How should I set up the Posting Options screen?
When configuring the settings in the Posting Options screen (Admin > Setup > Accounting > Posting Options), a few best practices are reviewed.
You should verify with your auditor and accountant how best to configure these settings.
What’s covered in this document:
Cost Plus Bill Rate/Recognition Rate
For Cost Plus contract billing types, this setting determines which set of indirect rates will be used for Billing/Invoicing and Revenue Recognition purposes.
- COST PLUS BILL RATE: This will almost always be set to Provisional since the Provisional rates are the authorized bill rates per the contract.
- COST PLUS RECOGNITION RATE: This is the rate used to recognize revenue. The factors to consider for selecting the correct value here include:
- Actual: Select this rate if you need the revenue values in the project system to reflect the actual indirect rates incurred to date. If this value is selected, Unanet Financials users should calculate and post the actual indirect rates on a periodic basis and then recalculate revenue on all Cost Plus projects for the applicable fiscal year. The advantage of using the Actual rates is that the system will properly reflect the actual revenues earned in the project system. The disadvantage is that it can be confusing to users as the revenue and billing numbers are not the same. In addition, since the actual indirect rates tend to fluctuate significantly during the year, using actual rates may not reflect the actual expected ultimate revenue amounts for costs incurred on Cost Plus projects. This may make it more difficult to determine where the project stands with respect to funding levels.
- Provisional: Select this rate if you want the revenues and billings to be in sync. If used, a journal entry would typically be made to adjust recognized revenue for financial statement purposes to reflect actual rates.
- Target: Select this rate if you want revenues to reflect your best guess as to the ultimate indirect rates for the fiscal year. These rates would typically start out equal to Provisional rates but could be adjusted if it looks like the actual year-end rates will vary from the original Provisional rates. The main advantage of using Target rates is that the project revenues will reflect the actual expected ultimate revenue amounts for costs incurred on Cost Plus projects, providing a good basis for determining where the project stands with respect to funding levels. If used, a journal entry would typically be made to adjust recognized revenue for financial statement purposes to reflect actual rates.
This setting determines which dates should be used when selecting labor to be included in the Billing & Revenue Post and the Labor Cost Post.
- Using Worked Date: The best practice is to use this setting.
- Using Posted Date: The Posted Date is the same as the Worked Date for regular timesheet entries and end user adjustments, but can be overridden in Admin adjustments and imported time. The Posted Date in this screen does not refer to the date assigned in the Financial Labor Cost Post or the Financial Billing & Revenue Post.
Expense Report Posting
This setting determines which dates should be used when selecting expense report items for the Billing & Revenue Post and the Expense Report Cost Post.
- Using Line Item Date: This refers to the individual Expense Report Line Item dates from Expense Report Vouchers.
- Using Expense Report Completion Date: This refers to the date on which the Expense Report voucher became COMPLETED (fully approved).
- Using Posted Date: This refers to the date on the Admin Export screen that is specified for Posted Date while marking expenses as EXTRACTED.
A solid understanding of your accounting policy on invoicing will determine which of these expense settings you choose. Note that no matter which option you choose, the status of the expense reports involved must always be either LOCKED or EXTRACTED. (It is not possible to invoice or post an expense report in any other status, such as INUSE, SUBMITTED, COMPLETED.) In other words, even if you choose Using Line Item Date, the vouchers themselves must be in either LOCKED or EXTRACTED status.
|Option||Expense Date Definition and Discussion||Possible Reasons for Usage||Advantage||Considerations|
|Using Line Item Date|
This refers to the individual Expense Report Line Item dates from Expense Report Vouchers.
In this approach, Expense Line Item Dates will be used to determine when amounts are available to be posted in the Billing & Revenue Post and in the Expense Report Cost Post.
Line Item Date most closely complies with US GAAP’s revenue and expense recognition principles, namely; revenue should be recorded when earned and the related expenses should be recognized in the period in which the related revenue is recognized.
This option provides a good cutoff for period end close. Invoicing is based on the period in which revenues are earned and associated costs are recognized and expensed in the appropriate period.
A single expense report which contains Line Items spanning more than one month will be invoiced separately. For example, January line items will appear on the January invoice and February line items will appear on the February invoice.
|Using Expense Report Completion Date|
This refers to the date in which the Expense Report voucher became COMPLETED (fully approved),
Replicates what a small company might do, which is to only bill or post in the period of approval.
|Does not require the extra step of exporting data to supply a Posted Date.|
Completed Date is simply the date that the voucher is fully approved, so there is little control over this date. For example, if an expense straddled January and February but was approved in March, then the Completed Date would be March and the posting would pick it up only in March. One way to attempt more control here is to use the Final Approver method to hold off on when the expense hits the COMPLETED status and apply it to all expenses.
|Using Posted Date|
This refers to the date in the Admin Export screen that is specified for Posted Date while marking expenses as EXTRACTED (screenshot below).
