What challenges have you overcome that you could attribute to knowledge gained from the CCIFP designation?

For the past six years, I have worked for a small CPA firm that has a construction industry niche. We work with GCs and specialty trade subcontractors, so I have firsthand experience with the unique aspects of construction accounting and taxation.

Our firm strives to be our clients’ “Most Trusted Business Advisor.” So it is essential for me to be able to provide top-quality service and advice when clients call with industry-specific problems and questions. My main challenge is possessing a comprehensive understanding of financial management for construction companies.

Earning the CCIFP designation exposed me to a broad range of industry subjects that I typically do not see, including risk management, legal, IT, and HR. This knowledge helped me build my confidence and enables me to do my job better.

Can you share a particular situation?

Our firm recently consulted with an equipment intensive contractor that reflected a significant financial statement line item in the schedule of earnings from contracts called overallocated equipment burden.

I had to analyze the “equipment cost pool” to determine what caused the significant overapplication. The cost pool was a range of accounts set up separately in the general ledger.  

I consulted the Financial Management and Accounting for the Construction Industry reference guide (also known as “The Book” — a great study resource for the CCIFP exam) in order to research more on the topic of “allocation of equipment costs to contracts.”

The equipment cost pool typically has an under/overapplied balance that should be allocated across all jobs as a “reduction” to job costs-to-date. Further, equipment is part of the “costs-to-date” numerator of the percentage-of-completion (POC) calculation, which determines financial statement revenue recognition.

The contractor’s failure to adjust the overapplied equipment burden back on jobs (i.e., reducing costs-to-date) significantly overstated its financial statement revenues and income from operations.  

What has been the most obvious advantage from becoming a CCIFP?

Working with our firm’s team of CCIFPs and having access to various resources within the construction industry has proved to be valuable in addressing the issue at hand.

By leveraging the knowledge and expertise of my colleagues, I was able to engage in constructive discussions and collaborative problem-solving efforts that ultimately led to the identification of a solution. The ability to draw on these resources allowed for a more comprehensive analysis of the situation and ensured that the proposed solution was effective and, most important, correct.

Why is it important for your organization to have CCIFPs?

Our firm is proud that all of its professional staff are CCIFPs, which demonstrates our dedication and commitment to specialization and continuous training in the construction industry. Because the CCIFP designation is a recognized industry credential, clients are more likely to choose and trust a firm that has multiple certified professionals on staff.

This background gives us a deep expertise in best practices and financial metrics, and we enjoy sharing these thoughts and insights with clients. Critical issues like strategic planning, incorrect labor burden and equipment rates, and the estimating and bidding process can be very complex and often lead to even the Best in Class contractors leaving money on the table.

Why would you recommend the CCIFP designation to another person/business?

The extensive training and education required can help you develop a deep understanding of the unique challenges and opportunities in the construction industry, which can make you a more valuable asset to your current and future employers and clients. In addition, the CCIFP designation is a great marketing tool — it prequalifies a CPA firm and sets it apart from the competition. This is an excellent way to prove that you are an expert in the construction industry.

Is there anything else you’d like to share about becoming a CCIFP?

Becoming a CCIFP is a significant professional achievement that requires a great deal of hard work and dedication. By earning this designation, it provides me with a sense of pride and accomplishment in my work and boosts my professional confidence and self-esteem. It also allows me to demonstrate a high level of expertise in financial management within the construction industry, which sets me apart from my peers and competitors. 

If you have earned your CCIFP designation and would like to share your experiences, please reach out to Veronica Whitehead at vwhitehead@cfma.org.

Copyright © 2023 by the Construction Financial Management Association (CFMA). All rights reserved. This article first appeared in May/June 2023 CFMA Building Profits magazine.