Question

How can job cost records help to promote sustainability efforts within a company?

Answer 1

Job records are help in cost management of a company to increase its transparency and accountability

Proper project cost records leads to better profitability, project estimating, management decisions, and timely financial reporting. Proper cost records uses the costs recorded to a particular contract to reveal the profitability of each job, which can be compared to the original profit estimate.

Internal controls and detecting fraud

Timely cost allocation also improves the company’s ability to identify fraud. The construction process inherently creates situations where fraud can occur. A properly designed job cost system creates additional internal controls. Costs could be miscoded or unrecorded by mistake, giving the job a false sense of profitability, or a cost could be miscoded or unrecorded due to an employee trying to show false profits on a job to receive better commission or a bonus. Employees could also misdirect materials and other resources to personal projects. Having accurate and timely cost allocation provides the company with a real time accounting of costs, allowing unexpected or unreasonable costs to be detected earlier and prevent additional misallocation and lost profitability.