The purpose of this procedure is to ensure all costs incurred through the end of the current accounting period are recognized and recorded.

Transcription

1 Project Procedure PROJECT UNRECORDED LIABILITIES 01/24/2012 PAGE 1 OF PURPOSE The purpose of this procedure is to ensure all costs incurred through the end of the current accounting period are recognized and recorded. 2.0 SCOPE This procedure is applicable for Pike Energy Solutions only. 3.0 REFERENCES None 4.0 DEFINITIONS 4.1 Project Accrued Liabilities: Recognition of costs incurred, but not recorded on the financial records. Types of accrued liabilities include subcontract costs incurred, but not invoiced; materials received, but not invoiced; and invoices received, but not entered into the system. 4.2 Project Unrecorded Liabilities (PURL): Incurred costs that have not been entered into the financial records during the current accounting period, but for which the costs and indebtedness exists and must be captured to properly reflect the operation of the entity. 5.0 RESPONSIBILITIES 5.1 PROJECT MANAGER The Project Manager is responsible for ensuring that that the PURL is accurate and complete. 5.2 PROJECT CONTROLS Project Controls is responsible for estimating the cost to date, gathering the supporting data, and preparing the PURL.

2 PAGE 2 OF CONSTRUCTION SITE SUPERVISOR The Construction Site Supervisor is responsible for notifying the Project Manager and Project Controls of materials received on site and Subcontractors progress. 6.0 PROCEDURE 6.1 MAJOR ASSUMPTIONS Invoices dated prior to the end of the current reporting period primarily represent costs incurred for services rendered or materials received through the current period end. These costs (excluding pre billed items, deposits, prepayments, advance lease payments, etc.) should be accrued if greater than $1, All invoices of $1, or more identified and determined to be Project related costs incurred as of the end of the current reporting period will also be accrued (whether or not they have been received by Accounts Payable). However, a more detailed review and approval from Project Controls and the Project Manager for reasonableness and appropriateness of accrual is required. Documentation, such as Material Receiving Reports (MRRs), while not required, are strongly preferred as evidence of receipt of materials in the proper period for accrual. 6.2 RISK AND CONTROLS Risks include the following: Revenues and costs are understated or overstated due to costs being expensed in the wrong period. Inadequate communication with the field results in month end liabilities not being properly identified. Not all month end liabilities are recognized. Controls to mitigate these risks include the following: Disputed invoices are identified and documented by Project Controls and the Project Manager. Accrual packages are reviewed and approved by Project Manager and/or other key personnel. Accrued journal entries are reviewed and approved by appropriate accounting personnel.

3 PAGE 3 OF 4 Project Controls responsibility for ensuring all known outstanding current month liabilities are captured as evidenced by maintaining a Project Accruals Log, with supporting documentation. 6.3 INTITAL PROCESS This is an ongoing daily procedure that is provided additional emphasis during the final few days of the month to ensure all costs are fully identified. It is imperative that costs incurred be documented in an expeditious and timely manner throughout the month. During the last five working days of the month, Project Controls shall perform the following: Prepare a listing of all open Purchase Orders for which material/equipment has been received, but cost related to payment of Vendor invoice has not yet posted in Great Plains, or title has been transferred to Pike for which neither material/equipment has been received nor paid for. Prepare a listing of milestone related costs, such as payment for long lead items, such as equipment or materials that are incurred under contractual agreements, but for which Vendor invoices related to these items have not yet been received. Gather supportive data and cost information from the Construction Site Supervisor or Project Manager regarding any unpaid Subcontractor work performed, Supplier milestones achieved, or equipment/material received. Work to have as many invoices as possible approved and paid/posted in Great Plains. Identify and reroute invoices loaded to the incorrect Project. Ensure that all accruals are fully documented on the PURL sheet (see Attachment 7.1), dated, signed in accordance with Pike policy and approval matrices, and then forwarded to the appropriate approving authority for posting and filing. 6.4 SUBSEQUENT TESTING As cost accruals are uploaded into Great Plains, Project Controls and the Project Manager should review the revised cost reports weekly to verify that all accruals submitted have been posted into Great Plains are correct. In the event that a previously accrued cost does not post to Great Plains within the subsequent month following the cost accrual, the amount should be re accrued and follow up should be performed with Accounts Payable (or Vendor representative if applicable) to resolve any issues with payment of Vendor invoice(s) related to accrued cost.

