A Key Film Accounting Task – The Hot Cost

One of the daily tasks of a Film Production Accountant is to prepare a “Hot Cost”.  It’s a major task that would seem to be impossibly grueling, unless you knew the system of things that is behind the Hot Cost.

As an exercise, recall your favorite movie scene, then try to imagine what it would take to estimate the costs of all that scene’s cast, extras, crew  of every kind, as well as the various gun battles, sinking ships, etc etc. Well, that’s the task assigned to the Production Accountant on a daily basis. It can be a challenge, especially since the Film Accountant is expected to send out the report by lunch time the next day.

How is that even possible?

In my opinion the task becomes not only possible, but routine for four reasons:

A well drilled and standardized reporting system unique to the industry.

The daily film and television production reporting system has been perfected over the last century. It could even be described as militaristic. The primary tools are the Shooting Schedule, the Call Sheet and the Daily Production Report as well as the SAG cast report called an “Exhibit G”. The Production Accountant knows how to pull off the information needed to prepare a Hot Cost within 2 to 4 hours.

A working understanding of the Union and Guild Payroll Rules.

In addition to the well known guilds (SAG, DGA, WGA) there are several different union locals under the IATSE umbrella (International Alliance of Theatrical & Stage Employees). The cast and crew regularly work in excess of 12 or 13 hours, resulting in numerous penalties that requires a familiarity with union and guild rules, so a thorough understanding of those agreements.

A hands on familiarity with all costs as they occur 

The Production Accountant works with a team that processes purchase orders, timesheets, credit card/petty cash reports, etc. and every document is initialed or signed by the Production Accountant. All of the costs flow into a unique general ledger software system used throughout the film and television production industry. 

A thorough grounding in the line-by-line items in the Approved Budget

 Once the costs are gathered together they need to be compared, line-by-line, with the Approved Budget for that particular production. The Production Accountant not only is a major contributor to the preparation of the Approved Budget, but he/she and the team of assistant accountants use the Approved Budget every day as they code costs to be entered to the general ledger system.

In summary, a working understanding of each of those four categories provides the Production Accounting Accountant with the ability to comfortably pull off the Hot Cost in less than a few hours.

If you’re interesting in taking the first step towards each of these categories above, come to our Film Accounting 101 Weekend Workshop, coming up in Chicago in May, 2018..


To find out more, check out http://www.filmaccounting.com

Cheers / John




Film Payroll Accountant – Most In-Demand Job in Film Accounting

There aren’t many ways to assess the demand for film production accountants. The film business is really a word-of-mouth industry. Getting verifiable statistics of the demand for those who work at the various levels of film production accounting are usually hard to find.


However, there is one source that many studios, producers and production accountants have used to find available film accountants. It’s referred to as “Emily’s List”. The postings are looking for various levels of film accountants to work across America, and even up into Canada. The internet address for Emily’s List is at https://sites.google.com/site/ricegortonpictures/film-tv-prodn-accounting-listings-1


I went through the last 120 listings or so, from Sept 24/14 backwards to Aug 14/14, to discover how many requests were for Payroll Accountants. I found that 4 out of 10 listings are for either a Film Payroll Accountant, or for a Film Payroll Clerk. That makes the other 6 out of 10 listings shared by Key Accountants, 1st Assistant Accountants, 2nd Assistant Accountants and File Clerks. Wow…. that proves to me that the Payroll Accountant is a scarce commodity.


As you can see from my other posts, film payroll accounting is all about knowing how to calculate the “Gross Pay” – that is, the Overtime Hours multiplied by the contracted rate, plus any meal penalties and rest violations. You won’t need to know about government and union withholdings and contributions – all of that nasty stuff is done by the payroll service.


So, the task becomes knowing how to calculate union payroll, and that’s all we do for 2 full days – right from beginning to end. You will be left with all of the reference material for SAG, DGA, IATSE Area Standards, and IATSE Low Budget Agreement, as well as on-line access to the full courses and materials for future reference. (A Michigan Teamster Agreement is reviewed at the end of the 2nd day; however, after doing the above it seems pretty simple).

