Thursday, December 18, 2008

Project Accounting Default Account Sourcing

Currently I am working on several project accounting implementations. When I have several similar projects going on at the same time like this, I tend to focus on the common themes. So, lately, I have been thinking about the default project account setup through Tools>>Setup>>Project>>Project>>Accounts. This is always an interesting thing to explain to clients when they ask, how does project determine what accounts to use? And my answer is, normally, it depends on your setup.

In the core modules of Dynamics GP, the defaulting of posting accounts is fairly straightforward. The system looks first to a master record, and if no accounts are specified, it then looks to the posting account setup. So, for example, when entering a payables transaction, the system will first look to the vendor card for default posting accounts and whatever it cannot find there, it will attempt to pull from the posting accounts setup (Tools>>Setup>>Posting>>Posting Accounts).

Project accounting presents users with a more flexible defaulting model, where default locations can be specified by transaction type and by account. Additionally, segment overrides can also be specified at the contract and project levels. This creates tremendous flexibility in terms of how the system can default accounts, and where accounts need to be set up in the first place.

So, to outline the different options...

For each cost transaction type in project accounting:
  • Miscellanous Logs
  • Equipment Logs
  • Purchases/Materials
  • Employee Expenses
  • Timesheets

And then for each account type (I only list a few of the basics below for the example that follows):

  • Cost of Goods Sold/Expense
  • Contra Account for Cost
  • Project Revenue/Sales
  • Accounts Receivable

For each account type, you can specify a "source" to pull the default accounts from:

  • None (do not create distributions for this account)
  • Customer (use Cards>>Sales>>Customer>>Project>>Accounts)
  • Contract (use Cards>>Project>>Contract>>Accounts)
  • Project (use Cards>>Project>>Project>>Accounts)
  • Cost Category (use Cards>>Project>>Cost Category>>Accounts)
  • Trx Owner (depending on transaction type, can pull from Employee, Equipment, Miscellaneous, or Vendor)
  • Specific (enter one specific account to always be used)
So, to take you through an example from a project I am working on...in the example we are working with timesheets. The clients expressed the following requirements:
  • The expense account used on timesheets should vary by the cost category, but the project determines which department segment should be used.
  • The offset to the expense (the contra account for cost) is determined by the employee's home department.
  • When the labor is billed, the revenue account should vary by the cost category, but the project determines which department segment should be used.
  • When the labor is billed, the AR account will be different based on the customer.

Sometimes it takes a bit of discussion to get items distilled down to the bullet points I show above. I actually start with a cost category worksheet that I have clients complete as homework that documents the cost categories and accounts they need in project accounting as a way to help us think through the requirements. Then, from that worksheet, we can discuss how to best set up the account sourcing. Feel free to post on this blog and I am happy to share the worksheet I use in case anyone is interested.

So, the outcome we came to for timesheets in the example above:

  • Cost of Goods Sold/Expense- Source: Cost Category
  • Contra Account for Cost- Source: Trx Owner
  • Project Revenue/Sales- Source: Cost Category
  • Accounts Receivable- Source: Customer

Then, at the project level, we will specify a sub-account format (Cards>>Project>>Project>>Sub Account Format Expansion Arrow>>Account Segment Overrides) that includes the department segment value and we will mark to override the segment on the Cost of Goods Sold/Expense and Project Revenue/Sales account. So this setting will substitute in the department value specified on the project, while pulling the remaining account segments from the cost category.

With the sources set as noted above, the client needs only specify accounts as follows:

  • On the cost category (Cards>>Project>>Cost Category>>Accounts), enter the Cost of Goods Sold/Expense and Project Revenue/Sales accounts.
  • On the employee (Cards>>Payroll>>Employee>>Project>>Accounts), enter a Contra Account for Costs.
  • On the customer (Cards>>Sales>>Customer>>Project>>Accounts), enter an Accounts Receivable account for timesheets.

And, more importantly, the accounts do not have to set up repeatedly in multiple places. And, because the project determines the department segment, there is no need for cost categories to be set up for each department, only for each main account needed.

Although the effort involved in coming to this conclusion may make you feel like accepting the default of all accounts defaulting from the cost category, taking the time to set this up in the most efficient way possible will minimize mistakes in posting and simplify the setup in the long run.

As always, please feel free to share your experiences and perspectives. Happy holidays!

25 comments:

MikeLupro said...

A very nice explanation of a complex topic.

I used a simiar setup one time where salaried employees used the PA system to post costs to projects (and the related project CostOfGoods) and had the Contra write back an offset to the employees Home payroll posting acccount.

So the Salaried Employees could enter time against a project, not get an entry posted to payroll, and have their home department relieved of their cost. In some cases where the salaried employees (Officers and Directors) worked more than 40 hours on projects their home department received a credit balance in Salary Expense for the month.

But you are correct, it takes a lot of thought and five colored markers on a white-board to work these concepts out with the Controllers and the Payroll Entry people.

That same projec dropped their Time-To-Bill from 8 weeks (Using Excel) to one day, found several projects where 'the other person' was supposed to do the billing (and wasn't). In short, they recovered over $500,000 in lost billings and improved their cash flow to where they were able to pay down a $4M loan.

Cost of the software and consulting effort? After that it was regarded as a rounding error. The company president still buys me a drink every time he sees me.

Mike Lupro

And yes, I'd like a copy of your worksheets. Thanks for a great article.

Christina Belding said...

