Film/Television Production – Are There Opportunities For CPA’s?

Above-The-Line Budget

Above-The-Line Budget


The purpose of this article is to point the CPA towards the film, television and commercial production industry. Is it worth learning more about this intriguing industry? Are there opportunities for CPA’s? Read on and you’ll discover for yourself if it’s worthwhile pursuing this industry. From that point you can start to learn more about the specific practices and terminology of Film Accounting.


For starters, is it worth looking at “Media Production”? From a total dollar value of Gross Domestic Product, I’d have to answer a resounding, Yes! Back in Dec of 2013 the Bureau of Economic Analysis published the first ever analysis of the value of Arts and Culture. They reckoned that Arts and Culture accounted for $504Billion, or 3.2%, of the Gross Domestic Product in 2011. That 3.2% encompasses everything from advertising to arts education to cable distribution and movie production. To give you some idea of how the 3.2% compares to other industries, the Motion Picture Association of America stated that all of Travel and Tourism at that time accounted for 2.8% of the GDP.

I sifted through the published numbers and came up with an approximate value of $273Billion due to various media “production”: cable, network, feature and advertising/commercial production. See my notations on the table below:

BEA-13-58 Media Production

BEA-13-58 Media Production



On February 6, 2016 the Bureau of Economic Analysis published statistics for 2013 in their document #BEA 16-07.  Here is a quote from the bottom of the second page of that report: “… total inflation-adjusted spending on all arts and cultural commodities reached $1.1 trillion in 2013. That figure was up 2.7 percent from the year before.”

Here’s another shocker for you. It’s a quote from the top of page 4 of the same report: “Employment for all arts and cultural industries totaled 4.74 million in 2013.”

Enough said. There’s plenty of energy in them ‘thar hills!


What is the the cycle of the film industry? How does it go from point A to point B? What really is a film producer and how does he/she need help from CPA’s? What are the common accounting practices and terminology used in film and television production?

The “Overview” course is a 2 hour self-study course which has been very well received, as has been the other courses for those wanting to dig deeper into the nitty gritty (Basic, Intermediate and Advanced).

Watch the video above to see how the course works and it’s content.


The courses have been validated by 4 years of workshops, CPE Sponsor licensing, and numerous testimonials. For more info  SEE THIS LINK.

Some Testimonials:

“We have not worked much in the film industry or film tax credits so thought it would be prudent to get a good foundation. Quite frankly, I did not realize how important it was until I took the first of John’s (self-study) courses. We have a wonderful audit department and plan to look into film auditing to add to our services. I am intrigued and enjoy the nuances of film accounting.” E.E.

The film cycle was especially helpful it IS unique to the industry.” T.S.

The course is a great presentation for an overview.” Z.K.

“I felt the objectives of the class provided good insight into the state film tax incentives and the requirements varying by state, and what the qualifying expenses incurred were.” J.B.




The courses are designed and delivered by a film production veteran, John Gaskin, with experience on over 50 film and television productions in 6 different countries over the past 30+ years, as well as 6 years experience as an instructor in film accounting & auditing,  and managing film budgets. John Gaskin has worked with such greats as Ron Howard (twice), David Valdes (Open Range, Green Mile, Unforgiven), George Clooney (Confessions of A Dangerous Mind) and Gulliermo del Torro (Mama).

For more information, 3 minute videos, course samples, etc. SEE THIS LINK.


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.


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.


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.


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

For more information visit


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


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.


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.


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.


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.


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.

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


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.


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.


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.


(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

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

Cheers / John

California Dreamin’ – Film Accounting For Film Tax Incentives

My congrats to the California Film Commission for publishing the “Expenditure Tracking Tips”. It not only provides film accountants with practical tips to track “Qualified Expenses”, it also provides a framework of understanding for external auditors who have never been exposed to film and television production.

For film accountants who have completed film and TV tax credited productions in other States (and Provinces), the various rules and processes of capturing and reporting the “Qualified Costs” start to meld together, but never arrive at a universal standard. So, it’s really good to see a single document which “nails” the entire accounting process in a clear voice. Even though this was written by the State of California, it applies universally throughout the United States and Canada.

There are a few unique, and very practical, points that make me want to brag about CA’s “Expenditure Tracking Tips”. Here are three:

  1. Production Assets (Page 6): This is the clearest procedure that I have seen on how to define, and to account for, “Assets” when applying for film tax incentives. Most of the other States don’t help you out with such a clear direction.


