Construction contract audit
The key area in audit of construction contract is the measurement of percentage of completion for recognition of Revenue over time. The company must prepare a so called construction project accounting. It must keep track all the costs incurred project by project, a budget, billing since commencement to the end of the project. Whether input or output method to measure the percentage of completion, the budget of the project is a key and involove judgemen.
To perform the audit is on project base, not invoice base. It is totally different from those manufacturing, trading, wholesale or retailing.