I did a screen recording to give you a better idea of how the Film Payroll workshop works – see this short YouTube video:  http://youtu.be/GcwXoq0cRE8

The payroll workshop is over the weekend of Nov 8th and 9th, 2014 in Toronto; and again on Feb 7th and 8th, 2015 in Atlanta.

Hope to see you there!

For more info you can check out my web site at http://www.filmaccounting.com/filmworkshops6.htm

Best / John

Film Accounting – Georgia and New York


Georgia Governor, Nathan Deal, is solidly behind the film tax incentives in Georgia, according to a Georgia news release this month. “Not only has this industry created jobs and investment opportunities for Georgians, it also has revitalized communities, established new educational programs, tourism product and more,” said Deal. “I will continue my commitment to growing this industry and to developing a film-ready workforce to meet the needs of the productions that are setting up shop in Georgia.”


According to the Motion Picture Association of America (MPAA), the motion picture and television industry is responsible for more than 77,900 jobs and $3.8 billion in total wages in Georgia, including indirect jobs and wages. Nearly 23,500 people are directly employed by the motion picture and television industry in Georgia, including 8,188 production-related employees. These local businesses include technology, lodging, real estate and food service.


Governor Cuomo has been behind New York legislation which has allocated $420 million per year for the calendar years 2015-2019. Louisiana is also booming, at least as much as Georgia. Other States with promising film production statistics are Pennsylvania, Ohio, Illinois, Alaska and New Mexico. Three other States with very good film productive incentives are Massachusetts, Florida and Alabama. Check the incentives map here for current tax incentives by State.


All this is creating a demand for Film Production Accountants. Film accountants generally train through a series of apprenticeships. A CPA designation is not a requirement; although having a CPA designation would definitely mean a faster rise through the ranks. How do you get your foot in the door? The biggest complaint I hear is, “The Key Accountants only want to hire experienced assistants.” So, the assistants are imported from out-of-town.


A solution is to “get up to speed” in workshops like these, learning the various film accounting techniques by practicing in a controlled environment. We use the unique proprietary film accounting software used in film production, taking the time to clear up the industry specific terms, reports and processes. (Note: this software cannot be purchased, only leased).

See http://www.filmaccounting.com for more information.

Cheers / John


Crossing Over to Film Accounting-Film Budgets

The film and television approved budget reflects what the financiers have given you permission to spend in order to create a product of a specific quality. Throughout the production process the Producer is managing that budget, and the Film Accountant is swiftly comparing the actual costs with that budget on a line-by-line basis. Both of these professionals must be thoroughly familiar with each others duties and responsibilities.


Above the Line

Above the Line

The best way to really know how to manage a film or television budget is to know how to create one from scratch. But … that is a time-consuming task and really isn’t a requirement to being a good Producer, nor a good Film Accountant for that matter. What’s vital to exist as a Producer? It’s being so familiar with the budget that one can manage any type of cost, within any number of layers, in any film or television budget that you are given. This is not as easy as it looks in a chaotic film shooting environment.


By sure I mean certain and stable, especially when measuring the costs against the approved budget – all in relatively unstable conditions. Again the film accountant may never have created a budget from scratch; however, the accountant better be darn sure of where every type of cost is located and in what layer of each budget under his/her control.


So the first step is to know the overall format of every film and television budget anywhere that I have worked or seen budgets – USA, Canada, Europe, South Africa and Australia. We use a professional budget in my workshops which you will have a pretty darn good grasp of by the end of any workshop. At the risk of telling you something that you may already know

Budget Topsheet

Budget Topsheet

the breakdown of sections of all film/TV budgets are:

  • Above the Line
  • Below the Line Production (also called Shooting Period)
  • Below the Line Post Production
  • Other (Insurance, Legal, Interest costs, etc)


For you non-accountants the chart of accounts is a listing of all account numbers and account descriptions. I bring it up only because all of the Major Studios and Independent Producers have developed different Charts of Accounts. It’s a bummer, because as soon as you’re very familiar with the account numbers in one budget, another budget will use an entirely different Chart of Accounts.