  1. Related Party Transactions (Page 5): When comparing Audit Instructions from Louisiana, Georgia, Michigan, New Mexico, New York and Connecticut, this is the only place I have found which tells you how to address rentals from a crew member. Is a box rental from a crew member considered a Related Party Transaction?


  1. Materials for Verification of Expenditures (Page 7 and 8): Pages 7 and 8 list 20 different types of materials which should be provided to the External Auditor. On that list are several film and television industry unique terms and reports that the External Auditor, or emerging Film Accountant, must gain familiarity with.

My next workshop on Film Accounting 101, is in Atlanta in January. In the workshop we drill the practical basics of a film accountant with a 2 day workshop and 6 live webinars of 1 and 1/2 hours each. To learn more visit .


Cheers / John

Film Accounting – Fresh and Fun CPE


A few years ago the Connecticut Film Tax Credit Administrator, Ed Ruggiero, asked me to deliver a workshop to CPA’s who were interested in performing audits of film productions for the CT State Tax Credit. I did just that, successfully helping several local CPA’s understand the Film Industry and Film Accounting much better. However, subsequent scheduling of workshops for CT CPA’s was difficult. As a result, I put together 4 online courses as a substitute to a live workshop.


Online courses have an earned reputation as being rather boring, slow and sometimes downright monotonous. Most of us would rather have a live workshop during the workweek, with lots of interaction among the other attendees and the instructor. However, getting to the workshop location, and breaking away from the office, aren’t always possible – for you or for me. So, how do you evaluate which online CPE course to take? The easiest way is to check out what your peers have said about the courses.


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. Several students also had other good things to say.


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.”

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.”

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.”

For more detailed information about the online courses see

If you would like to see the stated objectives of the courses I have listed them below, along with links to short YouTube videos describing each of the course’s content.



– John has worked on over 50 film and television productions in 6 countries since 1985 on productions big and small. For more information on his credentials see



An Overview – The Learning Objective Met By 100% of the Students: The participant will understand the overall business cycle of the Film Industry with specific attention on the workflow, general terminology and film industry specific accounting practices of Film and Television Production. No advanced preparation is required. See this short video reviewing the content of this course.

The Basics Course – The Learning Objective Met By 100% of the Students: The participant will be familiarized with the film production processes, forms and control points of a usual film production. With this knowledge the participant will be “up to speed” with the books and records of a usual film or television production.  No advanced preparation is required. See this short video reviewing the content of this course.

The Intermediate Course – The Learning Objective Met by 100% of the Students: (Prerequisite: An Overview) The participant will understand the interaction among the production entity, the approved budget, the production documents (Call Sheets, Daily Production Reports, etc) and the Final Cost Report – prepared by the film production accountant, this is the document audited for film tax credit certification. From this understanding an external auditor will be able to plan the tax credit audit with an understanding of all industry specific factors.  No advanced preparation is required. See this short video reviewing the content of this course.

The Advanced Course – The Learning Objective Met By 100% of the Students: (Prerequisites: An Overview and Intermediate)The participant will have an understanding of various State requirements to certify the production for Tax Credit purposes. From this understanding participants can confidently comply with their own particular locale’s certification requirements. The categories closely examined are Qualified Expenses (Payroll, Non-Payroll, Real Property) as well as Related Party Transactions, Ownership and Sources of Funds. No advance preparation is required. See this short video reviewing the content of this course.

The New CPA and the Film Industry


The new CPA is fully aware of expanding markets and breaking the mold of tradition. The outbreak of videos used to promote CPA firms is witness to an interest in reaching new public. As a result, there is a growing interest in the business of filmmaking. Where are the film companies? What sort of audit services do they need? What are the film accounting principles and practices unique to the industry?


The film industry is generally viewed as Hollywood in America. It’s true that Hollywood drives a big part of the machine, but over the past several years the production of feature films and television programming has branched out dramatically.

There are three primary divisions of the industry:

1. The “Majors”: the Majors both produce and distribute a substantial amount of their own products. They are generally defined as “The Big Six”: Sony Pictures (Columbia), Disney, Warner Bros, Universal/NBC, Paramount, and 20th Century Fox.

2. The “Mini-Majors”: There are always companies that are striving to join the Big Six – such as Lionsgate, Dreamworks and The Weinstein Company. There is also the example of MGM, which has fallen from a Major status to a Mini-Major status.

