Film Accounting & Auditing for Professional Accountants

FOR CPA's, CA's, Enrolled Agents, Accountants & Bookkeepers, etc.

Continuing Professional Education/Development 6 Hours - Verifiable/Certificates Issued

Description: This workshop will present the industry specific accounting and auditing practices of the Film Production Industry.

Objective: The Public Accountants & professional accountants/ bookkeepers will understand the industry specific practices, terminology and methodology of the Film Industry.

Participants: will be introduced to the full film industry business cycle of: development – production – distribution – revenue sharing, with the emphasis on the production and tax incentives audit stage.

Where: No scheduled workshops at this time

When: TBD

NOTE: Lunch included.

Note: within the film production industry the term “managing a budget” is the equivalent to “controlling expenditures”. Additionally, the “Cost Report” is the equivalent to the “Financial Statements”.

Major Topics:

1. An overview of the Film Industry for Accountants

2. Intro to the Film Budget – THE Key to Film Production

3. Managing the Film Production Budget – Labor Example

4. The Film Production Accounting Practices – “Walk Throughs”

5. Managing the Film Production “Weekly Cost Report”

6. Tips On EFFICIENTLY Auditing the Film Production Costs

7. “Studio Accounting” Practices Related to Film Accounting

8. Opportunities for Film Accountants & Professional Accountants

Prerequisite: An accounting background of any kind, and an interest in the industry specific accounting and auditing practices of the Film Production Industry.

In addition to the Film ProductionIndustry, it also briefly introduces the Film Tax Credits as well as “Studio Accounting” practices so as to complete the full business cycle of: development – production – distribution – revenue sharing.

FREE: Multiple Budget Templates and Film Accounting & Legal Form Templates

BRING YOUR WIRELESS LAPTOP!

AGENDA - FILM ACCOUNTING & AUDITING

1. An overview of the Film Industry for Accountants. 45 Minutes

The following stages are reviewed with practical examples and situations presented applicable to the role of both the Public Accountants and the Film Accountant:

Development: the cycle from concept to pitching to financing.

Financing: the concept of borrowing against the rights

Rights: The importance of the Copyright & ‘Chain of Title’

Production: setting up a shell company for the production, pre-production, production, post-production.

Auditing of film production costs in post-production.

Distribution time period and how the producer receives the net revenues.

Within the above framework the functions of film accounting, external auditing (Public Accountants’s), financial service contracts and employment roles are indicated with examples.

Differentiation is made between “Studio Accounting” and “Film Production Accounting”.

Entry points of penetrating this insulated market are discussed. (Note: this topic will be more fully drilled and discussed at the end of the workshop.)

2. Intro to the Film Production Budget – THE Key to Film Production 45 Minutes

An actual film production budget is reviewed with the purpose of understanding the industry specific departments and how they inter-relate. Key terms used in film production, but not widely known, will be cleared up.

Managing a real Film Budget: Above-the-Line, Below-the-Line and Post-Production budget categories and line items are reviewed to demonstrate how a Producer manages a film’s cost during production.

Present the standard format of presenting Film Budgets. Practice the format until can do it habitually. (This is basic to all budgeting and is expected to be intuitive).

Practice making changes to equipment rentals using the actual budget. Demonstrate how the changes are made on the film industry’s leading budgeting software.

Discretionary& Non-discretionary costs in the budget are discussed, as well as how theses may be abused or missed by the producer or the film accountant.

3. Managing the Film Production Budget – Labor Example 60 Minutes

Review the major unions and guilds, demonstrating the simplified way of relating the “Hours Worked” with the “Pay Hours” (that is, arithmetically translating the hours worked into the equivalent hours to pay factoring in the overtime ratios).

Drill this simplified method for the purposes of managing a film budget, demonstrating the impact of working an hour later at the end of the day (a huge factor in any Film Accountant’s reporting).

Drill making changes to a labor category of the actual budget, using the film industry’s leading budgeting software.

Review the industry definition of “Fringes” – the government and union contributions paid by the producer over and above the hourly wage. Demonstrate actual fringe rates and how to simplify the details for the purposes of managing a film budget.

Drill managing fringes using real life examples.

Observed methods of “padding” film budgets. Examples given and drills done by attendees.

Common errors in film budgets to watch for.

Discretionary& Non-discretionary costs in the budget are discussed, as well as how theses may be abused or missed by the producer or the film accountant.

Budgets are a vital tool in generating financing. Sometimes an “Opinion Letter on Tax Credits” is asked for by a lending institution. One such Opinion, acceptable to at least one lending institution, is presented. Real examples of potential errors in budget, and the impact of unethical presentation by the Producer, are given and discussed. (Note: this Opinion is an example only and may not be applicable for all circumstances).

Break For 1/2 Hour Lunch - Included

4. The Film Production Accounting Practices – “Walk Throughs” 60 Minutes

The practice of using a shell company usually referred to as the “Prod-Co”, for the production of the film, and a review of the unique General Ledger system used by all film productions in North America.

A “Walk Through” for a check issuance is flow charted and discussed. It will entail the Purchase Order, Invoice, Check Preparation, check signing, all authorizations for every document and every temporary and permanent file along the route.

A “Walk Through” for a Crew Timecard is flow charted and discussed. It will entail the Deal Memo, the I-9, the payroll service’s Start Card, the timecard, all authorizations for every document and every temporary and permanent file along the route.

