We are following Accounting Policy to book Revenue, Costs and GP on percentage of completion (POC) basis. Therefore all costs, whether they be Material, Labour or Overheads are first accumulated under Work in Progress. At the end of the month, a detailed Payment Certificate Application is created in XL based on agreed POC with the supervising consultant; the Application runs into several pages with itemised details. Generally, the Application is submitted to the Principal contractor who then adds his own details, and submits onto the consultant. By the time, the approval comes, anywhere between 30-90 days from the month of aggregation have expired; this means the WIP ledger has more cost bookings in that period.
The Certificate itself may not be approved for 100% of the amount applied for; the Consultant may approve less than 100% of certain items and thereby reduce the total amount payable. Currently what is done is that based on the amount finalised, the gross amount is removed from WIP, not the itemised reductions and the cost and revenue is booked into the WBS for the project, as a lumpsum. Now, the WIP account has the aggregate value of the unapproved portion of the Costs booked for that month, plus costs booked in subsequent months.
Therefore, we are unable to get a breakdown from the system of the ageing of the WIP in a project, with the ABC analysis of itemised details of the WIP balance on a project.
Is there some standard SAP procedure which can enable us improve the booking process, whereby we are able to get the breakdown?
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