Film Production Accounting

This post has been well received ever since I first posted it in 2009. I’m updating now to bring it up to 2014 standards.

There is a professional accounting niche that is little known – Film Production Accounting. I regularly receive queries to my web site, or my blog, about film production accounting and of how to enter this field. Most of the queries used to be from the Los Angeles area, but over the past 4 years there has been an equal number of queries from the Film Tax Incentive States.

FILM PRODUCTION ACCOUNTANT CATEGORIES AND EXPECTED PAY

Production accountants have traditionally fallen into the field without much of any kind of accounting background. I believe that film production is the last industry in the world to hire accountants who don’t have some kind of formal training in accounting. Currently, the field of film accounting is looking more appealing to a wide variety of CPA’s who are looking for something more markets to penetrate – or even to change careers. Most film accountants get into that position through a period of apprenticeship as assistant accountants. The levels usually go from File Clerk, 2nd Assistant Accountant, 1st Assistant Accountant to Key Production Accountant (sometimes referred to as the Production Auditor). Another position that is classified as an assistant accountant is the Payroll Accountant. The Payroll accountant is an expert in calculating complicated union payroll time sheets and is usually too busy to do much else than just that one function. A good payroll accountant can make in the area of $1800 to $2,000/week on the bigger Hollywood productions and are worth every cent.

The File Clerk would start in the range of $500-$900/Week, a 2nd Asst Accountant in the $900 – $1400/Week range, a 1st Assistant Accountant in the range of $1,500 to $2,300/Wk.  usually the accountants get a little more on a big Studio production, and less on a small independent production.

THE SKILLS OF A FILM PRODUCTION ACCOUNTANT

The Film Production Accountant needs to be conversant with every area of film production, if not downright expert when it comes to predicting cost overruns. The rapidity of spending during the production of the feature film, or TV show, is so high that it would be a nightmare for someone who hasn’t been exposed to the usual reporting system. That’s why an experienced Film Production Accountant doesn’t get out of bed for less than $2,500 a week (a 5 day week). Experienced production accountants demand and get at least $3,500/5 day week, and if they go on location ask for another $1,000 to cover off Saturdays worked (even though they don’t need to work many Saturdays).

The Film Production Accountant’s job falls into the same three categories as any other accounting function:

– Bookkeeping: the speed of bookkeeping has to be experienced to understand. Petty Cash is often in the $60,000 to $80,000 a week range.

-Reporting: there are very specific Budgeting and Weekly Cost Report formats which can be a bit of an IQ test until you get used to it. This type of report is used throughout the film production world from Australia to India to Europe to North America.

-Auditing: because the money appears to be spent so helter-skelter it can be abused, mostly by producers and department heads. It’s up to the production accountant to see the signals and prevent it before someone embarrasses themselves. There really are lists kept of those deemed to be A, B or C listed. Those that are B and C listed are almost always because of their inability to control their departmental budgets.

So, if you have an accounting background you can pick it up very quickly, but you really do need some experience first. The fact that you’re intimately dealing with so many facets of the actual film production it’s certainly a challenge and, I have to say after 30 years, tons more challenging and rewarding than working in manufacturing, banking, etc.

MY JOURNEY TO, AND IN, FILM PRODUCTION ACCOUNTING

My own background started out in Engineering in the 70’s. Then, when I graduated I saw that open pit mining wasn’t doing it for me, so I started working with an accounting firm to earn a designation. My original purpose was to become skilled enough to be able to use both Engineering and Accounting to help failing businesses turn around. However, after I got my accounting designation I discovered that I would be taking a steep cut in pay to go back to being a junior engineer so I took a job as a Chief Accountant/Controller at a place with about 15 branches. After 5 years I went out on my own, starting a small accounting practice with a couple of other people. After a couple of years of beating the bushes and working 7 days a week I saw that I could make more money as a Film Production Accountant than I could in my practice, so I dropped my office space, my 2 staff, and started working as an assistant accountant.

STEPPING STONE TO FILM PRODUCING AND PRODUCTION MANAGING

Like other industries, after spending many years accounting for and auditing the money, including advising producers and production managers, you start to get the idea that you can do as good as, or better job, at producing. There are many production accountants who have gone on to related film production careers – although, funnily enough, they often keep quiet about it. I presume because they want to distance themselves from the infamous “Blue Suit” – the much maligned Big Studio Exec. (Not a job for me – man, talk about pressure).

