INTRODUCTORY MATERIAL

• PREFACE
• PEER REVIEW OF THIS GUIDE
• HOW TO USE THE GUIDE
• ACKNOWLEDGMENTS
• ACKNOWLEDGMENT OF COPYRIGHTS
• ABOUT THE AUTHORS . . .
• LIST OF SUBSTANTIVE CHANGES AND ADDITIONS

CHAPTER 1: INDUSTRY OVERVIEW

• 100 CONTENT AND ORGANIZATION OF THIS GUIDE
• 101 INTRODUCTION
  • Scope of the Industry
    • The Role of the Accountant.
• 102 PARTICIPANTS IN THE CONSTRUCTION INDUSTRY
  • Owner
  • Design Professionals
  • Contractors
    • Highway Contractors.
    • Heavy Construction Contractors.
    • General Building Contractors.
  • Construction Manager
  • Developer-contractor
• 103 METHODS OF PROJECT CONSTRUCTION
  • Evolution of the Construction Industry
  • Traditional Bid Method
    • Description of the Traditional Bid Method.
    • Strengths and Weaknesses of the Traditional Bid Method.
    • Risk of the Traditional Bid Method to the Contractor.
  • Construction Management Approach
    • Description of the Construction Management Approach.
    • Strengths and Weaknesses of the Construction Management Approach.
  • Developer-contractor Approach
    • Description of the Developer-contractor Approach.
    • Range of Developer-contractor Services.
  • Summary
• 104 FORMS OF ORGANIZATION
  • Sole Proprietorships
  • Corporations
    • Tax Considerations.
  • Noncorporate Ventures
    • Partnerships.
    • Taxation of Partnerships.
    • Undivided Interests.
  • Limited Liability Companies
    • General Tax Treatment.
    • Liability Considerations.
    • Accounting for LLCs.
  • Other Contractor Considerations
• 105 INVESTMENTS IN JOINT VENTURES
  • Advantages and Disadvantages of Joint Ventures
    • Financing.
    • Spreading of Risk.
    • Disadvantages.
  • Accounting for Investments in Joint Ventures
• 106 SERVICES PROVIDED BY CPAS
  • Traditional Services
  • Third Party Users
  • Level of Services
    • Surety Underwriters.
    • Contractor Licenses.
    • Lending Institutions.
    • Cost of the Engagement.
  • Independence
    • Performance of Nonattest Services.
    • General Activities That Impair Independence.
    • Tax Compliance Services.
    • Valuation, Appraisal, or Actuarial Services.
    • Forensic Accounting Services.
    • Extended Engagement and Internal Audit Assistance Services.
    • The Accountant's Ability to Perform the Requested Service.
  • Overview of Factors to Be Considered in Determining the Level of Service to Be Provided
• 107 CONSTRUCTION-RELATED ASSOCIATIONS

CHAPTER 2: CONSTRUCTION CONTRACTS

• 200 INTRODUCTION
  • Organization of This Chapter
• 201 CONTRACT DOCUMENTS
  • Bid Documents
    • Invitation to Bid.
    • Instructions to Bidders.
    • Bid Form.
    • Notice of Award.
  • Contract Agreement
  • General Conditions of the Contract
  • Project Plans
  • Addenda
  • Notice to Proceed
• 202 TYPES OF CONTRACTS
  • Lump-sum Contracts
    • Variations of the Lump-sum Contract.
    • Model Lump-sum Contract.
  • Cost-plus Contracts
    • Calculating Contractor Fees.
    • Model Cost-plus Contract.
  • Other Standard Contracts
    • Advantages and Disadvantages of Standard Contracts.
  • Customized Contracts
    • Advantages and Disadvantages of Customized Contracts.
• 203 IMPORTANT CONTRACT CLAUSES
  • Change Orders
  • Changed Conditions
  • Retention (Retainage)
  • Claims
  • Alternative Dispute Resolution
  • Warranty
  • Bonds
    • Contract Bonds.
    • Types of Bonds.
  • Insurance
    • Workers' Compensation.
    • Public Liability.
    • Automobile Liability.
    • Excess Catastrophe Liability (Umbrella).
    • Builders' Risk.
    • Subcontractor Default.
  • Liquidated Damages
  • Extension of Time
  • Pay-when-paid
  • Termination Provisions
  • Contract Review
• 204 OBTAINING CONTRACT BONDS
  • Maintaining Contact with Bonding Agents and Sureties
  • Providing Information Needed by the Surety
    • Basic Financial Statements and Supplementary Schedules.
    • Interim Information.
    • Nonfinancial Statement Information.
    • Information about the Owners or Key Employees.
  • How Practitioners and Industry Accountants Can Help Contractors Secure Bonding
    • Developing Systems to Produce Timely and Accurate Records.
    • Analyzing Financial Statements.
    • Advising on the Impact of Proposed Transactions.
  • Options Available to Sureties When Contractors Do Not Fulfill Their Obligations under the Contract
    • Advantages and Disadvantages of the Finance Option.
    • Advantages and Disadvantages of the Takeover Option.
    • Advantages and Disadvantages of the Tender Option.
    • Advantages and Disadvantages of the Settlement Option.
    • Surety Analysis.
    • Contract Considerations.
    • Business Considerations.
  • Practitioner and Industry Accountant Services Available When Contractors Do Not Fulfill Contract Obligations
    • Services Available to Contractors.
    • Services Available to Sureties for Nonclient Contractors.

