Auditing Construction Contractors

Gain tools and learn concepts to perform and report on an effective audit.

Construction cost has a number of unique cost elements and methodologies that are not found in other audit assignments. An auditor can identify cost protocols that are consistently followed by the audit subject and reasonable under GAAP but are not allowable under the contract agreement, general conditions, or other prescriptive documents. Finally, the notion of sampling coverage can be misleading in a construction cost environment. This presentation will identify what makes construction cost and cost auditing unique and give the attendees the tools and concepts to perform and report on an effective audit. Subjects such as labor costs and burdens, field overheads and home office cost allocations, equipment cost challenges, and how to identify milestones of the project headed for overruns or contract non-compliance issues that are not yet apparent but can be identified with proper audit inquiries.

Learning Objectives

• You will be able to recognize the primary focus of financial statement audits and identify why objective reporting and risk assessment are essential for audit integrity.
• You will be able to identify key accounting issues in construction auditing, including indirect costs, home office overhead, IT cost allocations, and rent expense classification.
• You will be able to differentiate the purposes and applications of construction auditing tools such as job cost reports, contract reviews, and change orders.
• You will be able to recognize the defining characteristics of major construction contract types, including GMP, unit price, and cost plus a fee contracts, and identify how labor costs are determined.