Process Flow Acquisition of Busi by liwenting


									              Process Flow -
Acquisition of Business, Contracting and Revenue
 Table of Contents
               Content                Page

               Overview                  3

               Organizational Chart      4

               Process Maps              5 – 13

Source:                   Page 2
 Process Overview – Contracting & Revenue

    Major                                       Business Acquisition                                          Revenues


                    Projects are not properly maintained in the system resulting in revenues that are not accurately presented in the financial statements
Business Risk

                                                Business Acquisition                                          Revenues

                                    •Contracts or projects are accepted without             •Project revenue is not recognized/recorded
                                    management approval.                                    in accordance with GAAP or agreed terms.
                                    •Projects are sold and not properly set up in           •Revenue journals are not properly posted to
                                    the system.                                             the system.
                                    •Potential commitments and/or contingent                •Costs of time and materials are not properly
                                    liabilities are entered into and are not                billed to the customer.
                                    appropriately identified or disclosed.

   Source:                                                                                                                   Page 3
                                                                  Company X Organization Chart
                                                                            (Reporting Order Only)


                                                      (insert name)                                                                     Sr. VP General                     Sr. VP’s
                                                 Sr. Vice President/CFO                                                                 Counsel/ Corp                      and VP’s
                                                                                                                                           Secretary                         (XX)

        (insert name)                                  (insert name)                                 (insert name)
  Financial/Actg. Coordinator                            Controller                         Senior Financial Systems Admin
                                                                                                                                   VP of Business        VP of Contracts
                                                                                                    (insert name)
                                                                                               Financial Systems Admin

                                                                                                                                     Business                           Project
          (insert name)                              (insert name)                                   (insert name)                  Operations                         Managers
      Billing/AR Manager                         General Actg. Manager                         Senior Contract Actg. Mgr            Managers

                                                                                (insert name)                 (insert name)
                                                                                Contract Actg. Manager        Senior Accountant

(insert name)                (insert name)                                      (insert name)                 (insert name)
                                                                                Accounting Manager            Accounting Manager
Billing/AR Specialist        Billing/AR Specialist
                                                                                (insert name)
(insert name)                                                                   Contract Actg. Manager
Billing/AR Specialist

                                                                                                           (insert name)
                                                                                                          Staff Accountant

                   (insert name)                      (insert name)                     (insert name)
                   Accts Payable                     Payroll Manager                 Asst Actg. Manager

         AP                           Actg. Services                    (insert name)
                                                                       Payroll Specialist
   (insert name)                       (insert name)                    (insert name)
   AP Specialist                   Actg. Svcs. Specialist              Payroll Specialist
   (insert name)                       (insert name)                    (insert name)
   AP Specialist                   Actg. Svcs. Specialist              Payroll Specialist
                                             Acquisition of Business

 Overall Acquisition of Business Processes

                             Proposal and            Bid and Proposal
                                Budget                                         Contract Award and
                                                      (If applicable)
                                                                               Acceptance Process

                                                                                                    entering the
                                                                                                    project into
                                                                                                     System X

                                                         Revenue Recognition

Source:                                                                                Page 5
                                                                                                                        Contact: (name),
                                  Proposal and Budget Process                                                         Director of Business

                                            The decision whether or not to bid on a proposal is made by the Officers & Project
                                                Managers. In making this decision, the officer looks at factors such as the
                                             requirements of the RFP, client relationships, competencies, resources, and the
    Request for                                                   reasonability of winning the contract.
  Proposal (RFP)
   received and
   distributed to                                                                          No
                                      RFP                                                                  End of
    Contracts,                                                         Bid?
   Business Ops
  and appropriate
      Charge                                                     Yes

                                             Operating Group meets with                                  Operating Group provides
                                               the Business Ops and                                       Labor and Other Direct
                                              Contracts Department to                                    Costs (ODC) inputs to the               T
                                               review the RFP from a                                       Business Operations
                                              contractual and business                                   Department for budgeting
       A formal meeting occurs only                risk standpoint                                               purposes
       when necessary. Also, weekly
       Marketing/Sales meetings are
                  held.                                              Budgets are set up based on past history or management’s best estimate
                                                                    for new projects. Operation's Group feedback assists in the budget/bidding
                                                                     process Factors include: Type of contract (Cost-reimbursable, Firm-fixed,
                                                                                      Time & Materials), Win probability, etc.

