Project Accounting

The Project Accounting functionality is used to define how much revenue or cost can be realized at period end, based on budget, actual values, and the percentage of completion for a project. Project Accounting can be linked to a maintenance agreement in 'Maint Agrmnt. Open' (COS410), but it is not mandatory. It can be linked to any project defined in 'Settings – Project Accounting per Proj' (GLS490) which is defined with a budget and where there are some actual costs and revenue booked in the general ledger where the project ID is included in the accounting string.

This is a periodic routine that is normally run once per accounting period and the calculations are based on the transactions in the General Ledger Balance table (FBAVAL).

Limitations

The details of the proposal for Project Accounting are not included in any printout but can be exported to MS Excel or Ad hoc Reporting can be used.

Before you start

  1. The ‘Project ID’ must be defined in 'Settings – General Ledger' (CRS750). The ID defines what accounting dimension is to be used for this functionality and this accounting dimension should not be used for any other purpose. The 'Project ID' defines in what accounting dimension the accounting object is entered that is to be used for the Project Accounting. The accounting object can, for example, be the Maintenance Agreement (AAGN) that exists in (COS410).

    The 'Project ID' is checked against the accounting dimensions used in 'Settings - Project Management' (CRS590) and if commitments are enabled in (CRS750) then the dimensions used for commitments are also checked. The controls are also performed vice versa.

    A balance key must also be defined in (CRS750). The standard balance key can be used which includes the accounting dimension 1-'Account' and the Project Accounting dimension.

    The new parameters in (CRS750) are not editable when projects have been defined in 'Settings - Project Accounting per Proj' (GLS490) with starting period the same as the current period. If there are records in (GLS490) for later starting periods, a warning message is displayed in (CRS750) if you try to change the 'Project ID' or the 'Balance key'.

  2. Use function key F14 in 'Accounting Event. Open' (CRS375) to generate the accounting event GL49 ‘Project Accounting’. Also use function key F14 in (CRS375) to generate the types 815 ‘Project value in Balance sheet’ and 816 ‘Project cost in Balance sheet’. The accounting rules for GL49 – ‘Project Accounting’ must be defined in 'Accounting Rule. Set' (CRS395). Use function key F14 to generate them. When generated, they should also be defined with the ‘Project Account ID’ (BDPIDM) in the dimension defined in (CRS750).

    Also add the accounting object for ‘agreement’ (AAGN) in the accounting rule where the actual costs (CO21/CO22/CO23/CO24 971) and revenue (CO20/120) will appear.

    The accounting object should be added to the dimension defined as ‘Project ID’ in (CRS750).

  3. The FAM-function ‘GL49 – Project Accounting must be generated in 'FAM Function. Open' (CRS405).

  4. In 'Accounting Identity. Open' (CRS630) the following options are available in the 'Inventory account' parameter:

    • 5 – Deferred revenue (used for account used in GL49/811)
    • 6 – Accrued cost (used for account used in GL49/809)
    • 7 – Realized revenue (used for account used in GL49/807)
    • 8 – Realized cost (used for account used in GL49/805)
    • 9 – Offset project cost and revenue (used for account used in GL49/815 and GL49/816).

    The accounts where these options are used should be set up to have the ‘project’ as a mandatory entry in (CRS630) in the dimension defined in (CRS750) for projects.

  5. The projects are defined in (GLS490). In this program, the following is defined:

    • The 'Project account ID' which can be the agreement in (COS410)
    • The start period of the project
    • Number of periods (the lifetime of the project)
    • Active project, the project needs to be activated when started and deactivated when completed
    • The original budget number/version
    • The forecast/revised budget number/version; can be used if the budget is changed during the project. If a forecast is used, it should be entered with the same start date as the project and the same number of periods as the project and the budget.
    • Revenue recognition accounting method, if revenue deferral or cost accrual is used.

Follow these steps

  1. Create a proposal in 'Project Accounting. Open' (GLS495) for the current period. The proposal is created with status 00-’Proposal created’.

