For three days the construction’s financial sector took center stage at Caesars Palace. The Construction Financial Management Association (CFMA) and the Associated General Contractors of America (AGC) hosted the 20th Annual Construction Financial Management Conference on Oct. 19-21.
Developed in response to a growing demand for education and programming designed for financial professionals in the construction industry, the conference is targeted to chief financial officers, controllers, treasurers, certified public accounts, auditors, bankers and legal professionals.
“There were a lot of tough lessons learned during the recessions and the industry as a whole learned to operate projects with less financial resources, so in a weird way it made the industry more efficient,” said Stuart Binstock, president and chief executive officer of CFMA.
The conference offered 31 interactive sessions delivered through “chapter classroom courses,” are all available at intermediate, overview and update program levels. No prerequisites or advanced preparation are required.
This year’s conference featured presentations on construction taxes, strategies for different economic conditions, claims management, federal acquisition regulations, business real estate management and ethics and fraud. Additional presentations include change orders, construction market trends and credit markets.
“We are primarily an education and networking organization,” Binstock said. “About five years ago we recognized that we were not keeping up with the sophistication of our members, many of whom have been members for two or three decades. We expanded our educational programs and developed the intermediate and advanced courses to deliver a better value to our members and we have done a better job of doing so since.”
Responding to revenue recognition
The AGC/CFMA conference addressed issues with the Financial Accounting Standards Board, including the newest revenue recognition compliance laws. The new revenue recognition laws feature a simpler five-step process that aims to increase efficiency for accounting departments while minimizing questions and undefined grey areas from the industry.
“For construction companies, revenue recognition is a critical process for financial reporting, and the new revenue recognition standard will hopefully eliminate some of the variations in practice that currently exist,” said Tim Wilson, certified public accountant and a member of CFMA.
“Construction companies will need to review their accounting policies for conformity with the new five-step process to recognize revenue. One favorable outcome from the new standard will be more communication within the construction company between finance, accounting, project management and operations departments,” he said.
Increased internal communication for construction companies combined with more efficient operations from a leaner economic environment has positioned the industry in a flexible position to adjust to industry, government and economic changes. The impact of revenue recognition accounting has a lot of influence in the financial, legal and regulatory areas of the construction industry.
“Many parties, such as banks, sureties, other creditors and other construction companies rely on the financial statements of contractors to evaluate the fiscal health of the company,” Wilson said. “Loan covenants and other key metrics are calculated using financial statements, therefore accurate accounting for revenue under the new standards will be important.”