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Posting Revenue and Variances

You can post revenue immediately after the revenue computation process, or after completing BOTH the revenue computation and redistribution processes.

If you decide to post the Revenue Journal immediately after the revenue computation process, the amounts that are posted to the G/L are the amounts derived during the revenue computation process alone. Any amounts derived during the revenue redistribution process are posted separately at the end of that process. Costpoint prints separate Journals for each process.

However, if you decide to wait until the redistribution process is complete before you post revenue, Costpoint prints only one Journal, which contains the net amounts derived from both the revenue computation and revenue redistribution processes. Both posting methods are equally valid, and the choice of method should be based on the amount of detail that you desire on the Revenue Journal.

The Post Revenue screen updates account/organization/project combinations in the G/L as follows:

  • Debit ACCOUNTS that have a Function Code of UNBILLED-GENERL and Credit ACCOUNTS that have a Function Code of REVENUE. The organization that is used for posting the Debit to UNBILLED-GENERL is always the owning organization of the project from the Manage Project User Flow. The project level to which the unbilled portion of the entry is posted is the higher of the billing or revenue levels.  
  • The organization used for posting the Credit to REVENUE is determined by whether you post revenue to the Owning Organization or Performing Organization on the Manage Revenue Information screen for each project that receives a revenue posting.

    If you selected the Owning Organization option, all revenue from all performing organizations that is attributable to a given project is summarized and posted to the owning organization on the Basic Info tab of the Manage Project User Flow.

    If you selected the Performing Organization option, revenue for each performing organization is posted separately to that organization.

    Note: Remember that revenue is calculated and stored in the PROJ_SUM table by performing organization for all cost-based revenue formulas. Additionally, the Redistribute Revenue process redistributes the revenue for projects with non-cost-based revenue formulas (revenue that is computed and stored in the PROJ_SUM table by owning organization) to performing organizations based on percent of cost incurred by those performing organizations.
  • The projects used for posting are those that have had revenue computed or redistributed.

The Posting Process

Before computing the revenue amount-to-post, Costpoint searches the Project Master tables to determine:

  • The level at which revenue is to be posted — this is the level of the project at which the revenue formula was entered.
  • The Revenue Account (which must be set up at the revenue posting level), which has a REVENUE Function Code, and the Unbilled Account, which has an UNBILLED-GENERL Function Code.
  • Whether the posting organization is owning or performing. Costpoint computes the amount-to-post at the level determined and for the Rate Type (Actual or Target) selected on the Post Revenue screen.

To compute the amount-to-post for a given project, the total revenue stored in the PROJ_SUM table is summarized year-to-date by the organization (owning or performing). That revenue includes revenue calculated during the Compute Revenue process and revenue redistributed during the Redistribute Revenue process.

Once it has derived a year-to-date revenue amount from the PROJ_SUM table, Costpoint searches the GL_POST_SUM table (the General Ledger) to determine the year-to-date amount in the Revenue Account and Posting Organization.

Costpoint subtracts the year-to-date revenue that exists in the GL_POST_SUM table for the Revenue Account/Organization from the year-to-date revenue derived from PROJ_SUM for the same account/org combination.

The resulting amount is the CURRENT AMOUNT-TO-POST. This amount can be positive or negative, depending on the values involved in the calculation.

The balancing side of the CURRENT AMOUNT-TO-POST entry is made to the Unbilled Account/Home Organization of the project.

Once GL_POST_SUM has been updated, the other G/L tables are updated with the same amounts. Those tables include:

  • GL_DETL: Detail G/L postings
  • FS_SUM: Summarized Account/Org postings
  • REF_SUM: Reference Number postings

The Variance Posting Process

If you post revenue using target rates, you can then determine whether or not to post the COST variance between actual and target rates. You can post variances for all projects or for cost reimbursable projects only (Cost plus Fee On Cost, Fee on Hours plus Cost Incurred). Posting the variance between target and actual rates has the effect of restating your Income Statement to show indirect costs at target rates. In doing this, you are assuming that you realize the full profit from your jobs, even though your actual indirect rates are higher than anticipated, and otherwise cut into that profit. It assumes that, in all probability, you recover the difference between actual and target.

Example: Your cost-reimbursable contract was signed with no ceiling rates on overhead or G/A and a 10% fee. Your approved provisional rates for the year for overhead and G/A are 50% and 10%, respectively. Your actual rates year-to-date are 60% and 10%, respectively.

You compute revenue using target rates (50% and 10% — the same as your approved provisionals), and show a 10% profit. However, your Income Statement shows indirect cost at 60% and 10%, which has the effect of decreasing your profit. If you feel strongly that, after audit, you will recover the extra 10% overhead and the resulting G/A on top of it, you restate your Income Statement to decrease the indirects to 50% and 10%, thereby showing the full 10% profit.

The calculation of the variance amount-to-post is as follows:

  • The year-to-date burden amounts contained in the PROJ_BURD_SUM table are summarized by pool.
  • Costpoint checks the Cost Pool Setup (POOL_ALLOC table) for each pool to determine the posting accounts/orgs for the cost variance and receivable variance.
  • Costpoint determines the year-to-date cost variance account/organization balance from the GL_POST_SUM table.
  • Costpoint subtracts the year-to-date cost variance account/organization balance from the year-to-date burden amounts derived from the PROJ_BURD_SUM table. The result is the CURRENT AMOUNT-TO-POST.
  • The balancing side of the CURRENT AMOUNT-TO-POST entry is made to the Receivable Variance Account/Org.
  • Posting variances is not required.

Once GL_POST_SUM has been updated, the other G/L tables are updated with the same amounts. Those tables include:

  • GL_DETL: Detail G/L postings
  • FS_SUM: Summarized Account/Org postings
  • REF_SUM: Reference Number postings