Surety Bond Quarterly - Winter 2017 - 26

feature

Bottom Line
Protection
Job Cost
Accumulation
& Allocation
LA1N/SHUTTERSTOCK.COM

BY R.A. BOBBI HAYES

A CONTRACTOR'S BOTTOM LINE is
directly affected by errors in bidding,
estimating, and job profit realization;
job cost accumulation and allocation
are key.
Our CPA firm works with many construction contractors of various sizes
and degrees of business sophistication. Over the years, we have found
that appropriate handling of job
indirect costs is one of the weakest
areas typically found in a contractor's accounting system. Not understanding either the components that
should be included in indirect costs
or how they relate to a job can lead
to substantial errors in bidding and

26

estimating and in job profit realization. This is one of the most significant
areas where a contractor can learn
tools to directly affect its bottom line.
Accounting is governed by a framework known in the United States as
generally accepted accounting principles (GAAP). Recording and reporting
accounting transactions in a consistent
manner within this GAAP framework
leads to information that is meaningful, useful, and appropriate and that is
comparable to other information (for
example, to a particular company's
results in different operating periods
or to other companies operating in the
same industry). In addition, recording
and reporting costs consistently support the proper calculation of revenue
for each contract.

SURETY BOND QUARTERLY | WINTER 2017

In accounting, we look to formal
pronouncements that provide guidance about such areas as the type
of costs that should be included in
accumulating costs for a particular
contract. Major guidance for construction contractors concerning job
cost accumulation is found in the
technical pronouncement Financial
Accounting Standards Board (FASB)
ASC 605-35, which specifically provides guidance on how to account for
contracts of commercial businesses
that operate completely or partially
in a contracting business. The guidance in this area had its origins in
a pronouncement known as SOP
81-1, Accounting for Performance
on Construction-Type and Certain
Production-Type Contracts.



Table of Contents for the Digital Edition of Surety Bond Quarterly - Winter 2017

NASBP Upcoming Meetings & Events
2017–2018 Executive Committee
From the CEO: Looking Backward to Reach Forward
Relationships for the Long Run
Subcontractor Default Insurance: Relevant Considerations for the Surety Claims Professional
Bottom Line Protection with Job Cost Accumulation & Allocation
Inside the AIA’s New Insurance and Bonding Contract Exhibit
The Calm After the Storm: Managing Disaster Response Contracts
Practical Tools to Help Jump-Start Your Company’s Cyber Plan
Index to Advertisers
Surety Bond Quarterly - Winter 2017 - Intro
Surety Bond Quarterly - Winter 2017 - cover1
Surety Bond Quarterly - Winter 2017 - cover2
Surety Bond Quarterly - Winter 2017 - 3
Surety Bond Quarterly - Winter 2017 - 4
Surety Bond Quarterly - Winter 2017 - 5
Surety Bond Quarterly - Winter 2017 - 6
Surety Bond Quarterly - Winter 2017 - 2017–2018 Executive Committee
Surety Bond Quarterly - Winter 2017 - 8
Surety Bond Quarterly - Winter 2017 - From the CEO: Looking Backward to Reach Forward
Surety Bond Quarterly - Winter 2017 - 10
Surety Bond Quarterly - Winter 2017 - Relationships for the Long Run
Surety Bond Quarterly - Winter 2017 - 12
Surety Bond Quarterly - Winter 2017 - 13
Surety Bond Quarterly - Winter 2017 - Subcontractor Default Insurance: Relevant Considerations for the Surety Claims Professional
Surety Bond Quarterly - Winter 2017 - 15
Surety Bond Quarterly - Winter 2017 - 16
Surety Bond Quarterly - Winter 2017 - 17
Surety Bond Quarterly - Winter 2017 - 18
Surety Bond Quarterly - Winter 2017 - 19
Surety Bond Quarterly - Winter 2017 - 20
Surety Bond Quarterly - Winter 2017 - 21
Surety Bond Quarterly - Winter 2017 - 22
Surety Bond Quarterly - Winter 2017 - 23
Surety Bond Quarterly - Winter 2017 - 24
Surety Bond Quarterly - Winter 2017 - 25
Surety Bond Quarterly - Winter 2017 - Bottom Line Protection with Job Cost Accumulation & Allocation
Surety Bond Quarterly - Winter 2017 - 27
Surety Bond Quarterly - Winter 2017 - 28
Surety Bond Quarterly - Winter 2017 - 29
Surety Bond Quarterly - Winter 2017 - Inside the AIA’s New Insurance and Bonding Contract Exhibit
Surety Bond Quarterly - Winter 2017 - 31
Surety Bond Quarterly - Winter 2017 - 32
Surety Bond Quarterly - Winter 2017 - The Calm After the Storm: Managing Disaster Response Contracts
Surety Bond Quarterly - Winter 2017 - 34
Surety Bond Quarterly - Winter 2017 - Practical Tools to Help Jump-Start Your Company’s Cyber Plan
Surety Bond Quarterly - Winter 2017 - 36
Surety Bond Quarterly - Winter 2017 - 37
Surety Bond Quarterly - Winter 2017 - Index to Advertisers
Surety Bond Quarterly - Winter 2017 - cover3
Surety Bond Quarterly - Winter 2017 - cover4
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