  2. Check the proposal and the details in 'Project Accounting. Open Details' (GLS496) and add manual adjustments if needed. The manual adjustment only affects the account entries created and not the figures in (GLS496).

  3. Use related option 9-’Update GL’ in (GLS495) to create the account entries for the Project Accounting. The proposal is updated to status 99-’Transferred to FAM’.

  4. When the project has ended, a manual journal voucher must be entered to clear the balances for the balance sheet accounts and the project needs to be set as not active in (GLS490).

Even if a round in status 99 exists for an accounting period, a second round can be created for the same period. Account entries are only created if anything has changed from the previous round.

If the calculated revenue to be recognized is higher than the actual revenue accumulated, then the recognized revenue is set to the actual accumulated revenue if 'Revenue recognition method' 1-'Deferred revenue' in (GLS496).

For 'Revenue recognition method' 2-'Cost accrual', if the calculated cost to be realized is lower than the actual accumulated cost, then the accumulated actual cost is set to the cost to be realized. The reason for this is that a loss should be accounted for directly.

Accounting Transactions

It is assumed that the project revenue and the project costs are entered on Balance Sheet accounts when the Project Accounting is started.

Accounting Rule Description of accounting event Description of accounting type
GL49/805 Project Accounting Recognize costs
GL49/807 Project Accounting Recognize revenues
GL49/809 Project Accounting Cost reservation
GL49/811 Project Accounting Revenue reservation
GL49/815 Project Accounting Project value in the balance sheet
GL49/816 Project Accounting Project cost in the balance sheet
Account entry Amount Debit Credit
The realized revenue is moved from the balance sheet to the Income statement. The calculated realized revenue. GL49/815 GL49/807
The deferred revenue. The difference between the realized revenue and the actual revenue. GL49/815 GL49/811
The realized cost is moved from the balance sheet to the income statement. The calculated realized cost. GL49/805 GL49/816
The accrued cost. The difference between the realized cost and the actual cost. GL49/816 GL49/809

Definition of column values used in (GLS496)

All values are based on the transactions in the General Ledger Balance table (FBAVAL) for the balance key defined in (CRS750) and for the period selected in (GLS495).

The sorting orders and views in (GLS496) can be user-defined but if the standard sorting order 1, view STD01-01 is used, these values are displayed.

Column value Content or calculation of value
Original budget accumulated cost (OBAC) The total cost for the original budget for the project’s lifetime.
Forecast budget accumulated cost (FBAC) If a forecast budget is defined for the project, the forecast budget total cost for the project’s lifetime.
Accumulated actual cost (CACC) The accumulated actual cost for the project which should be the account entries CO21/CO22/CO23/CO24 971 (if linked to a Maintenance Customer Order, MCO) which are created based on the invoicing of the Maintenance Customer Order, but which are created when 'Internal Account Entry. Create'(CAS950) is run.

If the project is not linked to an MCO, it can be any cost which includes the project ID in the defined accounting dimension.
Accumulated cost accrued (ACCC) The accumulated accrued costs are the costs booked on the account with the parameter ‘Inventory account’ set to 6=’Accrued cost’ in (CRS630).
Percentage of completion (PCMN)

If the ‘Revenue recognition accounting method’ in (GLS490) is set to 1=’Revenue deferral’ then a ‘Cost-based’ approach will be used and the ‘Percentage of completion’ in (GLS496) is calculated as the ‘Actual accumulated cost’ divided by the ‘Forecast budget accumulated cost’ or the ‘Original budget accumulated cost’, if there is no ‘Forecast budget’ defined for the project.

If the ‘Revenue recognition accounting method’ in (GLS490) is set to 2-’Cost accrual’ then a ‘Revenue-based’ approach is used and the ‘Percentage of completion' in (GLS496) is calculated as the ‘Actual accumulated revenue’ divided by the ‘Forecast budget accumulated revenue’ or the ‘Original budget accumulated revenue’, if there is no ‘Forecast budget’ defined for the project.
Original budget accumulated revenue (OBAR) The total revenue for the original budget for the project’s lifetime.
Forecast budget accumulated revenue (FBAR) If a forecast budget is defined for the project, the total revenue for the forecast budget for the project’s lifetime.
Actual revenue accumulated (AARV) The accumulated actual revenue for the project which should be the account entry CO20/120 (if linked to a Maintenance Customer Order, MCO) which is created based on the invoicing of the Maintenance Customer Order. If the project is not linked to a MCO, it can be any cost which include the project ID in the defined accounting dimension.
Realizable accumulated total value (RRAC)

The field indicates the total value realizable as cost or revenue at the end of the period.

