Tracking Financials for Internal Projects

Yahoo Archive
1
Something my company does is run all capital expenditures through WIP jobs. We created a product group and given part numbers (ie capex machine) in that product group and a also a specific part class that only relates to the capex parts. The product group's WIP g/l accounts relate to contstuction in progress, and not work in process inventory. On the part class, both the primary g/l account and variane g/l account point to a fixed asset account, we just use suspense accounts for all others. Basically you set up a job with the capex part number and capitalize all material (even major purchases) as job material via purchase orders and account for all hours worked on the job as clocked hours. When the project is finsihed a production detail report will give you all costs associated with that project and a WIP/reconciliation report will give you the CIP balances. When you close the job, it will automatically move the costs from CIP to fixed assets based upon the g/l maintenance in product group and part class. The only issue is that the canned WIP balance report will report these jobs on there and it will not tie to inventory WIP. You would need to filter the product group out.

--- In vantage@yahoogroups.com, "ericskennedy" <ericstephenkennedy@...> wrote:
>
> Right now we're capitalizing internal projects through journal entries, and would like to move to something more acurate and automated. Is anyone using the Project Management Module or even just a simple job to track INTERNAL projects? Is there a white paper out there on internal project setup? Do you have to fake ship or invoice the job to move the hours out of WIP? What works well and is a minimal disruption to setup if all you every want to do is financially track internal projects (not bill projects to customers)?
>
> Thanks for your help.
>
> Eric Kennedy
> IT Project Manager
> Precision Wire Components
>
2
Right now we're capitalizing internal projects through journal entries, and would like to move to something more acurate and automated. Is anyone using the Project Management Module or even just a simple job to track INTERNAL projects? Is there a white paper out there on internal project setup? Do you have to fake ship or invoice the job to move the hours out of WIP? What works well and is a minimal disruption to setup if all you every want to do is financially track internal projects (not bill projects to customers)?

Thanks for your help.

Eric Kennedy
IT Project Manager
Precision Wire Components
3
Hello Eric:

I believe we have a pretty slick method to capture all different types of internal projects (without using the projects module). It is accomplished through Product Groups. We actually call them Internal Jobs and use the acronym IJ Jobs. The product groups we have set up all begin with that acronym IJ...IJCAP (capital asset), IJRAD (Research and Development), IJSAE (Shows & Exhibits), etc... The set up of the product group is the trick. All account numbers on the product group would point to the interim account number you desire to hold the cost with the only exception being the Variance account which is the ending account you desire to reflect the ending cost. Here's an example...IJCAP is for our capital asset jobs. We have a part template set up IJCAP that contains no material tags and three non costed operations (IJ operations with an IJ resource group). This part utilizes the product group IJCAP. All of the account numbers tied to that product group (sales, discounts, returns,COS, WIP, etc...)are our In Process Asset account (Balance sheet CIP account). The variance account listed on this product group is an account we called Completed Assets, same classification (Balance sheet asset). Costs are accumulated on the job and show as In Process Asset cost. Once the accountants see an amount in Completed Assets, that is our signal to create a journal entry and classify it to the proper asset account (Machinery, Computer Hardware, Software, Office Equipment, etc...) The job has a Demand Link of Make To Stock (you just won't ever be completing a quantity on the job, you will collect the costs and close the job without completing the quantity, thus forcing everything through the Variance account from the product group...That's the trick, force everything through the variance account. Since the job has no material tags originally established, they are added as the project owner determines. Maybe you will issue some inventory material from stock to build something, add the material tags as required and issue. Maybe you are releasing a purchase order for the purchase of equipment, that can be assigned directly to the IJ job, add the material tag mark purchase direct and purchasing will see the demand. Although our operations are non-costed, just for time reporting, we do sometimes have internal time that we would want to capitalize. The accountants determine if the operations should be switched to a costed operation and make the change appropriately. If manufacturing produces parts for the capital job (i.e. a component of the machine, or a tool, etc...) make the material tag for that part on the IJ job, allow the demand to show on the shop floor, manufacturing will create a separate job with the final demand link the IJ job. Everything flows so nicely.... last thing you now probably are thinking, but if it is a job it will show on the work in process report, but it's not really work in process (balance sheet account), how do we reconcile true work in process...simple, you can now run a WIP report by product group, filter by all the IJ product groups and that separates out how much on the WIP report is from IJ. This whole process is nice, because at the end you print out a production detail report and that now shows all of the specific detail of the capitalized asset, ready for audit purposes.

This also works for most anything else. We do this for Shows & Exhibits, you can voucher expense reports to the job, apply freight costs, apply third party invoices like booth space, etc.... All accounts on the product group are a balance sheet Prepaid Show cost, the variance account is the Expense account Shows & Exhibits.

We do this for New Product Development and Research and Development, all accounts including the variance account is our expense account Research & Development. If you want other ending account based on a type, you would have to do this through more product groups or do it like fixed assets, one "clearing account" listed as Completed and then a journal entry to the ending account.

If you want to discuss in any more detail give me a call.

262-369-1120

Sincerely,
Chris Berger
Controller
Dorner Mfg. Corp.

--- In vantage@yahoogroups.com, "ericskennedy" <ericstephenkennedy@...> wrote:
>
> Right now we're capitalizing internal projects through journal entries, and would like to move to something more acurate and automated. Is anyone using the Project Management Module or even just a simple job to track INTERNAL projects? Is there a white paper out there on internal project setup? Do you have to fake ship or invoice the job to move the hours out of WIP? What works well and is a minimal disruption to setup if all you every want to do is financially track internal projects (not bill projects to customers)?
>
> Thanks for your help.
>
> Eric Kennedy
> IT Project Manager
> Precision Wire Components
>