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Cost Report (Accounting/Variance Report)

by | Aug 5, 2020

Attached Documents

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Cost-Report-Template.xls

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Media-Services_Accounting_Payroll_Tax-credits.pdf

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COST REPORTING

Please follow these recommendations when preparing cost reports:

  • Cost reports should be delivered per your commissioning agreement/payment schedule and itemized to correspond with the contracted budget
  • Provide an accompanying variance report (a category-by-category detailed explanation of all under and over spend).
  • We may require cost reports to be corroborated by recent bank statements and bank reconciliation etc. Production Management will advise.
  • If at any time the cost of a budgeted line item or category exceeds the contracted amount by 10%, or major cost shifting between budget line items, you must contact Production Management to discuss.

Cost reports and supporting documentation should be delivered to your DNI Production Manager. These can be emailed for review, but once approved they must also be uploaded to the Producer’s Portal.

VARIANCE REPORT (Interim and/or Final)  

Are a  brief written explanation of any budget line items that have gone over/under by 10% or more of the original agreed budget.

If at any time the cost of a budgeted line item or category exceeds the contracted amount by 10% you must contact your production manager to discuss measures to bring the production back on budget. You also must contact your Discovery PM if major cost shifting between budget line items are under consideration for approval.    

All and any overages unless pre-approved by Discovery in writing, shall be the responsibility of the Producer.


ACCOUNTING PROCEDURES

Commencing with the date of the Production Agreement and continuing for a period of two (2) years following delivery of the Program Materials to DNI, Producer shall keep complete books of account showing in detail all expenses and charges incurred in the production of the program. DNI may audit Producer’s books with respect to the production of the Program.
All books of account and cost reports shall be prepared in accordance with GAAP (Generally Accepted Accounting Principles). All questions regarding the form and substance of cost reports shall be directed to the attention of the DNI Production Manager on the Program prior to delivery of the relevant cost report to the Company.
Each production is responsible for establishing a credit rating with their individual vendors, independent of DNI. DNI should not be referenced on credit applications, and does not guarantee credit worthiness or payment to vendors. 

 

BANKING – US ONLY

The Budget Contribution provided in the Production Agreement shall be deposited by Producer in a segregated bank account set up exclusively for the production of the Program (the Production Account) and shall not be co-mingled with any other funds of Producer which are not directly connected with the production of the Program. The Production Account shall be deemed a trust fund for the exclusive benefit, and to pay the claims of, creditors of Producer whose claims arise from the production of the Program. Upon DCL’s request, Producer shall provide DCL with proof that all payments of the Budget Contribution have been deposited in the Production Account. Segregated Accounts must have two (2) signatories.

Producer shall promptly return any savings, interest income earned or overpayments immediately to DCL.

If you are using ACH/Direct Deposit to receive payments, you will need to establish one holding account for all DCL payments. Payments are transferred to this account and then the production company has 3 business days to transfer the funds to the applicable segregated project account.

Federal Tax Obligations

These guidelines are provided to assist the production company in meeting its obligations under federal tax law. They are not intended as a substitute for advice from a qualified tax professional. Please consult your tax advisor for details.

General Tax Rule

  • Where a participant/contestant receives goods (including cash) or services of determinable, or measurable, value of $600 or more, tax reporting is required. The $600 threshold is applied to the combined value of all goods and services provided to a single taxpayer in a single tax year.
  • The tax-reporting requirement is created in the year that the goods or services are received by the participant, regardless of when production is completed or when the program is aired. Form 1099 is due to the recipient by January 31 and to the IRS by February 28 of the year following the year in which the goods or services are received.
  • In certain cases the value provided may not be measurable. Where a taxpayer has not received measurable value, no reporting is required.

Tangible Property Provided

  • Tangible property provided to and retained by the participant/contestant is measurable, and therefore reportable, at its fair market (i.e., retail) value.

Example: If clothing is provided to a participant, and the clothing is retained by the participant after the production is complete, the value of the clothing is reportable as taxable income. However, if clothing is provided for use on the program but is not removed from the production or retained by the participant, the value of the clothing is not reportable as taxable income.

Services Provided

  • Services provided to a taxpayer which are commercially available (such as a haircut at a popular salon which offers services to the public) are measurable, and therefore reportable, at their fair market (i.e., retail) value.
  • Where services are provided which are incidental to the production of programming, they may not represent measurable value to the recipient.

Example: If a production company pays for a participant’s tuition at a culinary school and then follows the participant around to document his or her education, that participant has received taxable value equal to the tuition price paid by the general public. However, if the production company pays a famous chef to perform a televised cooking lesson and offers audience members the opportunity to meet the chef and to act as chef’s assistant during the televised lesson, the audience members’ experience, which is incidental to the production, may not have measurable value.