If ‘Revenue recognition accounting method’ in (GLS490) is set to 1-’Revenue deferral’, then this value is calculated as the ‘Percentage of completion’ multiplied by the Forecast or Budget accumulated revenue.

If ‘Revenue recognition accounting method’ in (GLS490) is set to 2-’Cost accrual’, then this value is calculated as the ‘Percentage of completion’ multiplied by the Forecast or Budget accumulated cost.
Accumulated deferred revenue (DRFA) The accumulated deferred revenue is the revenue booked on the account with the parameter ‘Inventory account’ set to 5-’Deferred revenue’ in (CRS630).
Calculated Margin (CAMG) The accumulated actual cost divided by the ‘realizable accumulated total value’.
Manual adjustment (MAAD) Field open for manual adjustments but only affects the account entries and not the figures in (GLS496).

The sorting orders and views in (GLS496) can be user-defined but if the standard sorting order 1, view STD01-02 is used, the values below are displayed.

Column value Content or calculation of value
Original budget period cost (OBPC) The cost for the original budget for the current period.
Forecast budget period cost (FBPC) If a forecast budget is defined for the project, the cost for the forecast budget for the current period.
Period actual cost (CACP) The actual cost for current period for the project which should be the account entries CO21/CO22/CO23/CO24 971(if linked to a Maintenance Customer Order, MCO) which are created based on the invoicing of the MCO, but which are created when (CAS950) is run. If the project is not linked to an MCO, it can be any cost which include the project ID in the defined accounting dimension.
Accumulated cost realized (ACPD) The accumulated cost realized is the cost booked on the account with the parameter ‘Inventory account’ set to 8-’Realized cost’ in (CRS630).
Percentage of completion (PCMN)

If the ‘Revenue recognition accounting method’ in (GLS490) is set to 1=’Revenue deferral’ then a ‘Cost-based’ approach will be used and the ‘Percentage of completion’ in (GLS496) is calculated as the ‘Actual accumulated cost’ divided by the ‘Forecast budget accumulated cost’ or the ‘Original budget accumulated cost’, if there is no ‘Forecast budget’ defined for the project.

If the ‘Revenue recognition accounting method’ in (GLS490) is set to 2-’Cost accrual’ then a ‘Revenue-based’ approach is used and the ‘Percentage of completion' in (GLS496) is calculated as the ‘Actual accumulated revenue’ divided by the ‘Forecast budget accumulated revenue’ or the ‘Original budget accumulated revenue’, if there is no ‘Forecast budget’ defined for the project.
Original budget period revenue (OBPR) The revenue for the original budget for the current period.
Forecast budget period revenue (FBPR) If a forecast budget is defined for the project, the revenue for the forecast budget for the current period.
Actual revenue period value (RVPE) The actual period revenue for the project which should be the account entry CO20/120 (if linked to a Maintenance Customer Order, MCO) which is created based on the invoicing of the MCO. If the project is not linked to an MCO, it can be any revenue which include the project ID in the defined accounting dimension.
Accrued or deferred adjustment (RRAP) The value indicates the value accounted as accrued cost or deferred revenue for the period.
Accumulated realized revenue (DRPR) The accumulated realized revenue is the revenue booked on the account with the parameter ‘Inventory account’ set to 7-’Realized revenue’ in (CRS630).
Calculated Margin (CAMG) The accumulated actual cost divided by the ‘realizable accumulated total value’.
Manual adjustment (MAAD) Field open for manual adjustments but only affects the account entries and not the figures in (GLS496).
Related topics
  • Create Project Budget or Financial Budget from a Maintenance Agreement Quote