CHAPTER 3: ACCOUNTING FOR CONSTRUCTION CONTRACTS

• 300 OVERVIEW OF THE CHAPTER
• 301 GAAP FOR CONSTRUCTION CONTRACTORS
  • In General Terms, What Is GAAP?
    • FASB Codification Project.
  • What Is GAAP for Contractors?
  • Revenue Recognition Methods Used by Construction Contractors
  • Other Accounting Considerations Unique to Contractors
• 302 THE FINANCIAL REPORTING SYSTEM
  • Determining the Profit Center
    • General Rules for Combining Contracts.
    • General Rules for Segmenting Contracts.
    • Conclusion Regarding Combining and Segmenting Contracts.
  • Field Reports
  • Subsidiary Records
  • The General Ledger
    • The Direct P&L Approach.
    • The Construction-in-progress Approach.
  • Adjusting Financial Statements to a GAAP or Tax Basis
• 303 COST ACCUMULATION
  • GAAP Cost Accumulation Rules
  • Direct Costs
    • Direct Materials.
    • Leftover Materials.
    • Direct Labor.
    • Subcontractor Costs.
    • Other Direct Costs.
  • Indirect Costs
    • Common Indirect Costs.
  • Other Cost Considerations
    • Costs in Cost-plus Contracts.
    • Equipment Costs.
    • Equipment Cost Pools.
    • Selling, General, and Administrative Expenses.
    • Precontract Costs.
    • Cost Adjustments Due to Back Charges.
  • Comparison of GAAP to Tax Cost Capitalization Rules
• 304 REVENUE RECOGNITION METHODS
  • Illustration of the Percentage-of-completion Method
  • Illustration of the Completed-contract Method
  • The Two Methods Contrasted
  • Percentage of Completion and Completed Contract Are Not Alternatives
    • Preferences Established by the Authoritative Literature.
    • Criteria for Reasonably Dependable Estimates.
    • When Completed Contract and Percentage of Completion Are Not Materially Different.
  • Does the Length of the Contract Affect the Method Chosen?
  • Departures from the Basic Revenue Recognition Policy
  • Deciding Which Method to Use for Interim Financial Reporting
  • Estimating Contract Costs and Revenues
    • Estimated Costs to Complete.
    • Estimated Total Contract Revenues.
    • Basic Contract Price.
    • Change Orders.
    • Options and Additions.
    • Claims Made by the Contractor against the Owner.
  • Provision for Anticipated Losses
    • Accrual of Anticipated Losses.
    • Revenue and Cost Recognition Issues Involving Loss Contracts.
    • Illustration Involving a Loss Contract.
• 305 THE PERCENTAGE-OF-COMPLETION METHOD
  • Determining the Percentage of Completion
    • Cost-to-cost Method.
    • Uninstalled Materials.
    • Conclusion Regarding the Determination of Percentage of Completion.
  • Determining Revenues and Costs to Be Recognized
  • Case Study Illustration
• 306 THE COMPLETED-CONTRACT METHOD
  • Determining the Point of Substantial Completion
  • Capitalization of General and Administrative Expenses
• 307 FINANCIAL STATEMENT CONSIDERATIONS
  • Deciding Whether to Present a Classified Balance Sheet
    • Operating Cycle of One Year or Less.
    • Operating Cycle Longer Than One Year.
  • Offsetting or Netting Amounts
  • Unique Disclosures for Construction Contractors
  • Supplementary Information That Is Sometimes Required
  • Derivative Instruments
    • Weather Derivatives.
  • Fair Value Accounting Considerations
    • SFAS No. 157.
    • SFAS No. 159.
  • Financial Guarantees
    • Recognition and Measurement Provisions.
    • Disclosure Provisions.
  • Mandatorily Redeemable Stock and Other Financial Instruments with Characteristics of Liabilities and Equity
    • Deferral and Indefinite Postponement of Certain Requirements.