The best way to learn thoroughly learn about film budgets and cost controls is to practice in a controlled environment. See my web site for workshops, live webinars and online self-study. Go to http://www.talkfilm.biz



Film Accounting 101 Workshop – Next Stop Orlando Oct 12/13th – 2013


The film accounting week-end workshop is hands-on training using a common proprietary general ledger software used in the Film Industry. You’ll be doing exactly the same thing all assistant production accountants do – all of the details are practiced in a controlled environment.


  • Film Accounting practices, processes and work-flows are generally the same throughout North America (if not the world).
  • We DO in the workshop what any assistant accountant must DO in the actual working environment of any film or television production.
  • After 2 days of practical ‘doingness’ you will be feeling pretty good about walking into a film production accounting office as an accounting clerk or a 2nd assistant accountant.
  • As an additional option you can also attend the 6 live on-line webinars after the weekend training which will take you into the next level of managing a film budget and cost reporting to the financiers.


In addition to having the skills to break into the film accounting business, you will also receive:

  • my ebook “Walk The Talk”, used by the Peter Stark Producing Program at the Univ of Southern California
  • multiple formatted film budgets
  • +50 practical Accounting & Legal Form Templates
  • accounting policies
  • flow charts of film accounting systems
  • a typical film production organization chart
  • a booklet in pdf on Managing Film Budgets
  • a booklet in pdf on Managing Cost Reports (a “Cost Report” is the weekly financial report card showing detailed and summarized information on the variances from budget as well as prediction of the final costs expected)
  • SAG payroll templates
  • IATSE Low Budget payroll helper template
  • cashflow templates
  • hot cost templates
  • enjoy a weekend in Florida at one of the best conference centers in Orlando
  • etc.

I hope to see you there. You can check out the details of the course by visiting my web site at CLICK HERE FOR MORE INFO

Cheers / John

Film Accounting 101 – Degrees Are Not A Factor

The profession of Film Accounting is arguably the last accounting profession on Earth, where you can earn over $100,000 a year, WITHOUT a degree of any kind – however an apprenticeship of 2 to 5 years is common. As an aside, last Friday I was talking to my current Unit Production Manager on a fairly big television series production who told me that she didn’t finish high school – furthermore she makes more than her two siblings who both have Masters Degrees. Just to give you the concept how little anyone cares about degrees in the film production world.

Sorry, I know them’s fightin’ words …. but beyond knowing that you can complete the things you start, no one cares where you went to school, what you took, or even if you didn’t. Yes, it’s a fun conversation breaker, but really … no one hires on that basis.


I get asked this question a lot. Again, there isn’t a straight forward path to take. There aren’t any head hunters or series of courses to take at specific colleges/universities. I think that there should be, with practical drills and applications – but there isn’t. Why? Hmmmm … excellent question. Film production people are a breed that believe in getting a valuable final product at any cost in a defined unit of time – and, they don’t see that kind of attitude coming out of colleges; at least, not in a large percentage of cases. Most film people truly believe that if you can’t walk into the job and DO it,(without too many mistakes), then you’re not going to make it and they’ll let you go and try someone else.


Yup. I say that, too. That’s why I make a special effort to train people BEFORE they get hired. There isn’t any money set aside in the budget to train someone. Each crew member needs to stand on their own 2 feet as soon as they walk on board. The attitude is – if we didn’t badly need you we wouldn’t have hired you, so get the job done and if you’re slow then work harder-longer.


It’s a fact that if you get past the first few productions, and are still standing, that you’ll be in demand. It’s tough to find someone as tough as me and thee. If I find someone who can take the rapidity of workflow, deal with it, that person is placed on my speed dial for the next production I’m on. It’s a fact. I have a true story about a CPA in Detroit who did one of my courses, suffered through probably two of the worst low-budget messy productions ever in Michigan, came out the other side, then participated in a huge film production where everyone loved her. She ended up with a very good full-time job, in a jobless town (Detroit), working with the film board to keep the producer’s honest with their budgets and state tax credits. Like I said, the winners reap big.


