s Design-Build Deskbook (4th Edition 2010). MONICA KULAWIAK, PHR, has worked in the Construction Industry for over 30 years. She has worked as a controller for several contractors including General Contractors, Specialty Contractors and a Developer. Monica spent several years implementing Construction ERP software helping contractors all over the country. Monica holds the PHR designation- Professional in Human Resources to maintain her expertise in Human Resources. ROBERT S. LAWYER, CPA, CCIFP, is the Chief Financial Officer of Meyer Najem Construction, LLC. Meyer Najem is one of the leading construction managers and contractors in the Midwest, with an emphasis in Healthcare and Institutional Markets. Rob has over 28 years of experience servicing the Construction Industry, including 12 years in public accounting before joining Meyer Najem in 1997. Rob earned a BS in Accounting at Indiana University and participated in the Business Honors program, as well as the Entrepreneurship Academy. He is a frequent speaker for the CFMA’s Central Indiana Chapter, their National Conference, and other trade association engagements MARK LUMSDEN, CCIFP, CPA, is a tax manager at Anton Collins Mitchell, LLP. His specialty is the construction industry, as he has worked with dozens of contractors on compliance, consulting, and planning. Mark just joined ACM’s team about a year ago, and has been in public accounting for almost nine years. He graduated from the University of Colorado, Boulder, with degrees in accounting and economics. Mark is a CPA and CCIFP and is a member of the Construction Financial Management Association, the Institute of Certified Construction Industry Financial Professionals, the American Institute of Certified Public Accountants, and the Colorado Society of Certified Public Accountants.

© 2013 CFMA. All rights reserved. 1

CCIFP Overview Webcast Outline

Session 1 – September 19, 2013

Accounting & Reporting presented by Heather Dunn, CPA, CCIFP

Accounting Standards & Guidelines Subcontractor Payables Basic Methods of Accounting Capitalized Interest Receivables Financial Statements Costs in Excess & Billings in Excess Project Management Construction Equipment

Session 2 – September 26, 2013

Income Recognition Methods presented by David James, CPA, CCIFP

Financial Reporting Contract Costs CCM & PCM Considerations Accounting for Effects of Changes Contract Revenues in Estimates Independent Construction Audit

Session 3 – October 3, 2013

Legal presented by Kerry Kester and Kory George

Preparation & Review of Contracts Warranties Subcontracts Alternatives to Litigation Budgeting & Planning presented by Herb Brownett, CCIFP

Capital Budgeting Strategic Planning Cash Management Strategic Cost Management

Human Resources presented by Monica Kulawiak, PHR

Compensation

Employee Benefit Plans

Session 4 – October 10, 2013

Risk Management presented by Rob Lawyer, CPA, CCIFP

Construction-Related Insurance

Surety

Information Technology presented by Tim M. Gray CPA, CCIFP

Applications for Construction Management

Taxes presented by Mark E. Lumsden, CPA, CCIFP

Accounting Methods Unique to the Construction Industry

Tax Filing Wrap Up/Final Q&A


Learning Objectives When you have completed this course, you will be able to:

Identify topic areas that comprise the “Body of Knowledge” for CCIFPs

Identify the most important topics, concepts, calculations, etc., that a CCIFP should know

Benchmark your own level of knowledge against that of a CCIFP

Target your study efforts in critical areas in order to broaden & deepen your mastery of these topics

Level This is a Group-Internet Based course at the Overview level. At least three years of industry experience & a basic understanding of construction accounting & financial management is recommended.

Also Included:

CFMA’s Study Guide for the CCIFP Exam A detailed outline what a CCIFP should know

based on “The Book” – Financial Management

& Accounting for the Construction Industry –

plus more than a dozen articles from

CFMA Building Profits & interactive Web links

to FASB, IRS, AICPA & other

valuable content providers.

This course qualifies for 4 CPE credits in the field of Accounting

& 4 CPE credits in the field Specialized Knowledge and Applications.

CFMA’s CCIFP Overview Participant Guide

Session 1September 19, 2013


CFMA’s CFMA’s CCIFP Overview CCIFP Overview

WebcastWebcast

©2013 Construction Financial Management Association. All rights reserved.©2013 Construction Financial Management Association. All rights reserved.

What Every CCIFPWhat Every CCIFPShould KnowShould Know . . .. . .

Copyright NoticeThis presentation and all associated materials are copyrighted by CFMA and may not be altered, adapted, reproduced, or redistributed in any manner without express written permission from CFMA’s Director of Educational Services and/or Chief Operations Officer. Unauthorized

©2013 CFMA. All rights reserved.©2013 CFMA. All rights reserved.2

use of any CFMA copyrighted materials is expressly forbidden by law.