THE DOWNSIDE

A downside to Production Accounting is that you don’t ever have a JOB. You get CONTRACTS which last anywhere from 5 weeks to 9 months (pretty seldom longer than that). I’d say that my average contract on a film or TV production in the $20Mil to $40Mil range was about 6 or 7 months. Honestly, I really liked the fact of working with different people. I have often talked with other people in the biz, and we almost all agree that the independence that brings is worth the stress of looking for contracts. Once you’ve been in the business for 3 years, and if you haven’t messed up, you’ll be on call, especially if you’re willing to travel.

So, there’s the pros and cons to getting into the film production industry as an accountant.

HOW TO BUST IN

I spend some time talking about ways to bust in during the weekend workshop. With the advent of tighter and tighter money I see even more opportunities for film accountants as aides to producers, or even film accountants producing projects on their own. Subjects like Film Tax Incentives, verification of paperwork required during Crowdfunding of “Accredited Investors”, cash-flow schedules, familiarity with equity terms, etc can all be easily learned by film accountants, or by professional accountants and bookkeepers interested in penetrating this market. (If you are interested in how this all fits together see this short video).

Good luck in your career, whatever you choose.

For more about training as a film accountant see this link to film accounting workshops and training online.

John Gaskin

New Adventures

I  finally have my Green Card. It’s been a long trip, with multiple diversions along the way.

WORK VISA’S ARE PROGRESSIVELY HARDER TO GET

Back in 1988 I looked at moving to the US while I was on a film production in Orlando during the winter. I enjoyed working on film projects in many areas of the USA and looked forward to returning someday permanently.

HOLLYWOOD AND NYC ARE STILL THE BIGGEST PRODUCERS

I was based out of Toronto, and busy with film productions; even though the busiest film and television production were in California and New York (currently followed by Georgia and Louisiana).

MY WORKSHOPS HAVE KEPT ME KEENLY AWARE

Because I have worked in 6 countries, and in 5 different US cities, working anywhere in the USA is not a hardship for me. Also, delivering week-end workshops on US Payroll and Film Accounting throughout America has kept me keenly aware of the US film and production scene.

LOOKING FORWARD TO NEW ADVENTURES

Now that I have my green card I look forward to contributing and sharing my hard earned skills  with you here in the film arena.           New adventures are definitely on the horizon.

 

Cheers / John

Visit http://www.filmaccounting.com for current workshops planned.

 

Film Accounting – New CPE Credits

Now that tax season is over, many CPA’s are planning on the best way to fill their CPE credit requirements. If you’re tired of the same-old-topics, have a look at the largely unknown field of Film Accounting.

FILM INDUSTRY AS AN OPPORTUNITY

Within the film and television industry there are several sources of new revenue opportunities for CPA’s. The most obvious opportunity for CPA’s is to perform audits of the Production Cost Report for the State Film Tax Incentives; however, several other opportunities lurk behind those closed doors, not the least of which is actually doing the film accounting for independent film and television productions.

FILM INDUSTRY SPECIFIC PRACTICES

The best way to learn more about the film industry specific practices, terms and unique general ledger software is to come to a workshop. The workshops are hands-on film accounting activities performed with proprietary general ledger software used in the film and television industry.

FILM ACCOUNTING 101 IN MAY, 2015

The next workshop is in May, before the Memorial Day weekend, in Tampa, FL. According to rave reviews, nobody leaves the workshops bored.

For more information visit http://www.filmaccounting.com

Cheers,

John Gaskin

John has worked over 50 film and television productions in 6 countries over 30 years. See his resume on IMDb and check the testimonials at http://www.filmaccounting.com

 

Producer Tasks Often Overlooked – Cashflows

I recently stumbled across a Filmmaker’s Checklist by Jason Brubaker. I really liked it! Normally, those kinds of lists just annoy me; however, Jason’s list of 65 items all ring true from my 30 years of experience in production. It’s prepared for the small Indie Producer trying to emerge into this very competitive film industry. By all means check it out.

CASHFLOW OF THE PRODUCTION BUDGET

Without taking away from Jason’s excellent list, he missed one vital step – the Cashflow of the Production Budget. This schedule is KEY to arranging financing. Without it the financiers will not know how much is required on a week-to-week basis, making the financing seem like one big blob.