Exceptional post (as always)!

billm312 said...

Hi Christina,

This is exceptional information. I'd be very interested in a copy of your worksheet.

Christina Phillips said...

Hey BillM312, I am happy to share the docs. Please email me your email address to turtlesoup00@hotmail.com.

Thanks!- Christina

Jodi said...

We realized that the contra account was incorrect for purchase orders. Our default accounts are set up at the project level. After we changed the account number, it was correct for new projects. However current projects, the old account number continues to show up. Is there something we can do to correct this? Thanks! Jodi

Christina Phillips said...

Hi Jodi-

You would need to confirm the sourcing under cards>>project>>budget, click on a cost category and then click the cost category expansion (blue) arrow to access the budget detail window. From there, click on the Accounts button and check the source in that window for the account.

Just an FYI, as you can always post on the blog, but you may be able to get quicker assistance on troubleshooting issues from the Dynamics forums, https://community.dynamics.com/gp/home.aspx :)

Let me know what you find on the sourcing!

Take care,
Christina

Christina Phillips said...

Hi Jodi-

You would need to confirm the sourcing under cards>>project>>budget, click on a cost category and then click the cost category expansion (blue) arrow to access the budget detail window. From there, click on the Accounts button and check the source in that window for the account.

Just an FYI, as you can always post on the blog, but you may be able to get quicker assistance on troubleshooting issues from the Dynamics forums, https://community.dynamics.com/gp/home.aspx :)

Let me know what you find on the sourcing!

Take care,
Christina

*Deenee* said...

Excelelnt. I would love a copy of yur worksheet.

Christina Phillips said...

Hi Deenee--

Please send me an email at cphillips@bkd.com and I will send you back a copy.

Thanks!
Christina

Janakiram M.P. said...

Great post Chrstina..Missed reading it earlier. Would it be possible to send the worksheet to me as well. I'll send an email.

Janakiram

Chaudhry Riaz Qadeer said...

Hi,
I am interested in a copy of worksheet.
Thanks
Riaz Qadeer

Chaudhry Riaz Qadeer said...

I am interested in that sheet please send me at riazqadir@gmail.com
Thanks
Riaz Qadeer

Leslie Pacis said...

Hi, your post was really helpful. Is it still possible to send me a copy of the worksheet you mentioned?

Thanks so much for sharing!

lesliepacis@gmail.com

Leslie Pacis said...

This is a great post. Can I please get a copy of the worksheet emailed?

Thanks,
Leslie

Reuben Cook said...

My experience has been that one the posting setup is changed, it only applies to new Projects. If a Cost Category already exists on a Project, it uses the posting setup that existed at the time of setup.

Christina Phillips said...

Yes, Reuben, that is because the overall setup (setup>>project>>Project) defaults to the project budgets (Cards>>project>>project>>budget button>>cost category expansion arrow>>accounts button). So if you chaneg the overall setup, you would have to go in to each project budget line item and change the sourcing there if you wanted it to change.

Accountant said...

Hi Christina! I know this topic is a little old, but I'm in the middle of working through some of these issues and would appreciate an expert weighing in.
What I wan't to happen is for each account segment (not necessarily each account type) to be dependent on a different thing. So, main account should depend on the project, department segment should depend on the employee and cost category segment depends on the cost category.

Unfortunately, it looks like you can only do a segment override at the project level. Which means that for the aforementioned plan to work, I would have to create a set of cost categories for each dept I plan to use. Set the system to look to the Cost Category first, then on each project set the main segment to override the respective section. This seems unnecessarily cumbersome, but I can't figure out another way. Am I looking at this correctly?

Christina Phillips said...

Hi-

I think you would need the cost categories by department, sorry! Unless you wrote a customization to override that segment based on employee.

Take care,
Christina

Sharon J said...

Hi Christina, our company is going to be implementing Project Acctg in the not too distant future and we want to do it right the first time. I would love to get a copy of your worksheet for my initial ideas on setup. I will send you an email on your 'turtle' account, thx.

Sharon J said...

Christina, our company is going to be setting up Project Accounting in the not too distant future and we want to do it right the first time! I would love to get a copy of your worksheetm as I would like to start thinking about account setups. I will send you a message on your 'turtle' email acct shortly, thx.

Fonda Jackson said...

Hi there! I know it's been awhile since this post was created but I'm wondering if I can still get a copy of the worksheet you mentioned?

Dan Bigelow said...

Same as above - could I get a copy of the worksheet?

Thank you

Dan Bigelow

Christina Phillips said...

Hey Dan! Happy to send it but I need your email address :) You can post here, or email me at cphillips@bkd.com

Stacy said...

I need help seting up...
For EMPLOYEE'S EXPENSES ONLY, we need to have the Employee's department pulled in the GL/Distributions instead of the Project's department GL code. Is this possible? Can someone point me in the direction if it is?
Your help is greatly appreciated!!

Nive said...

Hi there,
I know it's been a while since this post is created, but I am wondering if anyone here would be able to help me with setting up a project in GP. We generally use templates to set up projects. I need to create a new project template for the new product code. While creating the template I am including all the possible project accounts and setting up the source information for the postings. While doing so, I am unable to see the "trx owner" source category. I can see that category for other projects and templates. Can you please help me on how I can get that category in the template creation or have any other idea if I can copy the existing project to set up a new project and save that as a template? Any help would be greatly appreciated.
Many thanks in advance
Nive.