4 PAGE 4 OF ATTACHMENTS 7.1 Project Unrecorded Liabilities Sheet 8.0 FORMS None 9.0 REVISIONS AND APPROVALS Revision Level Revision Date Revision Description Department Head (Approver) 0 7/1/09 Original Issue Brian R. Hay 1 11/20/09 Changed Procedure Number From P 611 to P 311 Brian R. Hay 2 02/10/2010 General editing and updating Brian R. Hay 3 08/01/2011 Updated logo and company name N/A 4 01/24/2012 General editing and updating Brian R. Hay

5 ATTACHMENT 7.1 PROJECT UNRECORDED LIABILITIES SHEET PAGE 1 OF 3 INSTRUCTIONS FOR REPORTING PROJECT LIABILITIES NOT YET IN GP CUSTOMER NAME JOB NAME and NUMBER PM NAME CURRENT DATE MONTH ENDING: JOB LOCATION: OFFICE LOCATION WORK ORDER NUMBER P.O. NUMBER or note as "OBLIGATED" VENDOR or INVOICE NUMBER or note as ESTIMATE MATERIALS TOTAL DOLLAR AMOUNT BILLABLE? (Yes or No) At the end of each month there is an accounting cutoff to begin the consolidation and review process for financial reporting. When the cutoff occurs, there are likely some invoices that have not yet reached accounting for input; yet, which Pike is now obligated to pay when they arrive. There may also have been materials installed or subcontractor work completed for which an invoice has not yet been generated. The Accrual Details worksheet included provides both a means to inform project accounting about these amounts and some documentation to support their entries. Enter the name of the customer for whom this project is being done. Enter the seven digit job number ( ) and job name. Project Manager Name Enter the date you are doing this Ex: 04/05/06, 05/02/06, 06/10/06, etc. Enter the month being closed as 11/23/08, 12/21/08, etc. Enter the city and state where the project is located. Enter the location of the office managing the project. Enter the work order number to which this accrual should be entered (when applicable). Enter the Purchase Order (P.O.)number associated with the dollars that will be shown in the Materials and/or Subcontractor columns. If no P.O. number is available; then, enter the word "Obligated" to indicated that the dollars being shown are obligated to be paid by Pike. Enter the name of the person or company that will need to be paid. This is for information only. It does not initiate payment of any kind. If an invoice has been received from the vendor or subcontractor noted; then, enter the invoice number in this column. If no invoice has yet been received; then, just enter the word "Estimate" in this column. Enter the dollar amount of the material charge (Greater than $10K only) that is not in GP, but for which Pike is obligated to pay for. Note: Materials are not eligible for accrual until they are actually received on site. Enter the dollar amount for the subcontractor charge (Greater than $10K) that is not in GP, but for which Pike is obligated to pay for. This column is automatically calculated as the sum of the materials and subcontractor amounts entered. Can the dollar amounts noted on this line now be used to generate billable revenue? Note this is for information only as no actual billing will be generated.

6 ATTACHMENT 7.1 PROJECT UNRECORDED LIABILITIES SHEET PAGE 2 OF 3 PROJECT UNRECORDED LIABILITIES CUSTOMER NAME PM NAME CURRENT DATE JOB NO. PC NAME OFFICE LOCATION JOB NAME MONTH ENDING JOB LOCATION WORK ORDER NUMBER P.O. NUMBER or note as "OBLIGATED" VENDOR / INVOICE NUMBER or note as ESTIMATE MATERIALS Material Cost > $10K Subcontractor Cost > $10K TOTAL DOLLAR AMOUNT BILLABLE (Yes or No) TOTALS $ $ $ Notes & Comments:

7 ATTACHMENT 7.1 PROJECT UNRECORDED LIABILITIES SHEET PAGE 3 OF 3 Engineering & Substation, Pike Electric Inc. PROJECT UNRECORDED LIABILITIES CUSTOMER NAME PM NAME COMPANY 01 JOB NUMBER PC NAME OFFICE LOCATION JOB NAME MONTH ENDING JOB LOCATION 1 Value of material/equipment invoices on hand and not in GP (greater than $10K), estimated value of material/equipment received and not invoiced (greater than $10K), and outside services performed and not invoiced (greater than $10K). $ 2 Value of subcontractor work performed not entered in GP (greater than $10K per invoice) $ 4 Total Unrecorded Liabilities $ NOTE: Input on accrual detail spreadsheet. Figures will be brought forward to this summary page. Prepared By: Approved By: Name / Date Name / Date Title Title