“We built a lot of this” – The CEO was clearly proud when he surveyed the Malaysian skyline but alas his pride was to come shattering down a few minutes later when his Projects Director was to walk in for the pre-arranged meeting.
The story was related to me by a former colleague when they were implementing a new accounting system. The challenges were all there, multi phase projects, multi currency triangulation to implement, a local workforce, UK-based architects and a smattering of languages to bind it all together.
The meeting that was to be held was to discuss the layout of some of the project reports; all of the other challenges had been overcome and now it was on the final furlong before sign off.
“This figure here”, explained my colleague and outlining a column total, “are the total project hours for the phase multiplied by hours accumulated at cost”
“No” interjected the CEO “accumulated hours are always at invoice value that’s how I report it”
“But I have always reported WIP at cost” said the Projects Director
There was an awkward silence as the impact of what was being said hit home; diplomatically, my colleague decided to leave the room.
Do you know what goes into your accounts?