PREDICTION LOWERS THE RISK FOR INVESTORS

Remember, no-prediction = high-risk. Investors want you to show a week-to-week prediction of cashflow requirements FOR EVERY NUMBER IN THE BUDGET. Some of those numbers may be a guess, but it really does give the bonding company, the banks and the financiers a lot of comfort that the Producer is at least attempting to reduce the risk for the investor. See the video clip below.

CASHFLOW OF THE BUDGET WITH ALL KNOWN FUNDING

CashflowsAnother schedule which potential investor’s love to see is a match-up of all budgeted costs with the known funding – sometimes called the “Loan Analysis Schedule”. This is a schedule which matches the budgeted costs with the arrival of any and all funding, whether it be loans on Tax Credits, Equity funding, loans on any Pre-Sales in foreign territories, etc. See this video clip to see what I mean.

FILM PRODUCTION ACCOUNTANT

Yes, this might be the duties of a film production accountant; however, if you are an emerging producer you should have this task as one of your skills when raising financing early in development. Once you have the templates it really is quite easy to master.

See the following links for more information about film accounting courses and film production courses for emerging producers.

 

Cheers / John

Curbing Film Tax Credit Fraud in Louisiana

Since the inception of the film tax credit in Louisiana there have been about a baker’s dozen fraud charges against local film producers. The newspapers love to rage about the illegal goings-on, of how many years the perpetrators can get in jail and of the madness of Louisiana politics. However, nobody thanks the poor auditor who discovered and ultimately exposed the fraud.

TWO WAYS SUGGESTED TO CURB FRAUD

In an article dated April 6, 2015, the Secretary of the Louisiana Economic Development, Stephen Moret, suggested there were two ways that the state could curb fraud and abuse: regulate accountants who audit the film industry and eliminate related-party payments.

DON’T REGULATE, EDUCATE

I would suggest replacing the word “regulate” with “educate”. Get those CPA’s educated before they even get a chance to audit – that’s what California has done successfully for some time now. It is safe to say that Louisiana already has the most comprehensive set of film audit guidelines for Related Party Transactions in America. However, there seems to be a disconnection between the written rules and the way they’re applied in the Film Industry. Click here to download the 8 page guidelines from the LED web site. See pages 3, 4 and 5.

FILM INDUSTRY PRACTICES

The second suggestion of eliminating related party transactions is like telling Americans not to drive cars because the pollution is killing the planet – it’s true, but just not workable. Simply bring the auditor to an understanding of the internal forms, practices and control points accepted as standard in the industry BEFORE the audit.

THANKS TO THE FORGOTTEN HEROES

So let’s remind ourselves who brought the fraudulent activity to light – the film state tax credit auditor. Okay, sometimes it was found a little late, but found it was … and, here’s a big THANK YOU.

I sincerely hope that you got paid in full before the Producer’s accounts were seized!

Cheers / John

For more information on Film Accounting see my Film Accounting 101 Workshop coming up.

Emerging Producers – Overview of the Film Industry

BUSINESS LANGUAGE OF PRODUCING FILMS

Emerging Producers must separate themselves from the crowd as someone who knows the “Business Language” of the investors, Major Studios, Completion Guarantors, Distributors, etc. You can’t be confused with the clutter of people who “have a great idea”, but can’t express their ideas in a business like manner.

The purpose of this article is to help you take a giant step towards your goal as a Producer, and of ultimately financing for your film.

BUSINESS CYCLE

By breaking down the business cycle of film into:

  • Development (Investor Confidence),
  • Green Light Stage,
  • Production Stage,
  • Post & Audit Stage and
  • The Waterfall

you will be able to more confidently discuss the film and television production business from a business perspective with potential investors and completion guarantors throughout North America.

ONLINE COURSE

This online course takes  about 2 or 3 hours to go through, has 12 videos and a 71 page course content. It also includes a download of a $9Mil professional budget example in pdf format.

See http://www.talkfilm.biz/filmbusiness.htm for more information.Overview-Indie

Cheers / John


John is a working film production accountant who has worked on over 50 film and television productions in 6 countries since 1985. His book, “Walk The Talk”, live workshops and online courses are highly regarded. See http://www.filmaccounting.com for more info.

The CPA and the Film Industry

There are several interesting ways that a CPA can service the Film Industry … IF you can get past the general distrust that the Film Industry has of outsiders.

