Actuals are the amounts a business actually recorded for a period, the revenue recognized and the cost incurred as they stand in the general ledger, as distinct from the budgeted or forecast figure set before the fact. The federal cost accounting standards put that distinction in writing: actual cost means an amount determined on the basis of cost incurred (as distinguished from forecasted cost), including standard cost properly adjusted for applicable variance (48 CFR 9904.401-30). The same section defines the other side of the pair, estimating costs, as the process of forecasting a future result in terms of cost, based upon information available at the time.
Commodity markets use the word for something unrelated. There, actuals are the physical or cash commodity, as distinguished from a futures contract (CFTC Glossary), and none of that sense carries into a firm’s ledger.
Where Actuals Come From
Actuals come off the general ledger, and how final they are depends on how far the period has been closed. Before the close finishes, invoices can still be unposted, accruals unbooked and reconciling items open, so the figure keeps moving. A recorded cash figure is not confirmed until the account has been through a bank reconciliation, and the sequence that gets a month to that point is the month-end close.
Once the close finishes and the figure settles, setting it against the amount planned for the period is the budget-to-actual comparison, which belongs to budgeted, and splitting an overhead gap into its components belongs to 2-way variance analysis.
Actuals Versus Accruals
These two are not opposites, though the question comes up because both words attach to the same line item. Accrual is a recognition rule about which period an amount belongs to. Actuals is a status, marking whether an amount was recorded rather than merely planned. So an accrued expense that has been booked is part of that period’s actuals even though no cash has moved. The recognition rules behind the booking are set out in accruals and accrual accounting, and the separate split between a cost being incurred and being accrued is set out in incurred.
What Billing at Actuals Means
Billing or reimbursing at actuals means the amount charged is the cost actually incurred, rather than a fixed fee or a standard allowance agreed in advance. Federal travel rules run the same split, since subsistence is reimbursed primarily by the lodgings-plus per diem method and may also be reimbursed under the actual expense method (41 CFR 301-11.3). Choosing actuals moves the documentation burden onto the claimant, because every expense reimbursed that way has to be itemized (41 CFR 301-11.23).
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