Using Post Date can be a more practical approach if, for example, a client is contractually obligated to invoice travel costs only after completion of the travel.
Using Posted Date provides more control over the period to which expense reports will be posted, as you can supply a Posted Date at the individual voucher level.
The challenge with this approach is ensuring that the expenses and revenue are posted into the General Ledger in the correct period, if those amounts are material. A client with a solid understanding of GAAP, with accrual accounting, and of the Unanet posting processes, could be successful in using the Post Date approach.
Note that these settings affect project accounting reports for unposted actuals and forecasts, and also affect the percent complete calculations for FP projects where the system is estimating percent complete.
Admin Export - Expense Criteria screen with the Posted Date set:
Expense Report Posting Scenarios
Note that Scenario 1 allows you to differentiate the bill/revenue and cost posts by expense line item date, while both Scenarios 2 and 3 allow you to group the expenses straddling two months into one bill/revenue and one cost post.
Scenario 1 - Posting and Billing Expenses by Month Using Line Item Date (Financial Post Date Matches Expense Line Item Date)
You would like to ensure that the dates on the line items inside the voucher will match the dates the expenses are going to be billed on the invoice and posted to the GL. For example: one voucher contains two line items, one with a line item date of 1/28 as well as one with a line item date of 2/2. The intent is to recognize revenue, and invoice and recognize the costs in the GL for the two expenses in separate months.
- Solution: Select Using Line Item Date in the EXPENSE REPORT POSTING section. (Admin > Setup > Accounting > Posting Options)
- Result: Assuming that through dates are specified reflecting the appropriate month end dates in the various processes, the intended results will be achieved as follows:
- Billing & Revenue Post - INCLUDE ACTUALS THROUGH date will be compared to the line item expense date of the individual transactions to determine whether the line item will be included in the post. Items will then be posted to the Post Date specified in the Transaction Attributes section of the Search tab of the Billing & Revenue Post option.
- Expense Report Cost Post - INCLUDE ACTUALS IN date range will be compared to the line item expense date of the individual transactions to determine whether the line item will be included in the post. Items will then be posted to the Post Date specified in the TRANSACTION ATTRIBUTES section of the Search tab.
- Add Invoice - THROUGH DATE will be compared to Post Date specified in the Billing & Revenue Post to determine whether the line item will be included in the invoice. The invoice will be posted based on the Post Date specified on the invoice. This date is originally set to the Post Date specified in the TRANSACTION ATTRIBUTES section of the Search tab, but may be modified via invoice edit.
Scenario 2 - Posting and Billing Expenses Using Posted Date (Financial Post Date Matches Expense Posted Date)
You would like to ensure that expenses from one expense voucher with two months (end of January and early February, for example) appear on only one month's invoice and in one monthly period in the GL to avoid confusion. In other words, you do not want the same expense voucher number to appear on two different invoices or posts when there are overlapping dates on the voucher. For example, a voucher contains two line items, one with a line item date of 1/28 and one with a line item date of 2/2. These two expenses would be invoiced on one month and show up in the GL as cost on one month, typically the second month.
- Solution: Select the Using Posted Date in the EXPENSE REPORT POSTING section. (Admin > Setup > Accounting > Posting Options)
- Result: Both January and February expense line items are captured on February’s invoice.
This option requires that you perform an export of Expenses for the purpose of applying an export Post date on the Export screen while marking as EXTRACTED. The steps would be:
- Turn on Require Post Date on Expense Extraction property (Admin > Properties > Expense > General).
- Ensure that expenses are fully approved and have reached either the COMPLETED or (via autolock property) LOCKED status.
- Via the Admin > Export screen, run an Expense Export in order to supply a Post Date on the export criteria screen. Note that this is not a financial post date.
- Perform your Financial Billing/Revenue posts and Expense Report Cost posts.
Scenario 3 - Posting and Billing Expenses Using Completed Date (Financial Post Date Matches Expense Completed Date)
Generally not recommended unless you do not want to export expenses in order to apply a Posted Date using Scenario 2.
As in Scenario 2, you would like to ensure that expenses from one expense voucher with two months (end of January and early February, for example) appear on only one month's invoice and in one monthly period in the GL to avoid confusion.
- Solution: Select the Using Voucher Completion Date in the EXPENSE REPORT POSTING section. (Admin > Setup > Accounting > Posting Options)
- Result: Both January and February expense line items are captured on February’s invoice and in the GL for February.
This allows you to group expenses from the same voucher, albeit in different months, onto the same invoice for billing/revenue recognition, and onto the same date for Expense Report Cost Post.
Scenarios 2 and 3 allow you to group multiple months into a single post.
You might choose Scenario 2 rather than Scenario 3 since it allows you to more closely define the Posted Date.