Basics you need to know about work in progress

  1. The use of work in progress accounts (WIP):
    1. Account 3195: Work in Progress – Equipment for resale
    2. Account 3197: Work in Progress – Equipment owned by ANU
    3. Account 3198: Work in Progress – Capital Construction (Buildings)
    4. Account 3199: Work in Progress – Artworks (Facilities & Services Use only)
  2. Work in progress accounts are used for projects, which involve the construction of an object over an extended period of time. For example, ANU may enter into a contract to construct a specialist piece of research equipment. The construction of the item of equipment will involve the time (and cost) of various research and technical support staff as well as the cost of materials.
  3. It is essential that the establishment of a work in progress project is well documented at the beginning of the project and that all relevant academic and general staff, who will be involved with the project are aware of the project set up from an administrative and financial point of view. Factors that need to be outlined and established are:
    1. Project name
    2. Project description
    3. Location of WIP Account in the General Ledger – One WIP account location per project.
    4. Total estimated cost of project
    5. Estimated completion date
    6. Are salaries involved? If so has a process been established for maintaining job-cost records for year end transfers of salary costs to WIP.
    7. Are materials involved? If so has a process been established for ensuring material costs are charged directly to the WIP account or processes established for maintaining job-cost records for year end transfers of expenditure to WIP.
  4. Where project expenditure is to be capitalised, Cash ledger entries are made to the nominated assets Work-in-Progress account by F&BS only. After completion of work and closure of a job in the job cost ledger, the accounting treatment is essentially:
    1. DR Property Asset
    2. CR Assets WIP (3198)

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