Accounting & Bookkeeping ยท KBLI 41012

Contractor & Construction Accounting

Contractor and construction businesses face unique accounting challenges: multi-year projects with revenue recognized gradually (percentage of completion), project costs that must be tracked per contract, as well as retention and progress billing. Arunika Consulting helps contractors implement project-based accounting according to PSAK 72 and SAK EP so financial statements accurately reflect project performance.

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What usually goes wrong

  • Gradual Revenue Recognition

    Revenue must be recognized according to project progress (over time), not when invoice or payment is received.

  • Cost to Complete Estimation

    Estimating total project costs to calculate completion percentage requires accuracy and periodic revisions.

  • Retention and Cash Flow

    Withheld payments (retention 5-10%) affect cash flow and need to be recorded as separate receivables.

  • Project Indirect Costs

    Project overhead, mobilization costs, and indirect costs must be allocated to projects consistently.

What we do

  1. 01

    Separate Project Ledger

    Creating general ledger per project to track contract revenue, direct costs, indirect costs, and margins.

    • Clear profit per project
    • Budget vs actual
    • Real-time cost control
  2. 02

    Percentage of Completion Method

    Implementing revenue recognition based on cost-to-cost or physical progress according to PSAK 72.

    • Accurate revenue
    • Matching principle
    • Fair financial statements
  3. 03

    Progress Billing Management

    Recording of billing milestones, retention, and differences between recognized revenue vs billing (overbilling/underbilling).

    • Monitored cash flow
    • Managed retention
    • Clear financial position

Related regulations

  • SAK EP

    Private Entity Financial Accounting Standards

    Reporting framework for medium-scale contractors without public accountability, effective 2025.

  • PSAK 72

    Revenue from Contracts with Customers

    Construction revenue recognition based on progress of performance obligation fulfillment.

  • PSAK 34

    Construction Contracts (Legacy)

    Old standard for historical reference, replaced by PSAK 72 for contract revenue recognition.

If the tax office starts asking questions

The team that keeps your books and files your taxes also stays with you through an SP2DK, an audit, an objection and an appeal.

How we handle tax disputes

Frequently Asked Questions

When is construction revenue recognized?

Revenue is recognized as the project is completed (over time) if customers receive benefits gradually. Completion percentage is calculated from actual costs vs estimated total costs.

What is overbilling and underbilling?

Overbilling occurs when billing exceeds recognized revenue (recorded as liability). Underbilling when recognized revenue is greater than billing (recorded as contract asset).

How to record retention?

Retention is recorded as separate receivables (retention receivables) and recognized as revenue according to progress, but receipt only when project is complete and maintenance period ends.

How do accounting services improve operating cost efficiency?

Accurate, timely financial reports help you spot cost leakage, monitor margins by product or service, and make data-based decisions.

Can financial reports be accessed in real time?

Yes. We use cloud accounting systems so you can monitor cash flow, profit and loss, and business performance from anywhere.

How do you ensure reports are ready for external audits or banks?

Reports are prepared with clear documentation and traceable transaction data.

Related Industries

Tell us about your business

Send your line of business, rough annual turnover, and what is going wrong. We reply on WhatsApp.

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