The Month End Cost Report

Where a cost report is required as part of the company’s financial month end/year end accounting the Production Accountant will need to refer to the Company Accountant to ascertain exactly what the company’s month-end requirements are. In general, the company accountant will require the following:-

1) A month end trial balance and nominal ledger from the accountant’s nominal ledger

2) A cost report where the cost to date ties in with the trial balance

3) A list of accrued costs

4) A month-end bank reconciliation that ties into the TB

5) An aged list of debtors at the month end (and supporting sales ledger) that ties into the TB

6) An aged list of creditors at the month end (and supporting purchase ledger) that ties into the TB

Where some of the funding is dependent on the type of spend, an updated estimate of the income calculation should also be produced eg UK Tax credit based on allowable spend or regional funding based on a certain level of funding in that region.

Month end checklist.xls

Revenue recognition

Whilst this is an important issue for all UK made productions and the companies they are owned by, it may be less relevant for you as a Production Accountant. However, a basic understanding of its concepts can be useful.

Revenue recognition is an accounting principle that determines the specific conditions under which income becomes realised as revenue. Generally, revenue is recognised only when a specific critical event has occurred and the amount of revenue is measurable. In the TV industry this is generally considered to be the delivery of master tapes to the principle broadcaster, however, there are some variants of this and they are often tied into milestone payments broadcasters make, so it is very important to understand when these are to enable a prompt billing cycle.

Work in progress

For accounting purposes WIP (work in progress) is considered a current asset on the balance sheet. It refers to all the materials and expenses incurred to get the part-completed show to its current state. WIP is valued at the lower of cost or net realisable value so no element of profit can be included in it (for profit you can read production fees). WIP is an important term used in conjunction with revenue recognition as until you can recognise your revenue your WIP remains the amount spent to date on getting the project to its current condition.

Hot costs

Some Producers and Line Producers request ‘hot costs’ from the Production Accountant, which is a daily comparison to budget and sometimes referred to as a daily cost report.   The hot costs are only meant to be measuring key variables; for example, on-set shooting crew, cast, footage/processing and catering, so it should be made clear to the Producer and Line Producer which areas are included and the limitations of the data.

Useful documents

Master tracker.xls
Cost report.xls
Catering numbers and costs.xls
Crowd analysis.xls
Cast overtime calculation.xls
Artist costings.xls
Accommodation breakdown.xls
Location breakdown template.xls