Chapter 35 Auditing Engineering and Construction Companies.doc

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35
Auditing Engineering and panies
OVERVIEW OF THE INDUSTRY   
ACCOUNTING FOR ENGINEERING AND CONSTRUCTION CONTRACTS   
(a) Percentage-pletion Method,   
(b) Completed-Contract Method,   
(c) Choosing the Preferable Alternative,   
(d) Provision for Anticipated Losses,   
(e) Capitalization of Interest Cost,   
(f) Deferred Tax Assets and Liabilities,   
(g) Financial Statement Presentation,   
(h) New Accounting Standards
ENGINEERING AND CONSTRUCTION CONTRACTS, INTERNAL CONTROL, AND TESTS OF CONTROLS   
(a) Types of Contracts,   
(b) Revenue Cycle,   
(c) Job-Cost and Related Cycles,   
(d) Contract Evaluation and Control, and Costs plete,   
(i) Estimating and Bidding,   
(ii) Job Forecasts,   
(e) Other Controls,   
(i) Regional Office or Job Site Accounting,   
(ii) Job Site Visits,   
RISK ASSESSMENT AND AUDIT STRATEGY   
SUBSTANTIVE TESTS   
(a) Contract Revenue,   
(i) Original Contract Price,   
(ii) Change Orders,   
(iii) Claims,   
(iv) Contract Renegotiation and Termination,   
(v) Contract Options,   
(vi) Additions,   
(b) Contract Costs,   
(i) Costs Incurred to Date,   
(ii) Estimated Costs plete,   
(c) Contract Losses,   
(d) Contract Billings,   
(e) Contract Liabilities,   
OVERVIEW OF THE INDUSTRY
panies, often referred to as contractors, operate in various types of businesses, with varying degrees of risk. For that reason, a contractor should be considered within the context of the market it serves. The construction industry includes the following types of contractors:
Residential building--including single-family and multi-family buildings
Nonresidential building--including industrial plants, hospitals, warehouses, office buildings, and retail and lodging facilities
Heavy construction--including highways, bridges, dams, railroads, airports, refineries, power plants, transmission lines, and water and sewer pipelines
Special trade contractors--including plum