cp 107: using iwos to streamline intercompany billing in costpoint€¦ · • the inter-co payable...

CP 107:Using IWOs to Streamline Intercompany Billing in Costpoint

Linda Riesenman, Aronson LLC

© Aronson LLC | www.aronsonllc.com |

CP-107 Streamlining

Intercompany Work Orders


https://www.facebook.com/MeetAronson/

https://twitter.com/Aronsonllc

https://www.linkedin.com/company/21619?trk=tyah

http://www.aronsonllc.com/

© Aronson LLC | aronsonllc.com 3

About Aronson LLC

Aronson LLC provides a comprehensive

platform of assurance, tax, and

consulting solutions to today’s most

active industry sectors and successful

individuals. For more than 50 years, we

have purposefully expanded our service

offerings and deepened our industry

specialties to better serve the needs of

our clients, people, and community.

From startup to exit, we help our clients

maximize opportunity, minimize risk, and

unlock their full potential.



About Aronson LLC

• Thinking ahead for clients for more than 50 years

• 225+ professionals located in Rockville, MD

• 80+ professionals dedicated to supporting government contractors

• Aronson helps clients rethink the way they approach their business through innovative,

industry-specific services and advice:

– Audit, Assurance and Tax

– Deltek Systems and Outsourcing

– Financial and Contract Compliance

– GSA Schedules

• www.aronsonblogs.com – News and trends and insight for today’s savvy government

contractor


http://www.aronsonblogs.com/


Awards & Accolades

INSIDE Public Accounting’s Top 100

Aronson has been continuously recognized by INSIDE Public Accounting as one of the best

accounting firms in the country. The Top 100 list is the longest running, most comprehensive,

and accurate analysis of America’s top firms.

Accounting Today’s Top 100 & Capital Region Leader

Aronson has been recognized year after year as an industry leader of the country and mid-

Atlantic by Accounting Today. Our firm was included in the Top 100 list and ranked as the #1

full-service CPA firm in the Capital Region. Accounting Today conducts an annual survey to

identify and rank the best firms in the country throughout 10 major geographic regions.

Washington Business Journal’s Top 25

Aronson has been highlighted for another year in the Washington Business Journal’s 2017

Book of Lists. Our firm was ranked #13 by metro-area professional employees on the

Washington Business Journal’s Top 25 list of accounting firms in the DC Metropolitan area.

The Washington Post’s Top Workplace

Aronson has been recognized as a Top Workplace by The Washington Post for a third year. In

2017, Aronson received a Top 10 ranking in the mid-size companies category and was the

highest ranked accounting firm on the list.

Washington Business Journal’s Best Place To Work

2017 marks the seventh time Aronson has been recognized by the Washington Business

Journal as a Best Place to Work. In 2017, Aronson received a Top 3 ranking in the extra-large

companies category and was the highest ranked accounting firm on the list.

Northern Virginia Chamber of Commerce’s Outstanding Corporate Citizen

Aronson was recognized as an Outstanding Corporate Citizen by the Northern Virginia

Chamber of Commerce. This award honors companies going above-and-beyond in their

corporate social responsibility efforts. Along with giving more than $1.6M to worthy causes since

2004, Aronson also encourages community volunteerism and involvement.



Introduction

Linda E. Riesenman

• Project Manager at Aronson LLC in Rockville, MD

• Works as a consultant assisting companies implement and improve their Deltek systems

• More than 20 years experience in government contracting and accounting systems

• Previously served as Controller for a large government contractor



Agenda

• Intercompany Background and Concepts

• Intercompany Work Order Module Configuration

– Multicompany Costpoint, Single Company Costpoint, External Costpoint

– Other configuration tables

– Direct Billing, Indirect Billing

– Project and Expense Mapping

• Intercompany Work Order Processing

– IWO Allocation creation/posting

– Next steps


Intercompany Background & Concepts


Intercompany Charges & Transfer Pricing

• What is transfer pricing?

• Regulations that US companies adhere to are dependent on:

– Domestic vs. International

– Industry (manufacturing vs. consulting)

– Product or Service



Transfer Pricing Methods

• The Comparable Uncontrolled Price

• Cost-Plus-Percent Method

• The Resale Price Method

• Transaction Net Margin Method

• The Profit-Split Method



Defining Intercompany Charging Components

• Revenue

• Intercompany Receivable

• Labor

• Non-Labor

• Burdens

• Fee

• Best practices

– Chart of Accounts

– Pool Wildcards



Intercompany Module – 3 Processing Methods

The Intercompany Work Order module can be used to bill costs from one legal entity to another.

The three ways in which IWOs can be used are dependent on how your organization’s

Costpoint system(s) are set up. The three ways to use the IWO module are:

• Option A – Single CP company in a single database (Internal)

• Option B – Multiple CP companies in a single database (requires Multicompany license)

• Option C – Companies exists in two separate Costpoint databases (External)

In this session, we’ll focus primarily upon using IWOs in a single Costpoint database utilizing

Multicompany functionality.