  • Environmental Cleanup Costs
    • Federal Environmental Laws.
    • Authoritative Literature.
    • Capitalization of Environmental Cleanup Costs.
    • Capitalization of Asbestos Removal Costs.
    • Special Considerations for Construction Contractors.
  • Accruing Environmental Remediation Liabilities under SOP 96-1
    • Determining When to Accrue a Liability.
    • Estimating Environmental Remediation Costs.
    • Allocating Shared Costs among Responsible Parties.
    • Effect of Changes in Laws and Regulations.
    • Technology and Productivity Improvements.
    • Use of Discounting.
    • Claims for Recovery.
    • Effect on Property Impairment.
  • Impairment of Long-lived Assets
    • Classification of a Long-lived Asset.
    • Assets to Be Held and Used.
    • Assets to Be Disposed of by Sale.
    • Assets to Be Disposed of Other Than by Sale.
  • Asset Retirement Obligations
  • S Corporations
    • What Information Should Be Provided a Surety?
    • Illustrated Disclosures.
  • Illustrated Notes to Financial Statements
  • Discontinued Operations and Costs to Exit an Activity
    • SFAS No. 144.
    • SFAS No. 146.
    • Disclosures.
  • Risks and Uncertainties
  • Nature of Operations
    • Use of Estimates.
    • Certain Significant Estimates.
    • Should Construction Companies Using the Percentage-of-completion Method Always Include a Significant Estimate Disclosure?
    • Vulnerability Resulting from Concentrations.
  • Payroll-related Fines and Penalties
    • Requirements of the Act.
    • A Word of Caution.
  • Comprehensive Income
    • Definition of Comprehensive Income.
    • Financial Statement Presentation Requirements.
    • Reclassification Adjustments.
    • Illustrative Financial Statement Presentation.
    • Disclosure Requirements.
• 308 INVESTMENTS IN VENTURES
  • Consolidation
    • SFAS No. 160.
    • Illustrative Statement of Income Presentation of a Noncontrolling Interest.
    • Income Tax Considerations.
  • Variable Interest Entities
    • The Role of FIN 46(R).
    • What Is a Variable Interest?
    • What is a Variable Interest Entity?
    • Assessing the Sufficiency of Equity.
    • Expected Variances in Estimated Fair Value--Expected Losses and Expected Residual Returns.
    • The Characteristics of a Controlling Financial Interest.
    • Determining Whether the Reporting Entity Should Consolidate a VIE.
    • Timing of the Assessments under FIN 46(R).
    • Effects of Applying FIN 46(R).
    • Construction Joint Ventures.
    • Applicability of FIN 46(R) to Income Tax Basis Financial Statements.
  • Equity Method
    • Measurement Using the Equity Method.
    • An Example of Equity Calculations.
    • Expanded Equity Method.
    • Income Tax Considerations.
  • Cost Method
  • Pro Rata Combination
  • Summary of Accounting Methods for Investments in Ventures
• 309 ACCOUNTING FOR SIMILAR OPERATIONS
  • Accounting by Homebuilders
    • Income Recognition.
    • Construction Financing.
    • Points, Commitment Fees, and Closing Costs.
    • Financial Statements.
  • Applying Construction Contractor Accounting to Manufacturing Operations
• 310 COMMON PROBLEMS IN APPLYING CONTRACT ACCOUNTING RULES
• APPENDIX 3A: Illustrative Financial Statements
  • APPENDIX 3A-1: Illustrative Financial Statements Contractor Using Percentage-of-completion Method
  • APPENDIX 3A-2: Illustrative Financial Statements Contractor Using Completed-contract Method
  • APPENDIX 3A-3: Illustrative Financial Statements--Homebuilder
• APPENDIX 3B: Selected Notes to Financial Statements

