What happens to the WIP variance after the invoice is posted?

QUESTION: We recently discovered that, per our lawyers' directions, some of our legal assistants were manually altering the invoice amount from the invoice properties > entries and adjusting the allocation. By doing so, the amount is quickly and easily adjusted. However, the effective rate of the respective lawyers and paralegals on time entries is changing, and the invoice always has a WIP variance. What happens to the WIP variance after the invoice is posted? 'How would this influence member activity?’

RESPONSE: When the invoice amount is increased or decreased the impact of the change is applied to fees creating a variance between value worked and value billed. If there is a WIP variance for worked values, it is allocated to the affected timekeepers based on the allocation schema. Not every firm has the same allocation schema so depending on your formula, the timekeepers will capture their corresponding gain or loss in their allocated-to measures (billed measures generated by working member, including member activity ones). This gain and loss is also recorded on the GL (its own master GL account).  In conclusion, if a timekeeper records their time accurately, however during the billing process it is decided that the work should not have taken so long and a write-down is required, then depending on your formula that write-down will be reflected as an efficiency loss for the affected members without affecting the hours worked and worked values. This is also reflected in measures like the members working rate which will be different than their effective rate.