PCCA Journal|1
st
Quarter 2013
15
changes have a less beneficial effect. The CFO’s responsibility
is to analyze the estimates and other assumptions from proj-
ect teams being used to predict the outcomes of projects and
to separate logic from pure speculation. Reporting results for
the month, quarter, or year gives the CFO significant oppor-
tunities for analysis. Comparing the numbers in hand to the
prior corresponding time periods and to expectations, such
as budgets and projections, with variances identified, allows
for the CFO’s analysis and discussion of operations, financial
position and likely cash flows. This analysis is generally a
written explanation of unusual items in the income statement
and balance sheet that provides insight to what is occurring
and affecting the financial statements. The CFO is the finan-
cial expert and is the person most qualified to provide and
interpret the key impacts on the financial statements.
Accounting Technician
The CFO must be an expert in applying generally accepted
accounting principles (GAAP) that pertain to the construction
industry. Financial statements are valuable only if accurately
presented. Additionally, one of the most important uses of fi-
nancial data is benchmarking—providing useful comparisons
against the industry. Furnishing accurate financial statements
that are reliable to bankers, sureties, and internal users is
paramount. GAAP is an evolving proposition and has had an
accelerating rate of change in the last several years. Account-
ing standard setters are in the process of reviewing GAAP for
the United States to be consistent with accounting practices
used internationally. Three key changes are currently being
considered that will significantly affect the construction
industry. They are the methodology for recognizing revenues,
accounting for leases, and accounting for liabilities in multi-
employer plans. The CFO must not only be aware of current
requirements, but also anticipate changes likely to come. The
effects of those standards on the company’s reporting will be
substantial, and the impact on banking and bonding relation-
ships will hinge on successful foresight.
Several provisions in the Internal Revenue Code are
sections (laws) applying specifically to contractors. While
extremely complicated, there are a variety of potential
benefits and pitfalls in applying income tax law. Some of the
laws apply at the company level, such as choosing the most
advantageous accounting or revenue recognition method,
and some apply at the contract level, such as determining
that a particular contract is a home construction contract.
Understanding the impacts of the tax-accounting treatments
available for equipment purchases can greatly influence the
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