This is part five of a five-part series on indirect costs.
As we wrap up our series on indirect costs, it’s important to remember the key takeaways from parts one through four:
In addition to the above points, the following items should be considered when evaluating indirect costs:
Though considering indirect costs in your construction contracts may seem like a no-brainer, these costs can be overlooked since they may be related to all projects but not easily allocated to just one. A concerted effort should be made to accurately estimate, allocate, and track these costs on a job-by-job basis to ensure accurate financial reporting, budgeting, and to remain in compliance with GAAP and other standards (FAR, CAS, etc.) that could be applicable to your construction business.
For more information regarding indirect costs and construction contracts, please contract Chris Fischer of Aronson’s Construction Real Estate Group at 301.231.6200.
On April 1, 2015, the Financial Accounting Standards Board (FASB) decided to defer the effective date of the new revenue standard, Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606). This proposed one-year delay is intended to provide entities adequate time to effectively implement the new standard.
The new revenue standard, which was officially issued by the FASB in May 2014, standardizes how companies should recognize revenue in financial statements under US Generally Accepted Accounting Principles (GAAP).
As a result of the proposed deferral, public entities would apply the new revenue standard to annual reporting periods beginning after December 15, 2017 and the first interim period within the year of adoption. Nonpublic entities would apply the new revenue standard to annual reporting periods beginning after December 15, 2018 and the interim periods within the year of adoption.
Additionally, the FASB decided to allow both public and nonpublic entities to adopt the new revenue recognition standard early, but not before annual periods beginning after December 15, 2016 (which was the original public entity effective date).
The Board directed its staff to prepare an exposure draft which will have a 30-day comment period for the proposed update.
For more information on this update or other accounting standards, please contact your Aronson advisor at 301.231.6200.
In January, the Financial Accounting Standards Board (FASB) issued the first Accounting Standards Update (ASU) created specifically for private companies. Accounting for Goodwill: a consensus of the Private Company Council (ASU 2014-02), which simplifies the accounting for goodwill subsequent to a business combination, is an important change by the PCC. In the May-June 2014 issue of the VSCPA’s Disclosures magazine, Aronson accounting experts Bill Foote and David Semendinger offered a detailed analysis of this notable development, including:
The Financial Accounting Standards Board and International Accounting Standards Board issued a revised Exposure Draft on May 16, 2013, recommending significant changes to lease accounting. The stated goal of the proposal is to better meet the needs of financial statement users by improving the transparency of lease accounting and increasing comparability between organizations.
The Exposure Draft proposes a dual approach to the recognition, measurement, and presentation of expenses and cash flows from leases. The distinction between capital and operating leases will be eliminated, and replaced with an asset/liabilities approach in which the right to use a specified asset is obtained in exchange for the obligation to pay rent.
Leases of assets that are deemed to consume more than an insignificant portion of the asset (e.g., equipment) will be classified as Type A leases. Lessees will generally recognize the lease as a nonfinancial asset at cost, and
On July 27, 2011 the Financial Accounting Standards Board (FASB) approved the revised accounting standard for Multi-Employer Pension Plans. This standard was originally released for public comment in September 2010 and was met with some criticism from the construction industry, so much criticism in fact that the Construction Industry FASB Coalition (The Coalition) was formed. The Coalition, led by several industry trade associations (as reported in our July 8, 2011 blog article), took on the FASB in an effort to remove several provisions of the standard. The most notable stance was against the proposed standard’s requirement to disclose a withdrawal liability to plans that a company participates in. The Coalition was successful in its negotiations as seen in the news release from the FASB regarding this accounting standard.