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What you know about Project Accounting

Project accounting is the practice of creating financial reports specifically designed to track the financial progress of projects, which can then be used by managers to aid project management. Project accounting is commonly use at government contractors, where the ability to account for costs by contract (and sometimes contract line item, or CLIN) is usually a requirement for interim payments. Percentage-of-completion is frequently independently assessed by a project manager. Funding advances and actual-to-budget cost variances are calculated using the project budget adjusted to percent-of-completion. Where labor costs are a significant portion of overall project cost, it is usually necessary for employees to fill out a timesheet in order to generate the data to allocate project costs. The capital budget processes of corporations and governments are chiefly concerned with major investment projects that typically have upfront costs and longer term benefits. Investment go / no-go decisions are largely based on net present value assessments. Project Accounting of the costs and benefits can provide crucially important feedback on the quality of these important decisions. Accounting is a statutory requirement in all organizations - Commercial, non-profit and Government. Therefore, there are many accounting software packages available. All these packages are targeted at small trading, manufacturing units. Apart from accounting, they offer features such as costing, sales and inventory management.
Advantages of project accounting
There are several advantages to the process called as the project. It helps in the management of each project very well. It helps in keeping track of the cost effectiveness of each of the project. The process becomes faster with the availability of several software in this regard. An Accounting software solution model embeds modules like General Ledger, Accounts Payable, Accounts Receivable, Payroll, Inventory, Job and Project Costing, Fixed Assets, Order Entry, Budgeting, Manufacturing, Multinational Accounting, General Accounting, and Technology.
The process
When a request is made to the Financial Accounting & Reporting (FAR) Office to place an account on projects, a 2-letter project department code is assigned to the account. This code identifies the departmental contact person and the mailing address for the monthly project statements, and weekly miscode reports. The project department address (not the Account Title or departmental statement address) controls the delivery of the project statements. Project statements are essentially identical to departmental statements with the exception that they will also show project adjustments (movement of transactions from one project to another within a fund-account).

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