CHAPTER 4: TAXATION OF CONSTRUCTION CONTRACTORS

• 400 INTRODUCTION
  • Changes in Tax Law and FASB Rules
  • An Overview of the Tax Law
  • Does the Taxpayer Have Any Long-term Contracts?
  • Are Any of the Contracts Manufacturing Contracts?
  • Were the Contracts Entered into after February 28, 1986?
  • Are Any of the Contracts Home Construction Contracts?
    • Home Construction Contracts That Meet the Small Contractor's Exemption.
    • Home Construction Contracts That Do Not Meet the Small Contractor's Exemption.
  • Manufacturing Contracts Are Not Allowed the Small Contractor's Exemption
  • Is the Small Contractor's Exemption Met?
    • Production Period Interest Must Be Capitalized.
    • Does the Small Contractor's Exemption Apply for Purposes of Alternative Minimum Tax (AMT)?
    • Is the Contract for Real Property?
    • The Exemption Does Not Apply to Manufacturing Contracts.
  • Has the Taxpayer Elected to Use the Percentage-of-completion Method?
  • Special 70/30 Rule for Residential Construction Contracts
    • AMT Is Computed Using the 100% PC Method.
    • Taxpayers with Exempt and Nonexempt Contracts within the Same Trade or Business.
  • Summary of Code Section 460
    • How to Change to the Percentage-of-completion Method.
    • Tax Preparation Checklist.
  • Specific Applications of Accounting Rules for Long-term Contracts
  • More Detailed Tax Guidance for Contractors
• 401 IMPORTANT CONSIDERATIONS FOR SMALL CONTRACTORS
  • Methods of Accounting
    • "Normal Methods."
  • The Completed-contract (CC) Method
    • When Is a Contract Completed?
    • Contract Disputes.
    • Cost Allocation Rules.
    • Is the Completed-contract Method a Good Choice?
  • The Percentage-of-completion (PC) Method (Old Rules)
    • Is the PC Method a Good Choice?
  • The Percentage-of-completion (PC) Method (Code Section 460)
  • The Cash Method
    • Small Taxpayers Granted Relief.
    • Rev. Proc. 2002-28.
    • Availability of the Cash Method.
    • Recognition of Income and Expenses.
    • Fee Retainages.
  • The Accrual Method and Variations
    • When Is Income Earned under the Accrual Method?
    • When Are Expenses Incurred under the Accrual Method?
    • Overruns and Change Orders.
    • Fee Retainages.
  • The Hybrid Method
  • Alternative Minimum Tax and Look-back
  • Selection of an Accounting Method
  • When a Small Contractor Becomes a Large Contractor
  • Recap of the Rules for Small Contractors
• 402 ALLOCATION AND CAPITALIZATION OF COSTS
  • An Overview of the Cost Rules
    • Manufacturing and Home Construction Contracts.
    • Nonexempt Manufacturing Contracts.
    • Small Contractor's Exemption.
    • PC Taxpayers.
    • Simplified Cost-to-cost Method.
  • Costs to Be Capitalized
    • IRC Secs. 460(c) and 263A.
    • The Small Contractor's Cost Rules.
    • Simplified Cost-to-cost.
    • GAAP Allocation Rules.
    • Costs That Are Not Required to Be Capitalized.
    • Impact Fees.
  • Methods of Allocating Costs to Contracts
    • Production Period Interest.
    • Is Interest Capitalization Waived on Contracts of Less Than One Year or on Contracts with Costs under $1 Million?
    • Regulations Regarding Interest Capitalization.
    • Relationship of Tax Interest Rules to GAAP Interest Rules.
    • An Overview of the Interest Capitalization Rules.
  • Highway and Bridge Company--A Case Study
    • Background Information about HBC.
    • Workpaper Requirements.
    • Analytical Procedures before Work Begins.
    • Reconciliation of the General Ledger to the Detailed Cost Records.
    • Unrecorded Liabilities.
    • Overhead Allocation of Indirect Costs.
    • Production Period Interest.
    • Estimated Cost to Complete.
    • Summary.
• 403 THE PERCENTAGE-OF-COMPLETION METHOD
  • The Formula
  • The Formula Stated in Terms of Gross Profit
  • Total Contract Price