Cost control points during the Film Production are discussed, both from an internal accounting and from a Producer’s point of view. Real examples are given, pointing out the weaknesses and strengths.

5. Managing the Film Production “Weekly Cost Report” 60 Minutes

(This is the document audited for all State/Provincial Tax Incentives)

The unique, but universally used, ‘Weekly Production Cost Report’ is presented and real examples given on how to read and control the presentation. (Note: the Cost Report is the document audited by Public Accountants’s at the end, or during, the post-production period.)

Several drills are done to practice the more common Cost Reporting and Estimating situations confronted by Film Accountants and Producers on almost every production.

The underlying records, and the appropriate section of the approved budget, are drilled down to discover what occurred to create the variances of actual to budget.

6. Tips On EFFICIENTLY Auditing the Film Production Costs 30 Minutes

The Film Production Accountant’s role of ‘Internal Auditing’ is reviewed, with emphasis on the absence of any centralized controlling body to draw support from (e.g., such organizations as the AICPA/CICA). The Film Accountant’s role in determining “Ethical Practices” is discussed by relating real life examples within the film production industry and comparing those practices with other industries.

This section is not a “How/What to Audit”, but rather is “How to Quickly Audit” the Cost Report. This section informs the Public Accountants the best way to have the records recorded by the film production accountant, along with written examples of instructions. It also shows Film Accountants how to work with the external auditor to prepare for final audits.

In post-production, the audit now becomes a matter of efficiently utilizing the general ledger data and matching it to the accounting records. Written instructions to the film production accountant and how to implement them, is presented, along with real examples.

The film production accounting records are filed in an industry specific way, giving the tax credit auditor a way to facilitate an audit from the downloaded general ledger records. This process is presented along with real examples of its application.

The relevant Financial Statement Presentation of the costs of a production by the Independent Filmmaker (developer and equity owner) is presented.

The external auditor’s tasks in auditing, or in consulting, with a film company is broken down into the areas of film production and independent film & television corporations (normally referred to as ‘Studio Accounting’).

7. Overview of State/Provincial Film Tax Credits and Related “Studio Accounting” Practices 30 Minutes

“Studio Accounting” refers to Major & Independent Studios that own, develop and produce their own projects for distribution/licensing. In the Major’s case, and even some Independents, they distribute the feature or television product within their own corporate holdings.

The legal steps of ownership and assignment possibilities are quickly reviewed, with real problems that I have seen are discussed.

The relationship among the “Production Company” created to produce the project, the Distribution Company and the Studio (the owner(s) of the “Production Company”) is charted and discussed.

The policies of one Independent Producer is reviewed with respect to Capitalizing “inventory” of projects, writing off Inventory to Revenues realized, Deferred Revenues not ready to be recognized and inter-company Management Fees. (Note: This is the type of common practice which permits a Studio to report losses despite having some very successful box office results).

The published policies of a traded Television Production Company are reviewed to see how their statements are presented in relation to what we’ve learned above.

8. Opportunities for Film Accountants & Professional Accountants 30 Minutes

Becoming a Film Production Auditor/Accountant. This position is a respected role in the film production business and is performed on a contract basis from production to production. What this role entails, income range, etc is discussed.

Resumes are a one page cover memo and listing of previous film/ television/ commercial/ digital media/ etc experience with contact phone numbers/ email addresses. In the case of Public Accountants’s or general accountants, a list of clients with contact names and phone numbers/ email addresses. An example is given.

Opinions are sometimes required on the amount of estimated tax credits are expected – based on the film budget. This is often required by lenders and the State. Examples are given.

Independent producers, and the Major Studios, require financial managers, tax advisors, accountants and office managers, either in their full time employ or on contract as needed. Some examples are given.

Small to mid sized film/TV productions need someone to administer their records for them on a part-time basis, opening the door to other consulting opportunities.

Film Commissions, Agencies, Bonding Companies, Banks, Tax Credit Administrators are avenues to network with producers, large and small, who need, at a minimum, annual professional accounting services.

Performing audits of the production’s Cost Report for Lenders.

The expectations of Producers, Lenders and the State fromaccounting professionals servicing the film production industry, and how to fulfill those expectations, is summed up.

Total number of minutes: 360Min (6 Hrs)

Certficates indicating the hours of Continuing Professional Education/Development will be issued to successful attendees at the end of the workshop.

*************** END OF LIVE WORKSHOP ****************

TORONTO

$185 Less 10% Early Bird discount (Deadline Sept 7/12) = $167 (Lunch included)

Participant's Understanding & Refund Policies

Participants Understanding: John Gaskin will be consulting the participants understanding of the materials during the workshops with practical drills, direct questions, short quizes, etc. The number of “Contact Hours” during the course will be provided to you for your purposes.

Attendance & Participation: Attendance will be taken. The “Clock-Hours” and the results of the attendee’s practical assignments and random quizzes (both verbal and otherwise) will form an integral part of John Gaskin's assessment of your understanding of the materials.

Refunds Policy: All fees paid by the applicant shall be refunded if the applicant is rejected by the instructor (John Gaskin) before enrollment. An application fee of $25.00 may be retained if the application is denied. All fees paid by the applicant shall be refunded if requested within 3 calendar days after starting the workshop. All refunds shall be returned within 30 days.

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