Observations From Our Construction Accounting Practice

Recently, the Schneider Downs Construction Group convened off-site for an all-day construction industry-focused summit. 

The goal of the meeting was to share experiences from our clients and the construction industry and to answer the following questions:

• What are the internal and external factors impacting our clients?
• What are the current and future challenges facing the construction industry?
• How can Schneider Downs assist construction companies in navigating these challenges?

We identified the following four topics as challenges facing nearly all of our construction clients.

Cybersecurity

Cybersecurity continues to be top of mind within the construction industry. With the sophistication and frequency of attacks continuing to increase, organizations are finding it difficult to keep up. As a means of combatting cyberattacks, companies are turning to cyber insurance. Only one problem: as the number of cyberattacks has increased, so has the cost of cyber insurance. Additionally, many insurance companies are requiring that specific controls and other preventative measures be in place before they will even consider providing coverage.

If you are struggling to navigate the complicated cyber insurance landscape, we encourage you to take advantage of some of our resources. The Schneider Downs Cyber Team recently published a whitepaper about how to qualify for cyber insurance and will also host a cyber insurance webinar on June 8.

Employee Retention

Employee retention and lack of qualified labor is an issue that all companies, regardless of industry, are currently fighting. The construction industry, however, has been facing this challenge for years. Among others, a main driver of turnover is compensation and benefits. A well-developed compensation plan attracts talent, improves retention and also encourages stronger employee engagement.

To ensure employees are being adequately compensated, companies will often have a compensation study performed.  A compensation study involves benchmarking an entity's selected job positions to what similar entities are paying for similar positions. Factors such as geographic area, industry and company size are considered.

Exit and Succession Planning

Having an exit and succession strategy is just as important as having any other corporate strategy. Many business owners are contemplating their next stage. Exit and succession planning can take many forms, such as the outright selling of the business, choosing to maintain ownership while stepping away from the day-to-day and everything in between. The key to exit and succession planning is to start early and know your options.  

To assist business owners considering an exit or succession plan, Schneider Downs developed a Masterclass webinar that broke the process into four parts. All four sessions can be accessed below: 

• Process Overview and Goal Setting
• Setting and Executing Strategy
• Analyze and Develop a Plan
• Closing the Deal and Beyond 

Lease Accounting 

The long-awaited lease accounting standard is finally upon us. For years ending after December 15, 2022, companies will need to adopt Accounting Standard Codification (ASC) 842, which will require them to record all substantial leases on their balance sheets.  

There are significant challenges management will encounter with the implementation of this new standard, including capturing the entire population of leases, tracking and accounting for the leases and compiling the necessary information required for financial statement disclosures. Additionally, companies will want to determine the impact this new standard will have on their financial statements from a debt covenant compliance to bonding perspective as well as educate the users of the financial statements.

Schneider Downs just hosted a lease webinar to help organizations address these very topics. Additionally, we have developed a software solution, SimpLEASE, to assist companies with the tracking and accounting for leases under ASC 842.