5301.9 Muli Project Accounting Approach

1. THE VARYING ROLE OF PROJECTS:

Within MULI all business operations occur within a PROJECT - which becomes an accounting "container" for:-

a. A single large volume contract

b. A group of "like transactions" - over a given period of time

c. A number of smaller “Jobs” - completed for a client or group of clients.

d. An asset holder, ie:

I. To control the hire of company assets (plant & equipment)

II. For Inventory & Stock Management of items used over a number of projects

e. Even the Overhead & General Ledger is managed as a project, having a start     & finish date equal to the financial year, ie: a new project each year.

2. INPUTS TO PROJECTS:

a. Original budget (= break-up of contract value)

b. Variations to Head Contract (which adjusts the budget)

c. Commitment of Orders & Subcontracts to external Suppliers & Subcontractors

d. Internal Orders (i.e. Labour for internal services which are invoiced when provided)

e. Payment processing (on a progressive basis as work is completed)

f. Income on progressive cash receipts 

g. Regular review of Risk2Do project items (to determine impact on final forecast costs)

3. EARNED VALUE ASSESSMENT:

All operational projects are assessed on a monthly basis (maximum yearly) for their “Earned Value”. This is then journaled as a DR to the Project and CR to Project Income on the Overheads (or Loss).

Note: The accounting standard requires any Loss to be recognised in full (while the Tax Office may not agree)

4. THE TRIAL BALANCE PROCESS:

a. Initial calculation for all transactions up to a given date. (The last date of any calendar month).

b. General Ledger Update - Muli obtains the starting period values by deducting the prior trial balance.   

c. Reporting Sequence - All allocations including internal alpha accounts have a General Ledger reporting sequence. This sequence determines where the values are located in the Muli General Ledger Accounts and also acts as the link to the data exported through SBR.

d. General Ledger Reports

I. Balance Sheet provides a statement of the financial position at a given time

II. Income Statement (Profit & Loss) - To show, manage and investigate if a company has made or lost money during a period of time

III. Cash Flow Statement - A solvency report focused on cash inflow and outflow separated into operating, investing and financing activities. Only includes inflows and outflows of cash and cash equivalents. It excludes transactions that do not directly effect cash receipts and payments.

This report is further supported by the individual project prepayment report.