deltek insight 2011: indirect cost pools
TRANSCRIPT
CP 203: Indirect Cost Pools
Keys for Success
Presented by:Traci Rowland, Baker Tilly and
Christine Trunnell, Baker Tilly
04/13/20232
Project Manufacturing
Human Resources
Project Management
Financial Management
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Winning More Business
Reducing the Cost of Compliance
Increasing Project Visibility
Improving Cash Flow
CRM and Capture Management
Teaming Solutions
Market Intelligence
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©2011 Deltek, Inc. All Rights Reserved
04/13/20233 ©2011 Deltek, Inc. All Rights Reserved
Project Manufacturing
Human Resources
Financial Management
Project Management
Do More
CRM and Capture Management
Teaming Solutions
Market IntelligenceWin More
Do More
Project Execution & Management
Reporting, GRC & Compliance
Project & Corp Accounting
Time, Expense, Labor, Payroll
Business Performance Management
Know More
April 13, 20234
Agenda
The set up, maintenance and processing of indirect cost pools and service centers in Costpoint are integral for accurate and timely reporting
Defined procedures can be followed throughout the year to increase efficiencies around cost pool processing
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Key Takeaways
Discuss the importance of sound controls around cost pool set up and maintenance
Tips on streamlining cost pool and service center processing during month-end and year-end close
The importance of reconciling cost pools and service centers to the General Ledger on a routine basis
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Cost Pool Set up and Maintenance
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Set up and Maintenance
The setup, maintenance, and processing of indirect cost pools and service centers in Costpoint is integral for accurate and timely reporting to the government
In covering this objective, we will discuss the following tools and key areas of importance: Controls Setup and maintenance
Recommended procedures Debit and credit allocation accounts Reclassification pools
Service Centers Automatic versus manual base
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Set up and Maintenance (cont.)
Controls Limit the number of users with access to maintain cost pools and service
centers
Provide detailed training for the users responsible for the maintenance of cost pools and service centers
If specific controls are not already in place, create an approval process around the set up and modification to pools and service centers to ensure changes to pools are made correctly
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Set up and Maintenance (cont.)
Recommended Procedures
Consider outlining pool and service center set up in an offline tool (e.g. Excel) prior to set up in Costpoint
Whenever possible, use the YTD method for pool and service center processing
Use the wildcard functions in the Cost and Base Creation Set up Screens to make all changes to pools and service centers
Additions/deletions to the Pool Cost easily flow to the cost pools and service centers.
Additions to the Pool Base can be easily made; however, deletions to the Pool Base must be executed using certain steps
Ensure the sequencing of pools and service centers is consistent with flow of allocations
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Set up and Maintenance (cont.)
Debit / Credit Allocation
“Smart code” debit and credit allocation accounts to better track where pool allocations are coming from and where they are going to
This is helpful when following the trail of allocations when reconciling the debit and credit allocation accounts and the allocation accounts to the total cost and base
Examples:
Example Pools and Service Center:
Pool #10 = Fringe Pool
Pool #50 = Facilities Service Center
Pool #100 = Overhead Pool
Pool #150 = G&A Pool
Allocation Accounts – Pool #10:
Credit = CR-0010-000
Debit = DR-0010-050 (Allocation of Fringe to the Facilities SC)
Debit = DR-0010-100 (Allocation of Fringe to the Overhead pool)
Debit = DR-0010-150 (Allocation of Fringe to the G&A pool)
Debit = DR-0010-DIR (Allocation of Fringe to Direct Labor)
Allocation Accounts – Pool #50:
Credit = CR-0050-000
Debit = DR-0050-100 (Allocation of Facilities to the Overhead pool)
Debit = DR-0050-150 (Allocation of Facilities to the G&A pool)
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Set up and Maintenance (cont.)
