Sign In
  • Question

    Can a newly formed small business Joint Venture (JV) rely on the approved accounting system of one of the members of the JV, or must the JV have its own separate accounting system?


    Answer

    A joint venture is a separate entity in and of itself and costs should be presented that way.  It is okay for the joint venture to determine which accounting system to use and using the approved accounting system of one of the members is a good place to start.  However, all costs in the joint venture must be separate from the companies forming the joint venture.  You may have to get the DCAA to approve the accounting system again. 

    The following are some links....the GAO link talks about accounting systems and the SBA link talks about some important things to understand with regard to joint ventures.

    http://www.gao.gov/products/A88853#mt=e-report

    http://www.sba.gov/community/blogs/community-blogs/small-business-cents/venturing-joint-venture-some-need-know-basics

    Open full Question Details