Source:                                                                                                         Page 6
                                                                                                                                            Contact: (name),
                                           Proposal and Budget Process                                                                     Director of Business

                                      The information entered into the
                                       set-up is used for calculating                                                        There are various types of ODC
                    T                              price.                        All the hours entered are used             calculation categories The per unit
                                                                               for calculating the cost or price in          information and the appropriate
                                                                                           the budget.                              quantity is entered.

A               Business                       Business Ops enters
                                                                                             Business Ops                        Business Ops enters
               Operations                         general proposal
                                                                                            enters the hours                       non-labor costs /
               Department                   information (project name,
                                                                                           each employee is                         expenses to be                B
              accesses the                       officer name, etc),
                                                                                          estimated to work in                  charged directly to the
            Pricing Template                   employee name and
                                                                                              the “Person                        project in the “Other
                  (Excel                      hourly rates in the “Set-
                                                                                              Loading” tab                        Direct Costs” tab
             Spreadsheet)                              up” tab

                             The Pricing Template
     Only Business           contains multiple tabs.                                Base hourly rates are obtained from the Salary Listing and are used to build
    Ops has access           The first three tabs are                               fully loaded rates. Base hourly rates equal the salary divided by the number
    to the directory.          the input tabs, the                                    of working hours in a year (XXXX). Fully loaded rates are inclusive of IDC
    The file is read-        information loads into                                 (fringe, overhead, G&A, and plus fee). Fully loaded rate is in the “bid rate” in
    only, all sheets          the remaining tabs.                                     the proposal (“bid rate” may or may not be included, it is often associated
     are protected.                                                                     with Time & Materials contracts). Salary Listing is generated the XXh of
                                                                                    each month via System X Access to the Salary Listing is limited to Business

                           Overhead, Fringe, and G&A rates are established
                                                                                                              Note: Salary info is provided by HR, and entered into
                         yearly by Contract Accounting, reviewed by (company)
                                                                                                              System X by Contract Accounting Generated the XXth
                          for approval and entered into System X by Contract
                                                                                                              (no significance in the date) to be aware of new
                        Accounting. The Indirect Costs (IDC) rates are built into
                                                                                                              employee or rate changes.
                        the Pricing Template Bus Ops enters fee percentage, in
                                      conjunction with the Officer.

     Source:                                                                                                                           Page 7
                                                                                                                             Contact: (name),
                                   Proposal and Budget Process                                                              Director of Business

                                                                                                         Note: Formal thresholds do not exist
                                                                                                         to determine level of approval
          Save Budget in the                                                                             needed.
                                        Bus Ops Submits                                No
          Directory under the
 B                                    Budget to the Officer-            Approved                A
              name of the
                                       in-Charge / Project                 ?
          appropriate Officer-
                                       Manager for review
                                                                      Yes             All proposals include standard terms and conditions,
                                                                                         technical specifications, payment terms, type of
                                                                                       contract, budget with the detail tasks (if required),
                                                                                      billing rates for time and material contracts, delivery
                                                                        D             date, and a signature page (which may serve as the

                           The Contracts Department
Bus Ops submits             reviews all final business                                                        Does the Officer
                                                               Contracts Department
   Budget to              management proposals prior                                                          want a Bid and                       G
                                                                submits proposal to
   Contracts               to submittal to the client to                                                         Proposal                  Yes
                                                                     the Client
  Department                   ensure all required                                                               account?
                             information is included



Source:                                                                                                                  Page 8
                                                                                                                                 Contact: (name),
                                             Bid and Proposal Process                                                           Director of Business

Note: Bid and Proposal accounts in System X are used at the discretion of the
                                                                                                  Contracts sets-up a record indicating the B&P in
Officer to track hours incurred to develop a proposal. They are typically used for
                                                                                                  (non-accounting related system).
larger projects.

                   A Bid and Proposal
                                                                                        B&P sent to the
                   (B&P) authorization                                                                                         Contracts
  G                                                      B&P                         Contracts Department
                    form is initiated to                                                                                     Department
                                                                                       to request a B&P
                 track proposals by the                                                                                    reviews the B&P

                                             B&P form forwarded
 B&P is a separate code within the               to Contract
overall G&A pool. If B&P job is not          Accounting to set up
established, labor is still charged to       a new B&P number
   G&A. The B & P is used for                   in System X
 operational analysis and does not
     create a financial impact.


