Processes to Consider Regarding Waste and Inefficiencies When Implementing the New Standards July 22, 2019 By: Claudia R. Wolter When a cost incurred does not contribute to progress in satisfying the performance obligation, the cost needs to be accounted for separately. Examples include: Costs incurred related to rework or wasted construction materials would be excluded from input measurement, as these costs do not represent the transfer of goods or services to the customer. Significant inefficiencies in the construction contractor’s performance that were not reflected in the contract price. What continual improvement processes need to be considered with regard to waste and inefficiencies? Ask yourself the following questions to see if you are prepared: Who within your organization is responsible to identify waste and inefficiencies? How will you define waste and inefficiencies? Who is determining the dollar value to assign to the waste and inefficiencies? What education do you need to provide to these individuals to assist in their assessment of waste and inefficiencies? How are you getting the appropriate information out of your system to correctly report this information? Do you need to make changes to your system to assist in the above assessments? Do any changes need to be made in internal controls to properly account for waste and inefficiencies? KatzAbosch has experienced experts in construction industry issues who are also trained in process improvement using lean six sigma principles that can help you through this transition to identify waste and inefficiencies. If you have any questions about this information please contact your KatzAbosch representative; or contact us here! Article by: Claudia R. Wolter, CPA, CCIFP, CCA Claudia Wolter, a Shareholder with KatzAbosch, joined the firm in 1988. She has played a major role in leading the firm into the 21st century with cutting edge initiatives, including the transition to and managing of a paperless environment. She serves as Chair of the firm’s Accounting and Auditing Services Group, assists in the quality control management and oversight of the firm and is a member of the Construction and Real Estate Services Group. Most recently, Claudia served as a contributing author of “Construction Accounting,” an in-depth guide to construction financial and accounting issues for attorneys distributed by the American Bar Association. A dedicated professional, Claudia holds the prestigious distinction of Certified Construction Industry Financial Professional (CCIFP), a certification held by less than 50 professionals in Maryland and less than 1000 professionals in the United States, the designation of Certified Construction Auditor (CCA) from the National Association of Construction Auditors (NACA) and a Lean Six Sigma CPA Green Belt certification from Ohio State University ATI and Boomer Consulting, Inc.
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