What is Engineering Accounting?

Our main difference from other firms is that we specialize in the kind of accounting that caters to design-and build industries. Companies with projects that undergo a design period, followed by the manufacturing, construction, and maintenance required to build the design, often come against particular accounting hurdles that significantly skew their overall financial standing. Depending on how the following factors are mitigated, meeting financial milestones can be a breeze or a headache.

Engineering and construction projects often span several years. Revenue recognition and cost allocation can be easily mismanaged, as the project unfolds. Percentage-of-completion accounting, completed-contract accounting, or WIP (work-in-progress) accounting, depending on the project's characteristics and accounting standards in use, are the ideal methods for keeping track of company revenue throughout the project. 

Job costing is a common method used by construction companies to track the costs and revenues by "job", making it easier to assess project profitability and allocate overhead expenses.

Heavy machinery and equipment are uncompromisable assets when it come to design-build projects. Properly accounting for asset depreciation over time and maintenance costs for these assets is essential for accurate financial reporting.

Design-build projects often have a network of subcontractors. Managing payments to subcontractors and ensuring compliance with tax and labor regulations can add complexity to the accounting process when done incorrectly.

Engineering and construction companies need to comply with various industry-specific regulations, such as bonding requirements, licensing, safety standards, and environmental regulations. These regulations can have financial implications that must be reflected in the financial statements. 

Have you faced these hurtles in your corporate financing?