  Source:                                                                                                                    Page 9
                                                                                                                            Contact: (name), Director of
                                                                                                                             Business Operations, and
    Contract Award and Acceptance Process                                                                                    (name), Vice President of

         F                                         Yes – With Changes

                                                                            Clients               Officer
  Client reviews                      Contract                             indicates            decides to                                Yes
                                                                                                                          Submit?                D
     proposal                        Awarded?                             revisions /           modify and
                                                                           changes               resubmit

               Yes – As Submitted                                                                                                 No
                                                                                                                                            End of Process
                                              From Project
VP of Contracts         Business Ops
                                                                                                  Business Ops or Contracts              Business Ops
   or Officer            or Contracts
                                                                                                    Department obtains the              sends the BRF to
   approval              completes a              BRF                                              approval signature of the              the Contracts
   signature               Booking
                                                                                                    Officer in charge of the             Department for
obtained on the         Request form
                                                                                                      project on the BRF               review and sign-off
   Contract                 (BRF)

                                                                                                                            Contract Accounting
   The form contains: project        Contract Accounting Department receives and reviews the                              inputs project number,
      name, customer name,         BRF, approved Contract, copy of the proposal, budget, PO (if                                project name,               E
 contract description, contract      applicable), invoicing schedule including deliverables, and                            customer name and
  type, customer type (ie Cost        estimated bill dates a list of the owning and performing                               prime contact into
   Plus Fixed Fee, Firm Fixed             operating groups and other relevant information                                        System X
  Price, or Time and Material),
   contract value and level of                                                                          System X
         funding, period of
    performance, any specific                                                             Project #s are typically setup in four levels. 1st level is the
      billing instructions, fee Note: The Contracts Department maintains                     contract level, 2nd level is the task level, 3rd level is the
   accrual percentage, names    all contract files.                                          reporting level, 4th level is for additional requirements.
    of points of contact within
   Company X, technical and     Note: Only Contract Accounting has access to enter the BRF information onto System X. Required
       procurement official     fields must be completed before moving to the next screen.
 information and a checklist of
Source:                                                                                                                          Page 10
     required documentation.
                                                                                                                                                   Contact: (name), Director of
                                                                                                                                                    Business Operations, and
        Contract Award and Acceptance Process                                                                                                       (name), Vice President of

 The fee is entered in           Note: Due to the nature of government contracting, it is common that work will begin on a job before the formal contract is signed and received. When this
   accordance with               occurs, some form of written approval (i.e. an email) is typically requested of those purchasing Company X's services, as proof of contract acceptance. These
                                 contracts are entered into the system as "award pending" and can accrue revenue on costs, but not on fees. A project will not remain “award pending” for
     Business Ops                more than 30 days without a reassessment by the Officer in Charge to indicate a willingness to accept continued risks.
    instructions as
indicated on the BRF.
                                           Contract Accounting
                                          inputs Contract Type and                      Contract
                                                                                                                   Contract Accounting            Contract Accounting
                Contract                    fee accrual percentage                     Accounting
                                                                                                                   enters the project’s                enters labor
E             Accounting                   into System X (i.e. Cost                       inputs
                                                                                                                         period of                  categories, billing           A
             inputs project                  Plus Fixed Fee, Firm                     customer type
                                           Fixed Price, or Time and                                                 performance (start            rates, and workforce
               description                                                             and funding
                                            Material), which drives                                                date and end date)                   from BRF
                                              revenue recognition                                                                                                      Billing Rates
                                                                                                                                                                      are calculated
                                                                                                                                                                       as part of bid.
                                                                                                                                                                       These inputs
                                                                                         System X                                                                       not needed
                                                                                                                                                                          for FFP
                                                                                                             X              Contracts Dept enters wins and
                                                                                                                            changes in contract funding                   Monthly
                                                                                                                            during the month and also year to             Booking
                                                                                                                            date wins by operating group into              Report
        Contract Accounting                                                   Contract Accounting links                     the Monthly Booking Report
           enters Contract                   Contract                       performing orgs to the project
        Information (contract             Accounting                             so that Company X                                                                               Monthly
A        #, subcontractor #,               enters the                       employees in those orgs can                                    To Payroll
         PO #, owning org #,            Ceiling rates and                    charge time to the project in                                                                       Report
        performing org # and             Booking Credit                      ET, the payroll system, and                                                                      distributed to
               B&P #)                                                                 System X                                                                                Management
Ceilings: If there are any contractual ceilings on labor hours, labor rates, indirect rates or fees, they must be noted and any attachments included in the                   comparison
                                                                      booking package                                                                                            with CP
Booking Credit: 1) Funded Amount- enter amount funded by contractual document 2) Unfunded Award – enter portion of contract value that has not yet                            Report from
 been funded 3) Unfunded options- enter total amount of options that may be exercised by the client in the future 4) Contract Value- this is the sum of                         System X
1+2+3 5) Management Adjustment – this is used when an Officer feels the real value may be more or less than the value stated in the contract It is used
         to adjust backlog #s to a more realistic amount (must be approved by the VP of Contracts and CEO) 6) Total – this is the sum of 4+5

