Jobs WIP Calculation Compliance in Microsoft Dynamics NAV 2013

Jobs WIP Calculation Compliance in Microsoft Dynamics NAV 2013

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Work in Process, WIP, and the related recognition of costs and revenues has a huge impact on the bottom-line for a project-based company. Project managers, accountants, and controllers are monitoring this recognition closely and for them it is crucial to have the process be as simple yet accurate as possible. Since the process has such an impact on financial reporting, it is also under the scrutiny of auditors. International and country-specific accounting standards control the WIP and Recognition process thoroughly. For these reasons, it’s important that the process as well as its result be easy to understand.

So what benefits does Microsoft Dynamics NAV 2013 bring to accountants and controllers? Flexibility in defining WIP methods makes it easy to have Microsoft Dynamics NAV 2013 fit particular company or industry requirements and country specific accounting standards. Accountants are in complete control of which of the WIP methods is to be used in the company to avoid rework later in the process and risking incompliance. Accountants can enforce a policy of using a particular WIP method, posting detail, and posting schemas for all of a company’s projects, thus providing consistent and accurate financial data for management. Microsoft Dynamics NAV 2013 provides two additional levels of detail while posting WIP to improve an accountant’s efficiency during the reconciliation process. First, it provides a choice on level of detail during posting of WIP to the general ledger. Second, it provides the ability to allocate different categories of costs (inventory, resources) to different general ledger accounts. 

All of the policies that an accounting department establishes come into effect at a point where data about actual execution of the project, collected by the project manager and project team, meets with the balance sheet. In Microsoft Dynamics NAV 2013, this place is called the WIP cockpit. The WIP cockpit provides a complete overview of costs, revenues, and profits generated by the project in particular period. In a single place, the accountant can overview the amounts that will be posted to company ledgers, and see how these amounts were calculated, with details of the underlying transactions that caused them just another click away. In addition, the WIP cockpit displays WIP warnings, which enable the accountant to see if the underlying data collected by the project team is in line with what is defined by the WIP method and if all prerequisites for recognizing costs and revenues are met before posting WIP to a company’s balance sheet. Posting WIP to the balance sheet (and reversing it in case of last minute changes to project costs) is as easy in Microsoft Dynamics 2013.

What about benefits for project managers? A project manager, who is responsible for the execution and monitoring of a project, can focus on his job and not become bogged down with the project’s accounting details. How? Well, Microsoft Dynamics NAV 2013 enforces policies set by the accounting department by taking care of all the accounting-related requirements during creation, planning, execution and monitoring for the project. The project manager makes sure that all the costs related to the project have been accounted for and that all that should be invoiced to the customer is invoiced. When this is done, the WIP cockpit will provide him with an overview of what will be handed over to the accounting department to be recognized in the company’s books. Before wrapping it up for a milestone or period end, the project manager can initiate calculation of WIP and verify that no warnings or violations of policies set by the accounting department exist, so project information can be properly reflected in the company’s books. When warnings appear, usually something is missing or is not accounted for. In Microsoft Dynamics NAV 2013, finding out what that is this just a click away and after warnings are sorted out, the  project manager can use Microsoft Dynamics NAV 2013 to recalculate WIP, and take these last minute changes into account.

-Ivan Koletic

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