  • Total Contract Costs
  • Percentage-of-completion
    • Cost-to-cost Method.
    • Actual Contract Cost.
    • When Is an Actual Cost Incurred?
    • GAAP Requires Removal of Unused Material.
    • When Are Subcontractor Costs Included?
  • The Election to Use the 10% Method
  • An Illustration of the Percentage-of-completion Calculation
  • Comparisons of Taxable Income
• 404 SIMPLIFIED COST-TO-COST METHOD
  • When a Taxpayer Elects the Simplified Method, Do the Cost Allocation Rules in Code Section 460(c) Still Apply?
  • The Formula for the Simplified Cost-to-cost Method
    • Should Percentage-of-completion Taxpayers Elect the Simplified Cost-to-cost Method?
• 405 PERCENTAGE OF COMPLETION-CAPITALIZED COST METHOD (PCCC)
  • Normal Method of Accounting
  • The PCCC Method Formula
    • The Accrual Method Must Be Used to Compute PC.
    • What Cost Allocation Rules Apply to the Normal Method of Accounting?
  • Illustration of the PCCC Method
• 406 CALCULATING CURRENT INCOME TAXES AND AMT
  • Computation of Regular Tax
  • Alternative Minimum Tax (AMT)
    • Exemption from AMT for Small Corporations.
    • Mandatory Percentage-of-completion Adjustment.
    • Computing AMT Percentage of Completion.
    • ACE Adjustment.
  • Illustrated AMT Calculations
  • The Final Current Tax Liability Is the Greater of Regular Tax or AMT
  • S Corporations and Partnerships
  • Losses
  • AMT Credit
• 407 LOOK-BACK
  • De Minimis (Small Contract) Exception
  • De Minimis Election
  • Simplified Marginal Impact Method
    • Mandatory and Elective Use.
    • Operation of SMIM.
  • Election to Use the 10% Method
  • Claims, Change Orders, Performance Bonuses, and Other Contingencies
  • Post-completion Revenue and Expenses
    • Delayed Application Rule.
    • Discounting.
  • Look-back Step One--Redetermination of Prior Year Gross Profit ("Hypothetical Contract Adjustment")
  • Look-back Step Two--Calculation of Hypothetical Over/Understatement of Tax
    • Form 8697.
  • Look-back Step Three--Calculation of Look-back Interest
  • Look-back Calculations for Post-completion Adjustments
  • Filing Form 8697
    • Form 8697 Noncompliance Issues.
  • The Interest Refund/Expense Is a Taxable Item
  • Illustrated U.S. Corporation Income Tax Return
• 408 DEFERRED TAXES
  • Overview of the SFAS No. 109 Rules
  • Differences between Financial Reporting under SFAS No. 109 and Income Tax Reporting
    • Permanent Differences.
    • Temporary Differences.
  • Temporary Differences Unique to Contractors
  • Which Rates to Use
  • Calculating the Deferred Tax Provision
  • Valuation Allowance
  • Classified Balance Sheet
  • Effect of Implementing FASB No. 48, Accounting for Uncertainty in Income Taxes
    • How FIN 48 Affects the Calculation of the Current Tax Provision.
    • How FIN 48 Affects Deferred Taxes.
    • Interest and Penalties.
    • Financial Statement Disclosures.
  • PPC's Guide to Accounting for Income Taxes
  • Illustration of SFAS No. 109 Deferred Taxes on HBC
• 409 DOMESTIC PRODUCTION ACTIVITIES DEDUCTION
  • Qualified Production Activities (QPA)
  • Domestic Production Gross Receipts (DPGR)
    • What Are Gross Receipts?
  • Qualified Production Activities Income (QPAI)
  • Pass-through Entities
  • Accounting Issues
    • Impact on Deferred Taxes.
  • Example of the Calculation of the Qualifying Production Activities Deduction
• 410 OTHER TAX ISSUES FACING CONTRACTORS
  • Electing an Accounting Method
  • Changing an Accounting Method
    • Automatic Changes in Accounting Method.
    • Nonautomatic Changes in Accounting Method.
    • Sale or Other Disposition of Uncompleted Contracts.
  • Built-in Gains upon Conversion from C Corporation to S Corporation
  • Independent Contractor versus Employee
• 411 SMALL CONTRACTOR CASE STUDY
  • Background Information
  • Summary