Learn something about the business before you jump – especially if you’re looking at film accounting as the route into the ‘biz. Try to accept contracts that aren’t impossible productions run by rookie producers, or, if you DO end up with an impossible production, work your way through it with killer hours and take the abuse – because at the end of it you’ll be recognized as ‘da dude – people like me will look you up and bring you into the fold.


I have knocked myself out coming up with a training agenda in film accounting, film budgeting, managing film production cost reports, etc. Have a look at my courses on http://www.talkfilm.biz

I’m not sure in what time period you’re looking at this blog – so check the link to see if I have something for you, near you, soon. (At the time of this writing the next two courses are Sept 22/12 “Film Accounting and Auditing”, then on Oct 20th and 21st “Film Accounting 101”.

Click here to see more.


The New Dearth of Film Payroll Accountants

Today I spoke with a representative from Quebec who has asked me to deliver film production payroll training in Montreal. I knew that this was a need in the newer tax incentive States, but I didn’t think it was so prevalent in other more established film production centers. This has also occurred in Georgia, Louisiana and Toronto.

I’m aware of the lack of payroll accountants in many places but I was surprised about Montreal. I have worked in Montreal about 8 times and I’ve always been impressed with the level of competence of the film accounting assistants in that city. So, it got me to thinking – what’s with the dearth of payroll accountants  that keep hearing about? Is it the demand from the financiers to have more skilled payroll accountants or is it just that we of the old guard are retiring?  Or, maybe it’s just that the productions are leaving Hollywood more and more and need a more local film payroll people?

Probably a blend of all the above, with special emphasis on the last point. At any rate it spells opportunity to you guys out there who want to get into the ‘biz but haven’t found a foothold.

Film Payroll is just learning the rule of the specific unions and working out the Overtime, Meal Penalties and Rest Period Violations. You don’t need to know anything about the various producer and employee withholding and contributions to unions and governments. It’s really the easiest payroll accounting job anywhere when compared to other big businesses – well paid, too.

I do a lot of film payroll training. Come to my next one? See my web site for details.



Emily’s List – About 43% of All Listings Are For Film Payroll Accountants

As in any job in the film industry, you need to find a way to reach potential employers. For film accountants one of the most common methods of finding jobs is to check-out Emily Rice’s posts on her Google Group – many of us refer to it as “Emily’s List”, although technically it is the Rice Gorton Pictures Google Group.

The internet address is at https://sites.google.com/site/ricegortonpictures/film-tv-prodn-accounting-listings-1

As you’ll see when you go to the web site, you can either “Subscribe” to posts, or simply put the link on your Favorites and check it out whenever you have a moment.

I was talking to an old friend who had moved to Atlanta many years ago. I called her up to ask her about doing a workshop in Atlanta and what the film production environment was like there. Right away she said, “Local Payroll Accountants are really needed – just look at Emily’s List, they’re always asking for locals who know how to calculate payroll.”

So … I did a little home work. I checked out several pages at the top of Emily’s List and several pages at the bottom of the listings. Out of a sample of 120 listings, 52 were for a Film Payroll Accountant. That’s over 43% of the listings are for local Film Payroll Accountants.

As you can see from my other posts, film payroll accounting is all about knowing how to calculate the “Gross Pay” – that is, the Overtime Hours multiplied by the contracted rate, plus any meal penalties and rest violations. You won’t need to know about government and union withholdings and contributions – all of that nasty stuff is done by the payroll service.

So, the task becomes knowing how to calculate union payroll, and that’s all we do for 2 full days – right from beginning to end. You will be left with all of the reference material, as well as on-line access to the full courses and materials for future reference.

I did a screen recording to give you a better idea of how the Film Payroll workshop works – see this short YouTube video:  http://youtu.be/GcwXoq0cRE8

The payroll workshop is over the weekend of Oct 15th and 16th in Atlanta.

Hope to see you there!