    Source:                                                                                                                                                 Page 11
                                                                                                                          Contact: (name), Director of
                                                    Revenue Recognition                                                    Business Operations, and
                                                                                                                                 (name), CFO

Note: Revenue is recognized                                                              Reviewing Period of Performance (POP) in relation to contract value
based upon contract type and fee                                                                  to ensure each project is in line with the budget.
accrual information contained in
the BRF. The BRF is entered into                                                                                     Contract Accounting
                                                                       Monthly, Contract
System X once the contract has                                                                                       reviews PSRs for all
                                              Revenue is              Accounting updates
been awarded.                                                                                     Print                active contracts /
                                             automatically              and creates the
                                                                                                  PSR                 projects to ensure
        From                                 calculated in           Project Status Report
                                                                                                                    revenue is calculated
        Payroll                               System X                  (PSR) tables in
                                                                                                                     according to budget
                                                                           System X
                                                                                                                          and or BRF

 Timesheets completed                                                                     If necessary
   and exported into                                                                     contact CFO or
                                                                                                                  BRF information entered
      System X                                                                              Controller
                                       System X                                                                    incorrectly into System        B
                                                                                                                    X, update information
                                                               Yes                                Yes
       Other Direct                         Contact Bus
       Costs (ODC)                         Ops to discuss
                                   B                                                                                         Note: Contract Accounting &
        are entered                        and determine
                                           action required                      No                                           Business Ops meet monthly
      into System X
                                                               S                                                             to review the CP Revenue
                                                                                                             Contact         Summary Report and the
                                                                         Contract Accounting                Contract         System X Revenue Summary
                                        The BRF may need                generates CP Revenue              Accounting to      Report . Also, mid-month
                                         to be updated, the                Summary Report                 research and       reviews are performed for any
                                           BRF may be in                                                     resolve         issues previously identified as
      BRF completed
                                          progress (Award                                                                    outstanding.
      and entered into
                                         Pending), or if the                                                         No
         System X
                                             Contract is
                                       completed, Contract                 Controller & CFO
                                           Accounting will                                                                         Yes
                                                                            review the CP                                                    R
                                       update fee in System                                                    Approve?
             X                                   X.                        Summary Report

Note: Labor Revenue cannot be recognized on a project beyond the                                                      Note: Only Contract Accounting has
Period of Performance input into System X. Typically, revenue can be                                                  access to make project revenue
recognized for an additional month. If the lag is to be longer than a
  Source:                                                                                     adjustments in System X.    Page 12
month, additional doc is required from Business Ops.
                                                                                                                 Contact: (name), Director of
                                                     Revenue Recognition                                          Business Operations, and
                                                                                                                        (name), CFO

                    Accounting re-runs                                                                                    Revenue is
   R                Revenue Summary                 Contract                                                             posted to the
                    Report in System X          Accounting runs        Reconcile                                        General Ledger,
                     and CP Revenue             Revenue Journal        Reports to                                       PSR and unbilled
                       Summary in                 in System X           Journal                                          Sub-Report by
   S                                                                                                                       Contract
                                                                                        No                                Accounting

                              Update                                                                             Controller / General Acct
                              Project                                                                               Manager generate
                          Master screen                                                                          Financial Statements in
                           in System X                            No                                                     System X
     Errors                                                                               Sr. Contract
generally due                                              Yes                            Accountant
  to manual                                                       Reconcil
                                          End of Process                            Reconcile Reports to
entry error (i.e.                                                   e?
                                                                                    Financial Statements
contract made                                                                       (tie in YTD revenue)

 Source:                                                                                                             Page 13

To top