CHAPTER 5: RISK ASSESSMENT PROCEDURES AND AUDIT PLANNING

• 500 INTRODUCTION AND AUTHORITATIVE LITERATURE
  • Authoritative Literature
    • Generally Accepted Accounting Principles.
    • Generally Accepted Auditing Standards.
    • Auditing Standards.
    • Clarity Project of the ASB.
    • Interpretive Publications.
    • Other Auditing Publications.
    • Public Company Audits.
  • The Risk Assessment Standards
    • What Is Risk Assessment?
    • Planning Is the Key.
    • Overall Objectives.
    • Integration of SAS No. 99.
    • Key Provisions of the Standards.
    • Key Provisions in the Risk Assessment Standards and How They Differ from Current Standards.
  • Organization of Chapter
• 501 PRE-ENGAGEMENT ACTIVITIES
  • Deciding Whether to Accept or Continue a Client
    • Ability to Accept Engagement.
    • Desirability of Engagement.
  • Deciding Whether to Retain an Existing Client
  • Documenting Client Acceptance and Retention Decisions
  • Establishing the Terms of the Engagement
• 502 AUDIT PLANNING
  • Objectives of Audit Planning
  • The Risk Assessment Process
    • Procedures Performed.
    • Understanding Obtained.
    • Decisions and Judgments Made.
    • Summary of Risk Assessment Process.
  • The Sequence of Audit Planning
  • Types of Risk Assessment Procedures
    • Nature, Timing, and Extent--General Considerations.
    • Gathering Other Information Needed to Identify Fraud Risks.
    • Using the Results of Risk Assessment Procedures Performed in Prior Periods.
  • Inquiries of Management and Others
    • Matters and Parties of Inquiry.
    • Fraud-related Inquiries.
    • Documentation.
  • Preliminary Analytical Procedures
    • Analytical Procedures Related to Revenue.
    • Profit Gain/Fade Analysis and Bid Spread Analysis.
    • Cash Flow Analysis by Contract.
    • Documentation.
  • Observation and Inspection
    • Documentation.
  • Discussion among the Engagement Team
    • Matters to Be Discussed.
    • Impact on Significant Audit Areas.
    • Who Should Attend the Discussion?
    • When Should the Discussion Occur?
    • Other Matters That May Be Discussed.
    • Documentation.
• 503 UNDERSTANDING THE CONTRACTOR AND ITS ENVIRONMENT
  • Components of the Understanding
  • Construction Entity, Industry, and Related Internal and External Factors
    • Types of Construction Projects.
    • Industry Economic Factors.
    • Contract Documents and Provisions.
    • Contract Disputes, Litigation, and Claims.
    • Other Factors.
    • Client Response to External Factors.
  • Industry Accounting Policies and Practices
  • Preliminary Review of Contracts Completed and in Progress
  • Fraud Risk Factors
    • Examples of Fraud Risk Factors.
    • Auditor's Considerations of Fraud Risk Factors.
• 504 CONSIDERATION OF FRAUD
  • Types of Misstatements Caused by Fraud
    • Misstatements Resulting from Fraudulent Financial Reporting.
    • Misstatement of Gross Profit on Contracts.
    • Omission of Other Revenue.
  • Misstatements Resulting from Misappropriation of Assets
  • The Auditor's Responsibility for Fraud Detection
    • Immaterial Misstatements Caused by Fraud.
  • The Importance of Exercising Professional Skepticism
  • The Auditor's Fraud Risk Assessment Process
    • Practice Aids for Documenting the Fraud Risk Assessment.
  • Detection of Illegal Acts
  • Fraud Consulting Services
• 505 THE UNDERSTANDING OF INTERNAL CONTROL
  • Components of Internal Control
    • Control Environment.
    • Risk Assessment.
    • Information and Communication.
    • Communication.
    • Monitoring.
    • Consideration of Internal Audit Function.
    • Control Activities.
  • Audit Procedures to Obtain an Understanding or Test Controls
  • Documentation
• 506 AUDIT PLANNING DECISIONS AND JUDGMENTS
  • Determining Materiality at the Financial Statement Level
    • Quantifying Planning Materiality.
    • Desirability of a Single Benchmark.
    • Recommended Benchmark.
    • Selecting a Percentage.
    • Audits of a Single Financial Statement.
  • Determining Materiality for Particular Items of Lesser Amounts
  • Determining Tolerable Misstatement
  • Trivial Misstatements
  • Differences from Approach to Materiality Judgments in a Small to Midsize Nonpublic Company
    • Impracticality of Using Audit Sampling.
    • Individually Significant Amounts.
    • Additional Materiality Concepts Needed for a Contractor Audit.
  • Materiality Worksheet for an Audit of a Construction Contractor
  • Using the Materiality Worksheet
    • Selection of Individually Significant Contracts.
    • Selection of Other Items.
    • Practice Issues in Using the Worksheet.
  • Assessing Risks of Material Misstatement at the Financial Statement Level
    • Responding to Risks at the Financial Statement Level.
    • Documentation.
  • The Audit Risk Model
  • Risk of Material Misstatement
  • Relevant Assertions
  • Assessing the Risk of Material Misstatement at the Relevant Assertion Level
    • Determining Significant Audit Areas.
    • Relative Significance to the Financial Statements.
  • Significant Risks in a Construction Contractor Audit
    • Significant Contract Risks.
    • Documenting Audit Risk Considerations.
  • Establishing an Overall Audit Strategy
    • Timing of Developing the Audit Strategy.
    • Communicating with Those Charged with Governance.
    • Documentation.
• 507 OVERALL TIMING OF ENGAGEMENT
  • Job Site Visits
  • Review of Contracts Completed and in Progress
  • Tests of Transactions for Costs Incurred
• 508 AUDIT SAMPLING
  • Audit Sampling for Tests of Transactions--General
  • Sample Size for Tests of Transactions
  • Sample Selection for Tests of Transactions
• 509 ESTIMATE OF AUDIT TIME AND BUDGET
• 510 SPECIAL CONSIDERATIONS IN AN INITIAL AUDIT
  • First Time Audit--No Predecessor
  • Prior Audit by a Predecessor
  • Audit Procedures for Initial Audits
• APPENDIX 5A: Illustration of a Completed "Contract Risk Assessment Summary Form" (CON-CX-7-1.1)
• APPENDIX 5B: Examples of Common Tests of Controls for Construction Contractors