Intercompany Configuration – Transfer Locations

• If you are using the IWO module to bill costs between Costpoint companies in the same

Costpoint database, the IWO Transfer Location is set up at the time the new Costpoint

company was created.

• If you are using the IWO module to transfer cost between legal entities within a single

Costpoint company, you will need to set up a separate Transfer Location for each of the legal

entities.

• If you are using the IWO module to transfer cost between companies in different Costpoint

databases, you will need to check the External Database box.



Intercompany Configuration – AP Vouchers

• In order to create AP vouchers when IWO allocations are created, click the box below

• When the IWO allocation is posted, the AP voucher will have a User of DELTEK



Inter-company Configuration – Project Settings

• In a multicompany Costpoint database, the Transfer Location is linked on the Configure

Project Settings screen.

• The Last IWO number is also displayed here. It is updated when the IWO Allocation is

posted in each company.



Inter-company Configuration - Projects

• The screen below highlights key fields for use with INTER-COMPANY projects

• Used by a performing company to capture IWO cost in a multicompany Costpoint

• The project type must be INTER-COMPANY in the performing (sending) company

• The project codes must be unique within the database (should mirror projects)



Inter-company Configuration - Projects

• It is a good practice to use separate accounts (PAG) to capture revenue, receivables, and

expenses that must be eliminated at the parent company level.

• The Customer should identify the related company

• A transaction-based billing formula must be used with IWO projects (CPFF, T&M)

• If PLCs are required for billing, it is a good practice to use Project Work Force assignments.



Inter-company Configuration – Billing & Revenue

• The sending company must setup the billing formula at the corresponding project level

• It must be a transaction-based formula. If using multicurrency, select the Billing Currency

• If revenue is recognized, a revenue record must be created for the INTER-COMPANY

project and a revenue account must be included in the PAG

• If the IWO is a cost transfer only (no revenue), the cost transfer account must be in the PAG



Intercompany Module Configuration

• The Intercompany Expense Mapping screen contains the translation tables for expenses

incurred by the performing company and charged to the owning company

• Examples of various Expense Mapping codes align with the nature of the expense (B&P,

Direct, Indirect, etc.)



Manage IWO Expense Mappings

• The mapping must include all accounts in the IWO sending project’s PAG (Link Expenses)

• For Internal IWO allocations, the Validate Accounts box must be checked

• The destination accounts (Posting Accounts) on the receiving side should be unique to IWO

activity

• Multiple sending accounts (Link Expenses subtask) may be linked to a receiving account



Manage IWO Expense Mappings



Manage IWO Expense Mapping

If the IWO allocation includes burdens you have two options for mapping:

• Map to the direct cost account (fully loaded)

• Map to a separate cost account

Fee can only be mapped to a single Posting account (destination account)



IWO Account Definition

• Relating Sending, Receiving, and Consolidating accounts for Parent company reporting



Manage IWO Expense Mapping

• Usage of specific PAGs is helpful

– Direct IWO Sending accounts

– Direct IWO Receiving accounts

– Overhead IWO Sending accounts

– Overhead IWO Receiving accounts

• Link IWO PAGs to Projects

• Use of Labor Group/PAG Timesheet defaults can be helpful



Manage IWO Projects

• There are many criteria to specify when setting up an IWO Project

• A separate IWO project must be created for every charging level project in the Sending company

• Projects must exist before the Manage IWO projects screen can be entered


26© Aronson LLC | aronsonllc.com

Cost Transfers

• No revenue earned by performing entity

• Transaction Types:

– Intercompany invoice posted to contra-

cost account in the performing (sending)

company

– Intercompany Receivable

– Intercompany Payable

– Destination Project (owning)

Unbilled Receivables

• Revenue recognized by performing entity

• Transaction Types:

– Intercompany Receivable

– Intercompany Payable

– Destination Project (owning)

IWO Projects – Transfer Types



Manage IWO Projects – Transaction Types

• Cost Transfers will have all 4 Transaction Types. Unbilled Receivables will have 3 Transaction Types. It does not include the Cost Transfer Transaction Type.

• The Inter-Co Receivable designates the sending project/account combination to receive the debit from the created IWO entry. The organization used will be the higher of either the revenue or billing project. This is only used when the Unbilled Receivable Transaction Type is selected.

• The Cost Transfer designates the sending project/account/org combinations used only for the credit entry if using Cost Transfer is designated as the Record Type

• The Inter-Co Payable designates the receiving project/account/org combination to receive the credit from the created IWO entry.

• The Destination Project designates the receiving project/org combination used to receive the debit from the created IWO entry. This field can be left blank, because accounts come from the expense mapping entered on the upper right portion of this screen, the Manage IWO Projects screen.