For more info you can check out my web site at http://www.talkfilm.biz

Best / John

Film Production Hot Costs – Webinars?

A young man, newly starting as a Key Production Accountant, asked me about Hot Costs. Below is the response that I wrote to him. It occurred to me that a lot of people have asked for a template of the Hot Costs that I use and perhaps there is a demand for a webinar on Hot Costs. Have a look at the info below and please give me your comments.


Hi, Erik. Helene passed along to me your emailed questions. First of all, I’d like to congratulate you on your new key accountant position.

1. On the Hot Cost template that I sent you the 0.74 is a conversion rate of CN$ to US$. For your purposes make it a 1.

2. TA ia “Turnaround”, a common term for “Rest Violations”.

On your question about doing a webinar on Hot Costs – I like the suggestion.

Background of Hot Costs:

The basic concept behind any hot cost is to estimate the cost of the actual day with the budgeted day. Labor is the biggest area looked at. In any labor calculation (cast or crew) you’re looking at:

– Overtime

– Meal Penalties

– and, Rest Violations (Turnaround).

 Over the years I’ve worked out this particular format for myself, but it doesn’t have to be as elaborate. For instance, when Hot Costs first started to be used, in the early 90’s, myself and the UPM would sit together and rough it out with a few pencil scratch marks on the back of the daily production report (i.e. the average time for all grips and elec’s was 14 pay hours x 11 of them at an average rate of pay, then compare that result with the budgeted number of pay hours x the same average rate of pay. We’d do that for each department, as well as the drivers, add it up and say – there’s your number).

 However, as the majors grew more and more cost conscious we were forced to become more and more detailed oriented. Also, some UPM’s and studios will challenge your Hot Cost results, so it behooves the production accountant to have a tidy schedule ready to answer their questions.

Film Payroll and Hot Costs:

I’ve never done a workshop on Hot Costs, only because you first need to know Film Payroll, then you need to know “If” statements in Excel. So, the course on “how to do Hot Costs” reduces to either, or both, a film payroll workshop or Excel programming workshop.

 Regardless of your geographic location, I teach all the fundamentals of film payroll (as well as film accounting, managing film budgets, etc). The unions covered are:

SAG, DGA, IATSE Low National Budget and IATSE Area Standards rules. (i.e. not the West Coast IATSE Basic Agreement, nor the New York locals). NOTE: The IATSE Basic Agreement as applied on the West Coast, and the New York union rules, are very similar, but there is variation among the Basic Agreement Locals which can be looked up once you understand the basics of film payroll.

Let’s see if others are interested:

Having a webinar on Hot Costs is a good idea, though. Hopefully, those who attend will already have a handshake idea of film payroll, as well as a good grasp of Excel.

 I’ll propose it on my blog and see what sort of response I get.

 Thx for your kind words about the usefulness of the recorded videos of the on-line webinars. I’m pleased that they helped you.

Best / John

Presenting the Film’s Weekly Cost Report-#7 of 7

Over the last 10 years, or so, Film Director’s have slowly started to be on the weekly distribution list to receive the weekly cost report  – especially by the Major Studios (Disney, Warners, Universal, etc.). But, hey, very few film directors have a clue what to do with it. (Mind you, no one else but a chosen few ever get to see it, so why would the Director know about it?).


The poor director who gets a copy of the film production’s Weekly Cost Report is caught up as a character in a living ‘Dramatic Irony’ (per my dictionary that’s: ‘the irony occurring when the implications of situation, speech, etc. are understood by the audience but not by the characters in the play’.) The audience (the Studio, and to a lesser degree, the Producers and Production Accountant), feel that the Director/Department Head/etc. (the characters in the play) should know what’s going on with cost over-runs, or cost savings, but those poor characters in the play only use the cost report as a place mat for leaky coffee cups, agonizing the outraged audience.


Okay, so I’m being overly dramatic here, but…knowing how to read and influence the presentation of the Weekly Cost Report is a very important key to surviving, and expanding, in the film production business. It really doesn’t matter your position in the film industry, if you work in film & video production at all, you need to be familiar with the basics of how to present your costs incurred in the best light. If you gleaned one thing from the previous articles, let it be this:




All right. I promised you a bit of practice in this final article of this series. So, let’s investigate ways to ‘direct’ the costs of producing your film, regardless of your position in the film industry.