CHAPTER 6: AUDIT PROGRAMS AND PROCEDURES, AND CONCLUDING THE AUDIT

• 600 INTRODUCTION
• 601 DETAILED AUDIT PLANS--ORGANIZATION AND STRUCTURE
  • Determining the Audit Approach
    • Limited Procedures Approach.
    • Choosing between Core Audit Programs and Specified Risk Audit Programs.
    • Basic and Extended Approaches (Core).
    • Specified Risk Approach.
    • Documenting the Response.
    • Determining the Audit Approach for Contracts.
  • Organization of Audit Programs
  • Types of Substantive Procedures and Audit Strategies
    • Limited, Basic, and Extended Approaches.
    • Specified Risk Approach.
  • Other Audit Program Considerations
    • Can the Auditor Use a Combination of Core Audit Programs and Specified Risk Audit Programs?
    • Initial Audit Programs.
  • Documentation Requirements
• 602 CONTRACT BILLING AND COST-RELATED ACCOUNTS
  • Planning and Preparation
    • Financial Reporting System Considerations.
    • Preliminary Review of Contract Terms and Activity during the Period.
  • Contract Prices and Billings to Date
  • Contract Costs
    • Direct Costs Other Than Labor.
    • Direct Labor Costs.
    • Indirect Costs except Construction Period Interest.
    • Construction Period Interest.
    • Precontract Costs.
  • Revenue Recognition
    • Total Estimated Costs on Jobs in Progress.
    • Total Contract Price on Jobs in Progress.
    • Total Estimated Gross Profit on Jobs in Progress.
    • Loss Contracts.
    • Calculation--Completed-contract Method.
    • Calculation--Percentage-of-completion Method.
  • Workpapers
    • Calculation Workpaper.
    • Audit Program.
  • Common Peer Review Deficiencies
• 603 JOB SITE VISITS
  • Audit Objectives and Procedures for Job Site Visits
  • Determining the Number and Location of Sites to Visit
• 604 AUDIT WRAP-UP PROCEDURES
  • Commitments and Contingencies
    • Environmental Remediation Liabilities.
  • Risks and Uncertainties
    • Certain Significant Estimates.
    • Current Vulnerability Due to Concentrations.
  • Subsequent Events
  • Related Parties
    • VIEs.
    • Related Party Transactions and Fraud.
  • Going Concern Considerations
  • Management Representation Letter
    • Audit Adjustments.
    • Materiality.
  • Considering the Accumulated Results of Audit Procedures
    • Reevaluating Risk Assessments.
    • Evaluating the Existence of Fraud.
    • Evaluating Significant Unusual Transactions.
    • Considering the Application of Significant Accounting Principles for Bias.
    • Documentation Requirements.
  • Analytical Procedures
  • Evaluation of Overall Materiality
• 605 CLIENT COMMUNICATIONS
  • Communicating Internal Control Related Matters under SAS No. 112
    • Identifying Control Deficiencies.
    • Evaluating Control Deficiencies.
    • Significant Deficiency.
    • Material Weakness.
    • Examples of Deficiencies.
    • Factors to Consider When Evaluating Control Deficiencies.
    • Can the Auditor Prepare the Financial Statements?
    • Aggregation of Deficiencies.
    • Mitigating Effects of Compensating Controls.
    • Prudent Official Assessment.
    • Communication Requirements.
    • What Not to Communicate.
    • Illustrative Communications.
  • Additional Guidance on SAS No. 112
  • Communication with Those Charged with Governance
    • Matters to Be Communicated.
    • The Auditor's Responsibilities under GAAS.
    • Planned Scope and Timing of the Audit.
    • Significant Audit Findings.
    • Evaluation of the Adequacy of the Auditor's Communication.
    • Documentation of Communications.
  • Fraud and Illegal Acts
    • Communication about Fraud.
  • Communication about the Entity's Ability to Continue as a Going Concern
• 606 AUDIT WORKPAPERS AND RELATED DOCUMENTATION
  • Support for Auditor's Report
  • Other Purposes of Workpapers
  • Basic Requirements for Content
  • Documenting Specific Items Tested and Other Procedures
  • Documenting the Identification of Preparer and Reviewer
  • Documenting Significant Findings or Issues
  • Documenting Revisions after the Date of the Auditor's Report
    • Audit Report Date.
    • Report Release Date.
    • Documentation Completion Date.
    • Assembling and Completing the Audit File.
    • Making Changes to the Workpapers.
    • Audit Documentation Recommendations.
• 607 AUDIT REPORTS
  • Common Reasons for Other Than a Standard Report
  • Prequalification and Contractor License Applications

