Unformatted text preview: edger codes in our example project, with the understanding that they could be some other set of cost accounting codes. It may appear to some that it is unfortunate we are making such a simplifying assumption here when the real world often behaves differently. The reason for doing so is that cost accounting is a discipline in its own right, and it would take us too far afield to branch off into this discipline in a discussion of appropriate cost accounting codes. On the other hand, a large proportion of the readers of this book will no doubt have had some experience with general ledger codes in an introductory accounting class, and the assumption that the cost codes coincide with the general ledger codes is a realistic one for small companies. It is the responsibility of project management to ensure the integrity and timeliness of the gathering, recording, and reporting of actual expenditures by work package. This includes recording any nonbudgeted expenditures as well. Project management accounts for these nonbudgeted expenditures through the project's change order procedures (discussed later in this chapter) in order to create an accurate picture of project expenditures. When corrections of actual expenditures are required, project management should make these corrections during the accounting period of their discovery. This can be done with the Page 70 Modern Project tools, either by editing the original expenditure transactions or by entering offsetting transactions. It is often preferable to enter offsetting transactions in order to preserve historically the posting of perceived expenditures and the later corrections to these expenditures. Also, project management is responsible for ensuring that all expenditures have been charged to the appropriate work package. This may seem obvious, but on large projects it is often difficult. Operational managers do not always have the same incentive to ensure correctness in the accounting of expenditures as the project management staff. It is time consuming and not something they always get credit for. Large-scale inaccuracies in accounting for actual expenditures can skew the performance and productivity evaluations so badly that a project can be in trouble and not know it for far too long. Figure 3-1 shows the Cost/Labor Transaction Entry/Edit tool that is used for entering actual expenditure transactions. This tool can be executed by clicking on its button on the Modern Project Main Menu. The operation of this tool is similar to the operation of other data entry and edit tools already introduced. Notice that the form shown in Figure 3-1 has fields for both labor and cost. Not all cost transactions have associated labor-hour expenditures. If the cost transaction is for materials or Figure 3-1. Cost/Labor Transaction Entry/Edit form. Page 71 equipment expenditures, only the cost of the transaction is entered, and the labor-hour field is left blank. The labor-hour expenditures are used in both the performance and the productivity assessments. There is a tendency by...
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This note was uploaded on 01/11/2011 for the course ACC 9 taught by Professor Yeetan during the Spring '10 term at Sunway University College.
- Spring '10