Uninstalled Materials and Implementation Under the New Revenue Recognition Standards April 17, 2019 By: Claudia R. Wolter Typically, uninstalled materials consist of standard materials that are easily transferable to other jobs and those which are custom ordered for projects. The cost of standard materials was never to be included in job costs until installation occurred. Conversely, if custom materials met certain criteria, you could include the cost in job progress prior to new standards implementation. (If you would like to understand more about how to recognize uninstalled materials under the new standard, click here.) After implementation, materials are treated as follows: If the contractor still retains control of the materials, they are reported on the contractor’s balance sheet as inventory. If the job owner has control of the materials, the cost of materials only (no profit) is included in job costs and revenue. Ask yourself the following questions to see if you are prepared: Who within your organization is responsible to identify uninstalled materials? Who is assessing who has control of those materials? Who is determining the dollar value to assign to uninstalled materials? 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 calculations and assessments? Do any changes need to be made in internal controls to properly account for uninstalled materials? KatzAbosch has individuals experienced in contractor issues and trained in process improvement using lean six sigma principles that can help you through this transition. If you have any questions about this information please contact your KatzAbosch representative; or contact us by clicking here. Article by: Claudia R. Wolter 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 Co-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. About KatzAbosch: Founded in 1969, KatzAbosch is one of the largest CPA and business consulting services in the Mid-Atlantic region. As an accounting firm, our mission is to provide the highest quality accounting, tax, financial and management consulting services to our regional clients. We understand the needs and challenges of our clients and we have made it our obligation to create, grow and protect asset value. KatzAbosch is consistently named a Best Accounting Firm to Work For in Accounting Today and has been named a Top 200 Accounting Firms in the Nation by Inside Public Accounting. Our firm is also ranked among the Top 15 Largest Accounting Firms in the Baltimore Area by the Baltimore Business Journal and a Top Workplace four times by The Baltimore Sun.