Auditing is the process company’s conduct to verify the accuracy and validity of your financial information. Non-financial audits can also be conducted to ensure that the company is following the appropriate procedures established by the executive management. Construction companies mix financial and non-financial audits in their construction projects to ensure that buildings are completed according to contractual obligations. Private companies working under government contracts may be subject to more audits in their projects; the audits of the government contract contrast the costs of the material with the rates specified in the contract.
Construction audits can be a lengthy process depending on the size of the project and the scope of the construction contract between the parties involved. The auditors will collect contract information to verify what charges and agreements related to the project are contained in it; deadlines, financing costs and advances are important pieces of information that need to be verified during an audit. It may also be necessary to review budgets, the contract negotiation process, or other predetermined construction processes.
Calculating the percentage of the project carried out is another important step in the audit process. Construction companies may receive periodic payments from their client based on what proportion of the building is completed. To verify the percentage of the building that is finished, it is necessary to inspect it and to interview the masons and supervisors. Another good process check may be to check the materials by hand at the workplace during the visual inspection.
Audits can also review the cost of construction materials used in the project. Construction companies can charge higher prices for materials in construction contracts and then buy lower quality materials to use in the project. In addition, companies can exchange cheaper materials they have at hand on new projects, violating the terms of their contract. These types of manipulative actions are revealed and reported in construction audits. These findings may contain contractual penalties for the construction company, depending on how your client solves these types of issues.
Completed construction projects can be audited to ensure that the cost of the new asset equals the value of all materials and labor spent in the building process. These types of post-build audits help clients determine if extra elements are included in the cost of the project or if some have been left out. These audits also provide a sense of clarity and consistency in projects for the construction company, enabling them to secure future projects with new clients using their positive reputation.