Difficulties In An Construction Audit

Auditors often have a difficult time completing an construction audit due to the complicated nature of the industry as well as the prevelent use of estimates. Construction companies construct items that are often very different from what auditors are used to and it is difficult to provide experience to test assumptions used. For example, if a construction company were to say a building is 50% complete, would you be able to tell from looking at the building? As this is the basis of percentage of completion, an auditor often has to go by these estimates and rely on what an engineer tells him. Therefore, the estimates inherit in the industry are what leads to complications in construction accounting.

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