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

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THE FILM PROFESSIONAL ON-LINE TRAINING SERIES – Part 2

TO START – TWO TRAINING TOPICS

There are a variety of skills to start with. I’ve decided to start with Managing Film Budgets (as opposed to creating a film budget). This is a vital step to any emerging producer or film accountant. It’s the natural precursor to actually licking the tip of the pencil and creating your own budget. In this series you’ll learn what a standard film budget looks like, how the columns are arranged, how to manipulate a budget as a manager, and how to control the processing. In 90% of the professional film projects you’ll work on, the budget will come to you in some kind of form – then you’ll need to massage it, have changes made to it, etc. That is you’ll need to manage it until it becomes “Locked” prior to the first day of production.

  1. Production Managing the Film Budget and Cost Reports – there are tons of experienced people who are ready to produce in some capacity, or who have the ability to Production Manage the physical production; however, many of those same people experienced in physical production of film and television haven’t any experience in managing budgets and cost reports. That’s a recipe for disaster and a short career. It’s also a very limiting factor to assistant film accountants who want to upgrade to the key film accountant. I will offer you a training solution with a minimum of inconvenience to your busy schedule. In this topic, for now, I am only doing the “Managing” series of webinars. Let’s leave the detailed budget preparation for later – also, I first need to ask permission from Movie Magic to use their software.
  2. Daily Hot Costs (Definition: a daily summary of the labor costs as compared to budget for the shooting crew as well as a way to declare other known over or under budgeted cost items; a working knowledge of cast and crew guild/union rules is required).

These vicious little monsters are the bane of every film accountant, Line Producer and UPM (Unit Production Manager). The Hot Costs have become VERY important to the studio production executives and financiers at every level. Not only is it difficult to get it done swiftly and accurately, but it’s difficult for the UPM and Line Producer to explain/defend the Hot Cost to the production executives up the line.

Essentially the Hot Cost is a daily cost report comparing the budgeted costs with actual costs for the cast, crew and background extras (and a few other things, but those other things are minor when compared to cast, crew and extras). The Hot Cost is completed every morning by the Production Accountant for the previous day’s shoot.

The Line Producer and UPM need to understand it and sign off on it before the Production Accountant sends it along to both the Production Executives and the Financial Executives (including the Bond Company if the production is an Indie).

First Level of Understanding: There are definitely two different skill sets we’re talking about here. The first level of understanding is simply to be able to read it and manage it. You’ll need a basic understanding of the SAG Rules, and an understanding of the terms “Worked Hours” and “Pay Hours”. You’ll also need a basic understanding of IATSE contracts in general. This first introductory level is for Line Producers, UPM’s and Producers.

It’s not just the job of the film accountant to know what’s going on with the Hot Cost. The UPM and Line Producer are just as much in the hot seat as the accountant is.

Second Level of Understanding: The second, and more detailed level of understanding, is being able to calculate the Daily Hot Cost. This requires a good understanding the payroll rules associated with SAG, DGA, IATSE and Teamsters. It doesn’t mean that you have to be perfect. But it does mean that you understand the rules. So, I have taken special trouble to provide references to exact clauses in the payroll contracts that refer to:

–         Overtime

–         Rest Periods

–         Meal Penalties

These are what I call the Producer’s Three Sins.

In this series we look at each union or guild, one at a time, until we cover the rules associated with Cast (SAG), Assistant Directors (DGA), Crew (IATSE – especially Low Budget National Agreement) – and Teamsters.

In each case I will provide Excel templates and a pdf copy of the appropriate contract. Unfortunately I can’t cover all of the contracts on the West Coast (there are many Locals in California), but I can give yu a familiarity with the contracts and show you how easy it really is to pull out the payroll relevant clauses. What appears daunting is really only a few clauses that are applicable.

RECORDED FOR PRIVATE UNLIMITED VIEWING AND FILE ACCESS

Note that each recorded webinar has attached to it, through an ingenious web site called Screencast.com, all of the materials used in that webinar and all files are easily downloadable – such as template budgets in Excel and MMB, Guild/Union agreements, vital links, gross payroll calculating templates, actual cost reports, template cost reports, etc.

AGENDA- next part

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