Project Accounting is a specialised form of accounting that corresponds to the ever-evolving needs of project delivery, which helps adequately track, report and analyse financial results and implications.
Traditionally, project accounting and its principles were largely used to track and report predominantly large construction, engineering and government projects. Today, project management delivery methodologies have expanded into several other sectors, including financial, technology and legal. Subsequently, project accounting has needed to follow to cover these areas to ensure corresponding financial tracking and financial implications are understood and considered.
The need for project accounting arose as a specialised field from the nature of projects being treated as separate temporary individualised entities set up for the purpose of delivering one or more business products (AXELOS Limited, 2014). As the nature of each project may be different to the business-as-usual activities run by the business; existent management and financial accounting skills were recognised as insufficient to accurately advise on the treatment and financial reporting of a project. Hence, a new field emerged within the accounting sphere – project accounting.