There are several ways to categorize the ways you can ‘Direct’ the costs. In all of them you’re looking hard at the Estimates-to-Complete. Have a look at the chart below. It’s a typical representation of the Electric Department of any Cost Report: (if your computer screen sees this chart as fuzzy, then you can either print it out – the print on the page shows very clearly – or click the attached PDF file for page 92 of my book).


Keep in mind that you’re looking for one of two things,


(i) Available ETC’s (Estimates-to-Complete) which can either be used to satisfy the Director’s creative vision more effectively, or to cover off known cost overruns in other areas, or


(ii) Under estimated ETC’s which when found, allows you the luxury of not being blindsided with an embarrassment but rather grants you the ability to plan an offsetting cost savings.


 So, how do you look at this department to see if there’s any fat in the Estimate-to-Complete?


As you might expect, about 25% of the production departments are some form of labor cost. Labor is usually paid the week after it’s worked (the only exception is New York city). Look at Column 3, the Actual Costs This Period. The amounts in the first 4 lines are what the crew in the Electric Department is paid for the previous week’s work. 


Look at the Best Boy Electric line – you can see in Col. 3 that he was paid $3,060 for his work last week. So, rounding to an easy number to work with, we can say that he will probably make $3,000 per week for the rest of the shooting period + let’s add another week for wrap (wrapping out the equipment, ensuring there are no missing rental items, etc.).


Now, still looking at the Best Boy’s labor line, have a look at Column 7, the Estimates-to-Complete – you can see that we have $21,930 left in ETC’s to pay for the Best Boy’s labor for the rest of the show. Again, rounding to an easy number to work with, we can say that there’s $22,000 left to pay the Best Boy.


Here is the simple rule that Producers and Production Managers use all of the time:

Take the rounded number in the ‘Actual This Period’ column and multiply it by the number of weeks left to shoot + 1 for wrap. Compare that number with a rounded amount of ETC.


In the Electric Department example above let’s say that there are 6 weeks left to shoot and one week of wrap for a total of  7 pay-weeks to go.


Best Boy $3,000 x 7 Pay-Wks  =   $21,000    

Compared to the ETC               =   $22,000


Nope. No fat there; but, at least we’re not in trouble there, either. After practicing this for a while it only takes about 20 minutes to go through all the labor accounts in a 12 page cost report, which will tell you a surprising amount. Anyone who plays cards, like bridge or whist, will tell you that this is child’s play.


One of the labor accounts in the Electric Department is in trouble – the projection of the labor cost is quite a bit less than the ETC. Can you tell which one? (If not, check out page 93 of my book.)


When projecting the labor cost in this way keep in mind two things:


1.It doesn’t work on accounts that have on-again-off-again labor, like Riggers, Special Effects labor, Construction labor, Stunts, etc. However, it does cover most of the crew.


2.Allow a little for ‘hard’ weeks and for ‘easy’ weeks. For instance, in our last example you could have said to yourself that the Best Boy had a particularly hard week last week, and reduce the amount. But, don’t get too complicated. It’s just a quick analysis tool.


I call this procedure ‘Projecting the Labor Cost’ rule. It’s not a new thing. Producers, UPM’s, and Department Heads use this rule every week in film & video productions everywhere. It works.


There are several more simple procedures to ‘direct’ the costs. They all work just as easily. I call them:


-Offsetting the +/- variances within the department

-Offsetting the +/- variances to the bottom line

-the Hot Cost savings or over-runs

-Projection Through to Completion

-Projected Fringes Technique

-The Missing Purchase Order

and more.

They’re available in my book – see my web site here “Walk The Talk”. All of them are simple but effective.

Visit my web site at www.talkfilm.biz. To buy my E-Book “Walk The Talk”, click here , for the full information and training on ‘Directing the Money’.
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