Manage IWO Projects

• Select the appropriate transfer location and IWO currency, if using multicurrency

• Select the corresponding Expense Mapping Code – Direct, Overhead, etc.

• Select “As Subcontractors” if you wish to have labor detail included on the AP voucher

• Select “Unbilled Receivable” for Direct IWOs and “Cost Transfer” for Indirect IWOs

• Select “Validate Posting Accounts” if the IWO is within the same Costpoint database



Manage IWO Projects – Labor Transfer Methods

• When transferring IWO data within same database and company, there is no need for any

setup of the above IDs (Option A)– Use “As Charged” as within a single Costpoint company

• When transferring IWO data between two different companies within the same database, the

employee ID, vendor ID, GLC and PLC must be setup (Option B) – Must use “As Subcontractors” if labor detail is needed for invoicing by receiving company

– If labor detail is not needed for invoicing, use “To Single Employee”

– Cannot use “As Charged”

• When transferring IWO data between two different databases, the employee ID, vendor ID,

GLC and PLC must be setup in the receiving company (Option C)– May use any Labor Transfer method if employee ID is unique in receiving database



Manage IWO Projects

• The Transaction Types are predefined in Costpoint

• The IC receivable account should be project required if IWO invoices should appear on the

AR Aging report

• If IC payables on the Receiving company must be tracked, the IC Payable account should

be project required. Unlike AR, there is no AP subledger entry created when the IWO

transfer is posted



Recap of Setup for Intercompany Work Orders

• Configure Transfer Locations

• Manage AP Voucher Settings

• Setup IWO sending and receiving accounts

• Setup IWO Direct and Indirect PAGs

• Setup INTERCOMPANY project in Manage Project User Flow

• Setup Manage Project Billing Information

• Setup IWO Expense Mapping

• Setup IWO Project Mapping


Intercompany Processing


Intercompany Processing – Standard Billing

• As INTER-COMPANY projects post cost, they are added to the Open Billing Detail table

• The invoicing of INTER-COMPANY projects uses the Standard Bills process to compute,

review, and post invoices.

• Invoices must be posted before the Create IWO Allocations process can be run. This is

because the process references data stored on the Billing Detail history table to create the

IWO allocation

• Only records with an “N” in the IWO Transfer column will be included on the IWO



Create IWO Allocations

• Before running this process, the IWO project billing must be posted. This process uses data

stored on the Billing Detail history table to create the IWO allocation

• Select one or more projects, the FY/PD combination and POP Validation

• The entry may be previewed before it is created. Troubleshoot mapping issues

• The entry created is marked with a location that identifies the receiving (transfer) location



Manage IWO Allocations

• Once IWO Allocations have been created, both sending and receiving IWOs may be viewed

in the Manage IWO Allocations screen

• Only accounts and orgs can be edited. The project field is not editable

• The Sending company entry debits IC Receivable and credits Unbilled AR or Cost Transfer

• The Receiving company entry debits expenses and credits the IC Payable Account

• The following tables are populated after creating the IWO allocations

– IWO Allocation Header

– IWO Allocation Transaction

– IWO Allocation Labor

• The individual transactions included on the IWO allocation are contained on the Closed

Billing Detail table. Viewable on the Manage Closed Billing Detail screen.



Posting IWO Journals

• When the IWO journal is posted,– The IWO Allocation tables are cleared

– The GL is updated with a journal entry with an IWO journal code

– Open Billing Detail is updated for Direct IWOs (destination accounts)

• With multicompany, both entries can be seen in either company, however you must log into

the sending and receiving company to post both entries

• The PLC description will be populated by the receiving company

• The 4 Transfer Types do not update the Open Billing Detail table




Once the IWO Journal has been posted, the GL detail is updated to reflect updates from the

IWO Journal and the accompanying AP voucher



Posting IWO Journals – Next Steps

• After posting the IWO journal in the receiving database:

– Calculate and post the standard billing journal for receiving project

– Run Compute Burden Cost process for IWO projects to update project ledger from the general

ledger

– Compute Revenue

– Update Project Report tables

– Create PSR tables



Recap of Intercompany Work Order Processing

• Compute Billing for INTERCOMPANY project

• Post Billing

• Create IWO Allocations

• Manage IWO Allocations

• Post IWO Allocations

• Load Labor Rates, if T&M

• Compute Billing (final customer)

• Compute Burden Costs (GL updates Project ledger)

• Compute Revenue

• Update Project Report tables

• Create PSR tables


© Aronson LLC | aronsonllc.com


(703)593-5591

[email protected]

https://www.linkedin.com/in/linda-riesenman-

8850b810/


cp 107: using iwos to streamline intercompany billing in costpoint€¦ · • the inter-co payable...

Documents