RESEARCH WHAT INTERESTS YOU ABOUT THE FILM INDUSTRY

Do some research. What sort of accounting services does the Film Industry require from a CPA? What are the industry specific practices, reports and terminology? I hear about the Film Tax Incentives in some States. How does that open the door to new business for my practice? What software is used during a film or television production? I think you’ll find that there is very little, if any, information available online – and most of what you’ll find is authored by me.

WHAT PRODUCERS EXPECT FROM A CPA

Producers and Studio Execs have high expectations of anyone they contract with, especially a CPA who charges out at an hourly rate. They will expect the CPA to be familiar with their everyday terminology and to contribute to solutions. Just a few terms considered common are:

  • Inventory (the current cost of developing and producing “product”),
  • Fringes (government and union benefits),
  • Back-End (final equity available),
  • IATSE Turnaround (penalties assessed by crew when not enough given enough overnight rest),
  • SAG residuals,
  • etc

If you are interested in servicing the Film Industry there are a couple of ways you can learn more.

LEARN THROUGH WEEKEND WORKSHOPS – 23 HRS of CPE

Workshops are always the most fun way to learn. I have another one coming up on May 2nd and 3rd in Tampa Bay, Florida.

For more info see http://www.filmaccounting.com/filmworkshops3.htm

LEARN THROUGH ONLINE COURSES – 2 HRS of CPE PER COURSE

However, getting to the workshop location, and breaking away from the office, aren’t always possible – for you or for me. At the end of each online course qualifying for CPE I ask the student if the “stated objectives of the course” were met. There has never been a “No” yet…. that’s 100% of the time every student has said that the stated objectives were met.

For more detailed information about the online courses see http://www.filmaccounting.com/filmaccounting-cpe.htm

If you would like to see the additional comments made by students who have completed the courses of the courses I have listed them below, along with links to short YouTube videos describing each of the course’s content.

Cheers / John


 

 

Several students also had other good things to say.

A SAMPLE OF ADDITIONAL COMMENTS MADE BY STUDENTS

Course #1. Film Accounting and Auditing – An Overview

  • “Yes. Great introduction of the role the production accountant will play within the overall film production life-cycle.”
  • “Yes – it was pretty much an overview. I feel I have a much better understanding of film accounting now.”
  • “Yes! Very easy to follow. An excellent intro to the industry.”
  • See this short video reviewing the content of this course.

Course #2. Film Accounting and Auditing – The Basics

  • “Yes, great to see the various sample forms. The workflow charts are also very helpful.”
  • “Yes, the detailed explanations of the various forms, as well as the general ledger software, were very helpful.”
  • “Yes, very useful. I now have a sound understanding of the basic principles of production accounting.”
  • See this short video reviewing the content of this course.

Course 3. Film Accounting and Auditing – Intermediate

  • “Yes. Great explanation of the inter-relationships between the various reports and overview of the audit plan.”
  • “Yes. Enjoyed the course and learned a great deal about auditing productions.”
  • See this short video reviewing the content of this course.

For more detailed information about the online courses see http://www.filmaccounting.com/filmaccounting-cpe.htm

 

Film Production Accountants Are Required

John GaskinThe “Film and Television Production Industry” requires accountants just like any other production business. There is a catch, though. You need experience to get hired, and you can’t get hired without experience.

EXPOSURE TO THE FILM INDUSTRY IS LIMITED

The Film Production Industry is isolated, even to the point of seeming to be a closed arena. The production accountants, under horrific time constraints, cannot train new people. The studio finance and accounting personnel must safeguard the privacy of the film budgets, “Cost Reports” and distribution deals. So, how does a person get exposed to the industry specific reports, practices and terminology?

FILM ACCOUNTING 101 WORKSHOPS – CPE 23 HOURS

This practical hands-on workshop of 2 intensive days gives attendees an opportunity to practice all activities associated with being an assistant film accountant, gaining a thorough practical understanding of the entertainment general ledger software and much of the terminology. The immediate follow-up of 6 live on-line training webinars brings you into a senior level of Film Accounting through managing the Film Budget and Cost Report (the financial statements of film productions).

SMALL CLASSES OF LESS THAN 20 PEOPLE

The classes are small and all attendee’s questions are addressed, providing the attendees with a controlled and friendly environment to learn the film production industry specific practices and terminology.

TAMPA BAY – Sat/Sun May 2nd and 3rd – 2015

I hope to see you there. Click here for more info.