Questions regarding usage should be directed to:CFMA, 100 Village Blvd., Suite 200, Princeton, NJ 08540Phone: 609-452-8000 Website: www.cfma.org

This course was developed for CFMA by:

Tony Stagliano & Herb Brownett, and we are grateful for their time, dedication & dili i ti thi h i i


diligence in creating this comprehensive seminar for Construction Financial Managers & Professionals.

Questions concerning content, etc. should be directed to [email protected].




CCIFP Overview Webcast Schedule

Thursday, September 19th 3-5pm EDTSession 1: Accounting & Reporting

Thursday, September 26th 3-5pm EDTS i 2: I m R iti M th ds


Session 2: Income Recognition Methods

Thursday, October 3rd 3-5 pm EDT Session 3: Legal, Budgeting & Planning, Human Resources

Thursday, October 10th 3-5 pm EDTSession 4: Risk Management, , Information Technology, Taxes

Course Objectives

To provide an overview of the “Body of Knowledge” thata CCIFP should understand.


To highlight those “specifics” that are of primary importance and, thus, particularly relevant to the CCIFP.

After completing this course,you will be able to:

Identify the broad categories that comprise the Body of Knowledge that a CCIFP should know.

Within those broad categories, identify the most important topics, concepts, calculations, etc. that a CCIFP should understand


CCIFP should understand.

Benchmark your own level of knowledge against that of a CCIFP.

Target your study efforts in critical areas in order to broaden and deepen your mastery of what a CCIFP should know.




Accounting & ReportingAccounting & ReportingSession 1:Session 1:

CFMA’s CCIFP Overview SeminarCFMA’s CCIFP Overview Seminar


ccou g & epo gccou g & epo g

Accounting & Reporting Presenter

Heather Dunn, CPA, CCIFPAssurance ManagerFrazer, LLP


Frazer, LLPEmail: [email protected]

Accounting & Reporting AgendaAccounting Standards & GuidelinesBasic Methods of AccountingReceivablesCosts in Excess & Billings in Excess Construction Equipment


Subcontractor PayablesProvisions for Anticipated Losses on Contracts Financial StatementsProject ManagementJoint Ventures

Chapters 3 & 24 in “The Book,” 30% of the exam.

9




Accounting Standards & Guidelines• AICPA’s Audit & Accounting Guide• Financial Management & Accounting for

the Construction Industry (a.k.a. “The Book”)

• Construction Accounting Desk Book


g• Construction Controllers Manual• PPC’s Guide for Construction Contractors• Project Management for Construction• Miller Construction Guide

Basic Methods of Accounting

• Objective of Accounting & Reporting • Two Acceptable Methods

- Percentage-of-Completion Method


g p(PCM)

- Completed-Contract Method(CCM)

Example Computation: CCM

Year 1 Year 2Contract Revenues $ 0 $100,000Contract Costs 0 78,000


Gross Profit 0 22,000G&A 5,000 5,000Income (loss) $(5,000) $ 17,000

before income taxes

Handout #1

CCIFP Overview Seminar

Example: Application of the two basic generally accepted methods of accounting for long-term contracts.

Assume the following:

1) Company A entered into a contract to build a warehouse for a total contract sum of $100,000.

2) At the end of the fiscal year, Company A had completed 50 percent of

the project at a cost of $40,000.

3) Company A completed the project in the following fiscal year at a total cost of $78,000.

4) Company A incurred general and administrative expenses of $5,000 in

each fiscal year. If Company A accounted for its long-term contracts by the completed-contract method (CCM), assuming that this contract was the only one in process during the two years, the income statements for the two fiscal years would appear as follows:

Completed-Contract Method

Year 1 Year 2 Contract revenues $ 0 $ 100,000 Contract costs 0 78,000 Gross profit 0 22,000 General and administrative expenses 5,000 5,000 Income (loss) before income taxes $ (5,000) $ 17,000 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ If Company A accounted for long-term contracts by the percentage-of-completion method (PCM), the income statements for the two fiscal years would appear as follows:

Percentage-of-Completion Method

Year 1 Year 2 Contract revenues $ 50,000 $ 50,000 Contract costs 40,000 38,000 Gross profit 10,000 12,000 General and administrative expenses 5,000 5,000 Income (loss) before income taxes $ 5,000 $ 7,000 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _




Example Computation:PCM

Year 1 Year 2Contract Revenues $50,000 $ 50,000Contract Costs 40,000 38,000


Gross Profit 10,000 12,000G&A 5,000 5,000Income (loss) $ 5,000 $ 7,000

before income taxes

Receivables• Recording Receivables

Currently Due Retainage

• Disclosures Balance Sheet- Footnotes - Claims

U S G t All f


- U.S. Government - Allowance for- Billed/Currently Due Doubtful- Unbilled Receivables- Retention- Completed Contracts

Costs in Excess & Billings in Excess

• Unbalanced Items

• Recognition of Unbalanced Items

• Computation of Percentage


• Computation of Percentage of Completion

• Costs & Estimated Earnings in Excess of Billings on Uncompleted Contracts




Costs in Excess & Billings in Excess (con’t.)

• Billings in Excess of Costs & Estimated Earnings on Uncompleted Contracts

• Accounting for Contracts-in-P U i th CCM


Progress Using the CCM• Nature of Assets & Liabilities• Disclosures• Balance Sheet Classification

Construction Equipment• Allocating Equipment Costs

to Contracts- Equipment Cost Pool- Allocation Methods- Under- or Over-Absorption


p• Depreciation

- Selection & Application of Methods- Lives- Salvage Value

Subcontractor Payables

• Balance Sheet or Footnote Disclosure- Separately Stated

R t ti


- Retention

- If Not Expected to Be Paid within One Year




Provisions for Anticipated Losses on Contracts

• SOP 81-1 Addresses Anticipated Losses- Provide for loss in period it

b id t


becomes evident.- Record entire loss.- Disclose on balance sheet:

“Estimated liability to complete contracts.”

Financial Statements• Opinion Letter

- Audit- Review

Compilation


- Compilation

• Balance Sheet Classification- Operating Cycle

contract vs. non-contract related

Financial Statements (con't.)

• Income Statement- “Profit Center” Concept- Contract Revenues

Management Contracts


- Management Contracts- Owner-Furnished Materials- Incentive & Penalty Provisions




• Income Statement (con’t.)

- Contract Costs- Allocation of Indirect Costs

C pit li d I t st



- Capitalized Interest

• Statement of Cash Flows- Investing Activities- Financing Activities



- Operating Activities

• Notes to Financial Statements- Nature of Business

• Notes to Financial Statements (con't.)- Basic Method of Accounting

- How construction costs are carried- Method of determining percentage of completion



- Disclosure of base percentage- Estimated losses recognized when known- Policy for claim recognition- Handling changes in estimates- Accounting method used for income tax purposes




• Notes to Financial Statements (con't.)- Employee Benefit Plans- Contingencies

D l f B kl



- Disclosure of Backlog- Balance in contracts-in-progress- Signed contracts not started at

year-end & before auditors’ report date

• Notes to Financial Statements (con't.)

- Business & Credit Concentration

Empl rs’ Acc untin f r



- Employers Accounting for Post-Retirement Benefits (other than pensions)

• Supplementary Schedules- Direct & Indirect Contract Costs- General & Administrative Costs- Other Income/Expense



- Other Income/Expense- Earnings from Contracts- Contracts Completed- Contracts-in-Progress




Project Management

• Change Orders- Accounting

- Approved- Approved & Unpriced


- Unapproved

Project Management (con't.)

• Extras or Work Orders- Origins- Accounting

- Costs & Billings Included U d O C t C d


Under One Cost Code- Included in Total Billings- Separate Job

• Incentives & Penalties- Origins- Accounting for Incentives & Penalties

B k Ch s



• Back Charges- Origins- Accounting for Back Charges




• Claims- Accounting for Claims

- Legal Basis for Claim- Costs Caused by Unforeseen



Costs Caused by Unforeseen Circumstances

- Costs: Identifiable & Determinable- Evidence: Objective & Verifiable

• Claims (con't.)

- Financial Reporting for Claims -Disclosure- Not recognized until claims are paid



- Recognized if amounts are probable & can be reliably estimated

Forms of Joint Ventures• Joint Venture Agreements• Partnerships

- Characteristics of PartnershipsT I li ti f P t hi


- Tax Implications of Partnerships- Dissolutions

• Corporations• Undivided Interests




A&R for Joint Ventures• Authoritative Accounting Literature• Commonly Used Accounting Methods

- Full ConsolidationP ti l P ti t C lid ti


- Partial or Proportionate Consolidation- Equity Method- Expanded Equity Method- Cost Method

ICCIFP Website & Exam ResourcesInterested in taking the CCIFP® Exam?

Check out our schedule, it’s coming to a location near you!

Exam Date Exam Location

September 16, 2013 Portland, OR

September 25, 2013 Elizabeth, IN


September 26, 2013 Perrysburg, OH

September 29, 2013 Philadelphia, PA

October 3, 2013 Oakbrook Terrace, IL

November 16, 2013 Denver, CO

December 4, 2013 Las Vegas, NV

For registration details visit www.iccifp.org

Accounting & ReportingWrap-Up/Q&A

©2013 Construction Financial Management Association. All rights reserved.©2013 Construction Financial Management Association. All rights reserved.36

Heather Dunn, CPA, CCIFP, Assurance Manager, Frazer LLP Email: [email protected]

Documents

CCIFP Overview Webcast 2013 Session 1.ppt · PDF file · 2014-11-12Contract Revenues in Estimates Independent Construction Audit Session 3 – October 3, 2013 ... CFMA’s Study Guide