3. The Independents (“Indies”): The status of “Indie” is a general umbrella of all other film and television production companies. The Indies often approach the Majors and Mini-Majors to land distribution deals, or some form of financing/participation of their projects (usually referred to as “Pick-Ups”.) Successful Indies often make distribution deals with, or even bought outright by, one of the majors or mini-majors. For example, Tyler Perry Studios, an Independent based out of Georgia, has a great deal with Lionsgate, who in turn, has distribution deals with the Majors.


Almost all of the States that offer film tax incentives require some form of audit BY A STATE LICENSED CPA. So, regardless of the relationship of the production company, big or small or in-between, every film or television production requires your services as an auditor in your State (the only exception that comes to me right now is New York State).


The legislation which requires the State licensed CPA very often has the following quote taken from the State of Connecticut (almost exactly the same wording exists for California, Louisiana, Michigan, etc):

“… the auditor must have sufficient knowledge of accounting principles and practices generally recognized in the film, television, commercial and digital media industry.“

The State of Connecticut was at a loss as to how to address this conundrum (i.e. the auditor must have exposure, but has never had exposure before). So, the State administrator, Ed Ruggerio, requires that only those CPA’s who have done my course, “Film Accounting and Auditing” are permitted to be listed on the State web site as qualified auditors for State Film Tax Credits. As much as I was honored by this acknowledgement, it was hard for me to break off my commitments, travel to Connecticut, and deliver a live workshop.


As a result, I have taken much time and effort to break the live workshop into four online self-study courses which are AICPA compliant for CPE. I have taken the material and broken it into the following categories:

Film Accounting and Auditing – 1. An Overview, 2. The Basics, 3. Intermediate/Supervisory Level and 4. Advanced – Film Tax Incentives.

I have worked in the film industry for almost 30 years, in 6 different countries, on every size of film and television production. As a result, I have made every effort to keep the courses from being pedantic or ponderous. From the testimonials I can say that it has been worth the effort.

To find out more visit:

Cheers / John

Section 181 – Must the Production Be in the USA

Someone sent me an interesting Section 181 question on LinkedIn. I thought I’d share the question and the answer her. (She has a project which can be shot inexpensively in the Czech Republic with only minor parts shot in the USA – the project would be using US cast, and many US crew while shooting in the Czech Republic  – who would be taxed at home; so her question makes some sense.)


Dear John,

I am taking the liberty to ask you a question regarding the section
181. Some websites say that 75% must be “shot” in US, others say that
75% of the budget must be “spent” in US. If the tax is based on budget
expenses then our production will qualify. Please be so kind and help
me to clear up my confusion. I don’t want to give wrong information to
the investors while raising funds.



Hi, MarieAnna. I have finally found the time to dig into Section 181 to answer your question. Again, I am not an expert in these matters, so please don’t depend on my answer as legitimate legal or professional advice.

If you go to the Internal Revenue Bulletin 2011-47 at this link  you will see this quote:

“Explanation and Summary of Comments

General Overview

Congress enacted section 181 to promote film and television production in the United States. For a qualified film or television production commenced before January 1, 2008 (a “pre-amendment production”), section 181 permits an owner to elect to deduct production costs paid or incurred by that owner in the taxable year the costs are paid or incurred, in lieu of capitalizing the costs and recovering them through depreciation allowances, if the aggregate production costs do not exceed $15 million ($20 million if a significant amount of the aggregate production costs are paid or incurred in certain designated areas) for each qualifying production (the “aggregate production costs limit”). A film or television production (a “production”) is a qualified film or television production if 75 percent of the total compensation for the production is compensation for services performed in the United States by actors, directors, producers, and other production personnel.”

Note this sentence … “A film or television production (a “production”) is a qualified film or television production if 75 percent of the total compensation for the production is compensation for services performed in the United States by actors, directors, producers, and other production personnel.”

I’m sorry to say that it’s quite clear that the services must be performed in the United States to qualify.

Sorry about that. I sincerely hope that you find another way to get your project off the ground.

Best / John

Film and TV Production – A Growth Area for Accountants

The growth in the film industry is indisputable.


Stats show revenue growth over the past year in both the film and television. The Motion Picture Association of America 2012 stats show the Domestic Revenues have 6% growth from 2011, and 12% growth from 5 years ago. The Global Revenues show 6% growth over 2011.


