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    Audit of Construction Companies

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    nicole bancoro
    1. The auditor must understand the client and their industry to develop an audit strategy and plan. For construction companies, the auditor focuses on understanding project management and the revenue process. 2. The planning stage also considers the company's going concern status, looking for issues like continuous losses or negative cash flows from operations. 3. The audit outputs are reported to the audit committee, who assesses the financial reporting risks and reports to the board of directors. The committee oversees issues that could impact the external auditor.

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    Audit of Construction Companies

    Uploaded by

    nicole bancoro
    237 views2 pages
    1. The auditor must understand the client and their industry to develop an audit strategy and plan. For construction companies, the auditor focuses on understanding project management and the revenue process. 2. The planning stage also considers the company's going concern status, looking for issues like continuous losses or negative cash flows from operations. 3. The audit outputs are reported to the audit committee, who assesses the financial reporting risks and reports to the board of directors. The committee oversees issues that could impact the external auditor.

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    AUDIT OF CONSTRUCTION COMPANIES

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    1. The auditor must understand the client and their industry to develop an audit strategy and plan. For construction companies, the auditor focuses on understanding project management and the revenue process. 2. The planning stage also considers the company's going concern status, looking for issues like continuous losses or negative cash flows from operations. 3. The audit outputs are reported to the audit committee, who assesses the financial reporting risks and reports to the board of directors. The committee oversees issues that could impact the external auditor.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    237 views2 pages

    Audit of Construction Companies

    Uploaded by

    nicole bancoro
    1. The auditor must understand the client and their industry to develop an audit strategy and plan. For construction companies, the auditor focuses on understanding project management and the revenue process. 2. The planning stage also considers the company's going concern status, looking for issues like continuous losses or negative cash flows from operations. 3. The audit outputs are reported to the audit committee, who assesses the financial reporting risks and reports to the board of directors. The committee oversees issues that could impact the external auditor.

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    Download as DOCX, PDF, TXT or read online from Scribd
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    1. Acceptance of client develops overall audit strategy.

    Output audit plan


    Focus of auditor: Planning aspect
    1. Understanding the client. May specialty din ang construction companies.
    2. Knowing the environment what is considered the peculiarity of the construction company.
    3. Internal control
    2. Planning stage the auditor must also consider the going concern capability of the client.
    Conditions manifesting on the going concern. The more common danger signal: 1. Continuous
    losses 2. Negative na ang she and net cash flow sa operating activities.
    3. Audit output of audit committee. Usually 3 members one chairman. Sa kanila nag rereport ang
    internal audit ng company si audit committee ang magfifinal assessment and will report on the
    board of directors. Concern ng audit committee: financial reporting risk and judgement na part
    ng fs. May impact sya sa external auditor.

    INTERNAL CONTROL

    After ng assessment ng audit risk deretcho sa evaluation of internal control. Focus on


    construction company auditor:

    1. Revenue process ng construction starts on biding. Focus dapat ni auditor na measure nya na may
    reasonable assurance sa bids formulated dapat in compliance with the necessary requirement such as
    estimated cost, revenue and profitability. Questionable if the company bids lower than the minimum
    required. (Adequate documentation and verification especially the estimated cost)

    2. Project management assuming nanalo sa bidding conducting the consruction. Walang nanakaw
    walang wasted man power and walang delay. 10% ang dagdag if natapos ng maaga ang project if
    government same din if delayed.

    3. Substantive testing gathering of supporting evidence.

    1. Visitng the job site.

    2. Specific account title primary concerns such as contract cost estimates on biding, income
    recognition (percentage of completion method), and last concentration on accounts receivables
    specifically aging. (May retention policy and advance payment policy) meron pa din unbilled recievable
    upon finish kelan mo sya pwedeng I bill? Basta may sales covered ng ifrs 15. Ang focus sa construction
    company is the reasonable estimate, quantitative discussion according to standard, earning on
    contracts, contracting progress and completed contract, disclosed dapat ang subsequent collection and
    lastly the backlog of the company it means yung lateness sa schedule of the company.

    Other audit considerations: 1. Capitalizations

    2. Compliance on legal and regulatory pd1746 and regular eo’s.

    3. related party transactions.

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