Press Release
Soren McAdam Christenson LLP
Certified Public Accountants and Business Advisors
Contact: Roger Wadell, Partner
909.798.2222
PR Contact: Ron Burgess
909.798.5737
FOR IMMEDIATE RELEASE
April, 2007
Real Estate Developers and Construction Contractors
Have Specialized Accounting and Reporting Needs
Soren McAdam Christenson has the knowledge and the experience to provide the unique accounting services needed by developers and contractors of all sizes.
The accounting for businesses in any industry involves the recording of assets, liabilities, income, expenses and the resulting equity created by the business activity. Few, if any, have the variety of users of the accounting information as the real estate developer or the construction contractor, and each user is interested in seeing different presentations of those assets, liabilities, income or expense items.
Soren McAdam Christenson’s Construction Team can provide each of these users with the specific information needed, and present it in the manner specifically required by the respective users.
This expert and attentive assistance to construction client accounting and reporting needs provides for the following:
Financial Statements
Audited, reviewed or compiled financial statements that are prepared using the generally accepted accounting principles peculiar to either the developer or the construction contractor. Banks and bonding companies recognize the knowledge and experience necessary to properly present a company’s financial position and the results of its operations according to the standards specific to the industry.
Income Tax Returns
The tax accounting methods available to construction industry companies are numerous, and, in many instances, bear no resemblance to the methods used for their financial statements. It’s not just the knowledge or the availability of a certain tax accounting method that provides value to a company. It is the in-depth knowledge of that method, when to elect it, and how to help a client take advantage of it. And, it is also the awareness of the various IRS and court rulings pertaining to the method that provide the real value to a company. Any accountant can file a tax return using a certain tax accounting method peculiar to the construction industry; it’s defending a certain position taken in the use of that method that gives the knowledgeable accountant an edge.
Management Reports
A management report or an executive summary of a company’s project(s) really needs to be a customized report, if, for no other reason than, each executive wants to see the results of a certain project, or a certain aspect of a project, presented in a manner that is meaningful to him – “It’s the way I’ve always done it.” Typically, this report is not the company’s income statement or even its contract operations schedule; rather, it is a report expressing productivity in some frame of reference specific to the type of construction.
Management Reports
This type of management report is not going to come from the accountant’s general ledger. The needed information will need to be extracted from a database containing all of the job cost information reported from the field (on a timely basis). An accountant familiar with the construction software, the databases and the field reporting will work closely with the manager to design a report which allows for timely and speedy analysis.
SMC’s construction team has accountants knowledgeable in all aspects of construction accounting, software, databases and field reporting. They use this knowledge to interact with the manager to design the perfect report.
Partnership Accounting
The partnership or LLC agreements that are written for the owners of a real estate project can be extremely complex and probably convoluted. Accounting for the income and expense of a project is usually pretty straight forward; it is the profit and loss splits that are at issue. The accountant has to prepare the internal and external reports (tax returns) that reflect the splits called for by the written agreements.
The accountants and tax attorney in SMC’s tax department have a great deal of experience analyzing existing agreements and helping to write new agreements to express precisely what the partners or members want when the profits or losses of a project are addressed.
Other Types of Reporting to Third Party Users
Personal financial statements are often required by banks or bonding companies in conjunction with indemnifying borrowing or bonding arrangements. This accounting is unique in that it allows the person’s assets to be shown at their fair market values on the statement of financial condition.
It is becoming more common for a governmental agency to require a prequalification statement to be submitted in conjunction with the bidding process. The form usually asks that a contractor submit his reviewed or audited financial statements along with a form which also discloses a great deal of historical information about the bidder.
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As you can see, specialized accounting needs for companies in the construction industry are numerous, and require special knowledge and experience even for practicing CPA’s. To stay on top of all of these issues, CPA’s must be dedicated to the construction industry and have more than just a few developer and contractor clients. Soren McAdam Christenson LLP is such a firm. Their team of construction accounting specialists is dedicated to providing exceptional client service to their developer and contractor clients. They make it their business to know all of these special needs and methodologies so they can assist their clients with compliance, as well as management reports and tax alternatives that enhance the goal of maximizing the equities of their companies and the values of their estates.
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