Reclassification Pools
Reclassification (“Reclass”) pools should be considered for instances where a pool is comprised of costs from multiple organizations that differ from the credit allocation organization identified during pool set up—this is due to the limitation of having one credit allocation account/org combination
The use of reclass pools eliminates skewed organization-level financial results from allocation posting
Common Examples:
Reclass pools are often used when an organization incurs fringe, OH or G&A costs across their entire organization
The costs (or debits) are aggregated from multiple organizations, but a single organization receives the credit from the allocation of the fringe, OH or G&A pool
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Set up and Maintenance (cont.)
Manual vs. Automatic Service Centers
Manual service centers can be difficult to execute and reconcile in Costpoint
Automatic service centers can be used in lieu of manual service centers
Using Statistical Accounts (e.g. dummy accounts), the same unit of measurement can be used (headcount, square-footage, etc.)—a journal entry will be made to enter the current period unit amounts each month
The Statistical Accounts and respective orgs will be added to the Base Creation Set up screen
This method creates a better audit trail of the base amounts for each period
The Check Pool Account/Org Set ups utility is a useful tool to run after pool and service center set up
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Pool Processing
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Period-end Pool Processing
Streamlining pool and service center processing is key to making a routine close process go smoothly and reduces the possibility for errors to occur
In covering this objective, we discuss the following processing tools and areas of importance: Using a defined set of processing procedures Creating and maintaining an approval process Utilizing Costpoint Process Managers
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Period-end Pool Processing (cont.)
Task a small group of individuals with responsibility for periodic pool and service center processing
Follow a defined set of pool and service center processing procedures every time pools are processed All steps are integral and should be processed in the correct sequence
Create an approval process to ensure each step was executed correctly before finalizing the pools for a period
Consider establishing Process Managers in Costpoint that will be manually executed during periodic pool processing Doing this does not necessarily eliminate the steps in pool processing; it
bundles steps together to ensure certain steps are not inadvertently omitted during processing
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Reconciliation to the General Ledger
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Reconciliation to the General Ledger
In order to ensure that cost pools are set up and processing correctly, a reconciliation must be performed routinely
Process
All pool/service center cost and base amounts should be reconciled to the General Ledger
All allowable indirect costs in the General Ledger should be included in the cost of pools and service centers
The total pool or service center cost should equal the amount recorded to the corresponding credit allocation account
The debit and credit allocation accounts for a pool or service center should zero out each period
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Reconciliation to the General Ledger (cont.)
Method Summary
Depending on the cost pool and service center set up, perform a high-level reconciliation of all pools and service centers.
If all Fringe accounts begin with a “5,” run the Trial Balance at account and org level “1” for accounts that begin with “5”
Compare the total on Trial Balance to the Fringe pool cost Detail
Reconcile the Statement of Indirect Expenses (SIEs) and Service Center Cost Allocation Reports at account and org level “0” to the detailed Trial Balance at org level “0”
All indirect expenses should be included in the cost of the pools and service centers
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Reconciliation to the General Ledger (cont.)
Frequency Every period close
If pools are YTD and target rates are used, it is not necessary to reconcile prior to closing the period
If pools are Current Period, reconcile prior to closing the period to ensure all costs are captured correctly
At year-end, reconcile prior to closing the year
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Reconciliation to the General Ledger (cont.)
Common issues encountered during reconciliation:
Accounts are removed from the base of pools and service centers without “clearing” the pool first
Accounts are removed from a Project Account Group (PAG)
Allocation and variance accounts are not linked with the organizations specified in the pool set up screens
Deletions of pool cost and/or base accounts are made in the subtasks of the Cost Pools screen instead of the Cost and Base Creation Set up screens
When the Create Pool Links process is run, the deleted account/org combinations will be created again for those pools
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Questions
04/13/202321 ©2011 Deltek, Inc. All Rights Reserved
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Speaker Contact Information
Traci Rowland, Director, Baker Tilly
Direct Dial: 703-923-8218
Email: [email protected]
Christine Trunnell, Manager, Baker Tilly
Direct Dial: 703-923-8217
Email: [email protected]
CONFIDENTIAL ©2011 Deltek, Inc. All Rights Reserved