 

Cheers / John

 

PS: For more info on the life of a Film Accountant see my article at https://filmproduction.wordpress.com

Film Payroll – SAG Day Performers

BIG DEMAND FOR FILM PAYROLL ACCOUNTANTS:

There just aren’t enough film payroll accountants trained to fill the demand, not only in the new booming production centers of Louisiana and Georgia, but also in the more traditional centers of New York and Los Angeles. Today (March 27th, 2015) I see listings on Emily’s List for payroll accountants in Baton Rouge, New York and Long Beach. Click here to see Emily’s List.

SAG PAYROLL CALCULATIONS ARE BASED ON EXACT RULES

Calculating SAG Payroll is the litmus test of who can actually be a Film Payroll Accountant. It requires an ability to find, read, interpret and apply the rules for payroll as written in the SAG Codified Basic Agreement. The references of what, and how, to pay SAG Day Performers can be confusing, especially without a helping hand nearby. For the first few days doing of SAG payroll it’s like the first day of Trigonometry in high school!

PAYROLL WORKSHOPS AND ONLINE PAYROLL COURSES

After doing quite a few live weekend workshops on film payroll I have re-designed my online course to follow those succesfull actions. Essentially, I have found that my students learn by watching me on the board, and then doing it themselves… repetitively.

How It Works

How It Works – SAG A Online Payroll Course

LOTS OF VIDEOS AND PRACTICE:

So I have made 2 1/2 hours of a slew of video clips, all on the SAG payroll rules applied to Day Performers (called Schedule A performers in the big codified basic agreement).

Have a look at the video describing how it works.

For more info see my web page at http://www.talkfilm.biz/filmworkshops9.htm

Cheers / John

 

52,000 Visits in 2014 – My Thanks to All Who Visited

The WordPress.com stats helper monkeys prepared a 2014 annual report for John Gaskin’s  blog, “Film Production and the Money”.

 

Click here to see the complete report.

Film Financing Series – Don’t Forget the Tax Credit Audit

INDIE PRODUCING – TAX CREDITS AS FINANCING

Most of us in film production have a very strong interest in the process of applying for the various State Film Tax Credits. It is a very real source of financing that can be estimated in the early stages of development, and is a big part of any Indie Producer’s job.

INDIE PRODUCING – PREPARING FOR THE CPA’S TAX CREDIT AUDIT

The Indie Producer can usually find someone to lend the production company up to 85% of the total “Estimated Tax Credit”; however, the lender will hold back at least 25% of the agreed amount (i.e. hold back 25% of the 85% financing) until the final CPA audit has been accepted by the State. The material to audit must be prepared by the film production accountant, with input from the Indie Producer, and presented to the CPA in the format required by the State. This preparation for the final audit is just as much part of producing as is arranging for the initial financing.

IT IS AN AUDIT OF THE COSTS PRESENTED IN THE “COST REPORT”

Effectively, the CPA is auditing the “Cost Report” produced by the production accountant. Additionally, the State may want the costs presented in specified templates, or in a cost report format of their own choosing. Remember that it is not up to the auditor to prepare schedules, or to find material to audit. It is up to the Producer and film accountant to present the appropriate schedules, cost report and original documents for audit. The producer who has not planned for the effort it takes to have the costs presented to the CPA will be over-paying the auditors, loan interest and delaying the final tax credit awards.

A sidebar to this blog is the audit of the Indie Producer’s relationship with the vendors, and of any economic rewards the Indie Producer may have received, even if seemingly legal. This is something that all States are vigilant about, especially Louisiana.

opinionWHAT DOES THE STATE REQUIRE TO SUCCESSFULLY COMPLETE AN AUDIT

(Note: For non-accountants, “AUP” in the picture opposite means “Agreed Upon Procedures” – these are the procedures required to be performed by the CPA before the State will accept the application for the final tax credit). See the video. Each State has its own audit procedures. Some States go so far as to audit the records themselves, without the help of a CPA. I have taken 5 States as a sample and I’ve prepared links to the appropriate schedules required by the State, as well as the audit procedures required. See http://www.talkfilm.biz/statelinks.htm

In addition I have carved up a short intro film, less than 3 minutes, from one of my online courses.

The web page and the film clip will give both Indie Film Producers and CPA’s an introduction to the process of auditing the film production’s cost report. A vital step in the financing of your Indie film.

For more information and coming workshops see my web site at http://www.filmaccounting.com

Cheers / John

Follow

Get every new post delivered to your Inbox.

Join 1,420 other followers

%d bloggers like this: