Auditing Construction Contractors: Avoiding Common GAAS and GAAP Deficiencies

Unlike other industries, the terminology alone for construction companies can be overwhelming. Change orders, claims, WIP or CIP (work in process or contracts in progress), retainage, job costs, billings in excess of costs, and costs in excess of billings must be understood, reported, and disclosed. Accounting for and auditing revenue recognition methods, including the percentage of completion (recognizing revenue over time) or completed contract (recognizing revenue at a point in time), can be challenging. Accounting for and auditing cost recognition for bond, mobilization, and uninstalled material costs, including indirect costs, has its unique challenges, along with auditing a contractor's job cost postings. Most importantly, understanding the types of contracts and key relevant accounting and auditing matters is one of the most important steps in the process.

ASC 606 changed the way revenue is recognized by contractors, certain financial statement reporting requirements, and made it critical for auditors to understand the audit process surrounding ASC 606 during engagement planning, fieldwork, completion, and reporting.

Listen as our panel of construction experts explains meeting GAAS and GAAP guidelines while efficiently completing audit engagements for construction contractors.