Construction Contractors: Non-Revenue and Non-Lease Accounting Considerations
- Construction accounting fundamentals The construction industry stands out in its need to adhere to diverse accounting standards. Essential knowledge and key issues influencing the field are explored as you learn about the overall construction process through the following topics:
- Industry players
- Preparing cost estimates and bids
- Project management
- Contracts and modifications Unique accounting issues for contractors Various contractor expenses that affect job profitability need to be identified and examined to ensure accurate accounting of a company’s total spending and performance. You'll review this concept and other characteristics unique to contractors as you gather critical information and learn the implications for CPAs. Relevant topics include:
- Contractor financial statements
- Common disclosures
- Supplementary information Working with a surety Surety is an integral part of the construction process. You’ll take a detailed look at the benchmarks a surety might analyze in a contractor’s financial statements as well as the following topics:
- Types of surety bonds
- The surety process
- Surety underwriting considerations
- Warning signs for the surety
Learning Objectives
- Recall the predominant types of construction contractors and the work they typically perform.
- Identify the common significant steps within the overall construction process.
- Recognize select characteristics that are unique to the construction industry and that have accounting, audit, tax, or consulting consequences.
- Identify the components of job costs incurred, the common categories into which the costs are divided, and the impact of both direct and indirect costs on the contractor.
- Identify the unique characteristics of the contractor financial statements (specifically, accounts generally unique to construction contractors) and the unique disclosures common to contractor financial statements.
- Recall the unique supplementary information normally included in the financial statements of a construction contractor.
- Recall the main reasons for and types of surety bonds in the construction industry and the advantages to the owner of such bonds.
- Identify the various financial benchmarks a surety or surety agent might analyze in a contractor’s financial statements to determine the amount of the contractor’s surety credit.
Major Topics
- Types of contractors
- Non-revenue GAAP accounting for contractors
- Contractor financial statements
- Sureties and their place in the construction relationship