The MPAA stats show that in 2010 direct industry jobs generated $42.1 billion in wages, and an average salary 32% higher than the national average. Also, there were nearly 282,000 jobs in the core business of producing, marketing, manufacturing, and distributing motion pictures and television shows. These are high quality jobs, with an average salary of nearly $82,000, 74% higher than the average salary nationwide. Those numbers don’t include over 400,000 jobs in related businesses that distribute motion pictures and television shows to consumers. (And … remember that there has been steady growth over 2011 and 2012)


Of the 52 States a whopping majority – 42 States – have some form of film tax incentive. (The naysayers are Nevada, Arizona, North and South Dakota, Nebraska, Kansas, Iowa, Delaware and New Hampshire.)   After working in the film production business for 28 years, and delivering workshops in 7 States, I can say unequivocally that filmmakers need your help to manage the required reports for Film State Tax Incentives, as well as give audit opinions, agreed upon procedures, etc for the certification of their cost reports.


It has been said for a few years now that the digital camera will revolutionize the film industry. There was a time, say just 4 or 5 years ago, when it was only possible to make films with very expensive 35 mm cameras that were bulky, required tons of lighting, dolly tracks, etc. Those days are still with us on the big time film productions, but it is swiftly declining as the major means of shooting film and television projects. This new generation of filmmakers need the accountant’s help.


Even Accounting Firms are doing their own filmmaking, witness Withum’s Mob Flash Dance (really up-beat!) and the Center For Audit Quality’s series – my fav is CAQ – The Financial Statement Audit (very cool comic book style).  These two YouTube videos have had 53,000 and 72,000 views, respectively.


This all spells opportunity. Take a minute to get an insight into the opportunities available for accountants of every status – watch this video.

Auditing State Film Tax Credits

I met with the State of Connecticut’s tax credit administrator, Ed Riggerio, before Christmas. Connecticut had a problem – to find a course which satisfied the following quote in the legislation:

“… the auditor must have sufficient knowledge of accounting principles and practices generally recognized in the film, television, commercial and digital media industry” (Note: this language is common to all State film tax credit regulations).

I have designed a course which references the AICPA’s (American Institute of Certified Public Accountants) auditing statement on “Understanding the Entity Addressed”. The AICPA refers to this as SAS 109 (Statements on Auditing Standards #109). The AICPA also has a statement on Fraud Risk Assessment (SAS 99) where it’s necessary to identify where management has the ability to override controls. I have also referenced SAS 99 into the course.

The course is not structured around SAS 109 and 99. Rather, the course has it’s own layout, but points that are relevant to SAS 109 anmd 99 are brought up and discussed.

In order to understand the Film Industry you really need to understand the Film Producer, the Film Accountant, the Film Budget and the Film Cost Report.

The Independent Film Producer, by necessity, is someone who doesn’t take to “rules” very well – if he/she was a rule-follower they wouldn’t be in the ‘Biz. For someone who is steeped in Standards the Film Producer may seem like a renegade, so lots of examples need to be interwoven into the course.

The Film Accountant is not an “accountant”, as known and thought of by CPA’s. The Film Accountant is a film industry professional who has apprenticed in the film production industry as an assistant accountant until he/she knows every nuance of the money-flows within any film or television production, and how to account for those money flows. The thought processes of a Film Accountant are quite different from a CPA. A Film Accountant is a cross between a Unit Production Manager and a strong bookkeeper. Since the CPA is trying to understand and assess the risks of “material misstatement” the CPA must understand the Film Accountant.

The Film Budget is viewed a lot like a financial/legal document in the Film Industry. It’s the document that the film producer has sweated over for months, if not years, to get the financing together for the film production. It is the foundation of bank loans, contracts made with key cast and crew and is on the lips of every experienced department head approached to work on the production. It sets the bar for the director, the cast and crew. The Film Budget leads the way – … was it based on lies? … was it based on mis-information? … is the account structure appropriate? … was it badly massaged from an earlier budget for different locations? … etc. A Film Budget that misrepresents itself can significantly raise the risk of misstatements all along the line thereafter.

The Film Production Cost Report is what the CPA will be auditing. It is the final “financial statement” of the film production and is a financial representation of the film itself. In the film industry, reading a Cost Report is like reading a report card on the producer and director. It tells the tone of “management” and sets the risk levels the SAS’s are so adamant in discovering.

The course is a one-day course, scheduled for January 29, 2011 in Hartford CT. It solves Ed’s problem. Hopefully other States will look for the same solution.

See for more details.


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