P&L Management Reporting

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account2k
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Joined: 07 Apr 2020, 11:33

P&L Management Reporting

Post by account2k »

Hello, I have been asked to group together 'Wages and Benefits" along with 'Contractor' and 'Consultant' costs for Management Reporting. Is there a common term for this grouping in the financial reporting realm? I wan to title my report appropriately.

Thank you.
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Marek Muc
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Re: P&L Management Reporting

Post by Marek Muc »

Hi, this will be a broad category, especially with consulting fees included. Maybe it's best to label this line in a more descriptive way, i.e. combining the labels of previous lines
JRSB
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Re: P&L Management Reporting

Post by JRSB »

Sounds like they want to know the total 'People' costs// People/Human Resource/Workforce etc?
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Marek Muc
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Re: P&L Management Reporting

Post by Marek Muc »

consulting is often delivered by corporations, not individuals, whereas 'People costs' would imply IMO that we're talking about individuals hired by the entity under various legal arrangements
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anandrocker
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Re: P&L Management Reporting

Post by anandrocker »

I agree with Marek, Its a broad category however, to place a bit of legal perspective into the mix from my experience, Wages and Benefits should only include persons who meet the statutory requirement of an "employee". To determine this we look at the difference between "Contract for Employment" and "Contract of Employment".

Contract of Employment usually means an employer and employee relationship exists through a "means test".

Contract for Employment usually is interpreted as a company to company relationship i.e. registered sole proprietor or an entity with a trading certificate and in other cases registered individuals. Strong Corporate Governance doesn't promote entities to conduct trade with individuals directly.

A few Features of the means test
Economic Reality Test- Whether they supply their own equipment or not. Financial Risk Involved and degree of responsibility
Performance and Exclusivity - Can the individual delegate his work. Can he undertake other contracts while involved with your company
Power to dismiss exists?
Payments considered to be Renumeration or Job?
Organisational Test- Is the individual integral to the running of the company?

After the above is determined, for Management Reporting Purposes and i strongly recommend it for IFRS Reporting also, a distinction and separate disclosure is made between Wages i.e. Employees and Subcontract Costs i.e. Contract for Employment.

Cheers
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