CHAPTER 7: COMPILATION AND REVIEW ENGAGEMENTS

• 700 INTRODUCTION
  • What Are Compilation and Review Engagements?
  • Organization of This Chapter
• 701 AUTHORITATIVE LITERATURE
  • Accounting Literature
  • Compilation and Review Literature
    • Recent Developments.
• 702 ENGAGEMENT ADMINISTRATION
  • Overview of the Compilation and Review Process
• 703 PRE-ENGAGEMENT AND PLANNING ACTIVITIES
  • Evaluation of Engagement Acceptance
    • Communication with Predecessor Accountant.
    • Engagement Acceptance Form.
  • Evaluation of the Level of Service to Be Performed
  • Establishment of Engagement Terms and Completion of an Engagement Letter
    • Management-use-only Financial Statements.
  • Gaining Knowledge of the Client and Its Industry
  • Communication of Fraud or Illegal Acts
• 704 COMPILATION PROCEDURES
  • Considering the Intended Use of the Financial Statements
  • Documentation of Procedures
    • The Compilation Procedures, Review, and Approval Forms.
    • The Trial Balance Preparation Checklist.
    • Compilation Reporting Checklist.
    • Income Tax Provision.
• 705 REVIEW PROCEDURES
  • Review Performance Requirements
  • Inquiries
    • Inquiries Made during the Planning Phase of the Engagement.
    • Minutes.
    • General Inquiries.
    • Specific Inquiries for Construction Contractors.
  • Analytical Procedures
    • Developing Expectations.
    • Specific Analytical Procedures for Construction Contractors.
  • Additional Procedures
  • Documentation of Procedures
    • The Review Procedures, Review, and Approval Form.
    • The Trial Balance Preparation Checklist.
    • The Inquiry and Analytical Procedures Program.
    • Review Reporting Checklist.
    • Representation Letter.
    • Analytical Procedures Worksheet.
• 706 WRAP-UP AND ENGAGEMENT REVIEW ACTIVITIES
  • Documentation of Procedures
    • Disclosure Checklists.
    • Routing Instructions.
    • Review and Approval Forms.
    • Consultation, Differences of Opinion, and Engagement Withdrawal Documentation Form.
    • Other Workpapers.
  • Filing Instructions
  • Subsequent Discovery of Facts Existing at Date of Report
• 707 REPORTING ON COMPILATION AND REVIEW ENGAGEMENTS
  • Reporting on Compiled Financial Statements
    • Financial Statement Legends.
    • Standard Compilation Report.
    • Reporting on Prescribed Forms under SSARS No. 3.
  • Reporting on Review Engagements
    • Standard Review Report.
  • Interim Reporting
  • Reference to Country of Origin
  • Reporting When There Are Significant Departures from GAAP
  • Reporting on Supplemental Financial Information
    • Supplementary Information Accompanying Compiled Financial Statements.
    • Supplementary Information Accompanying Reviewed Financial Statements.
    • Supplementary Information Presented Alone.
  • Prequalification and Contractor License Applications
    • Compilations.
    • Reviews.
    • Schedules Included in Prequalification and Contractor License Application Filings.
    • Illustrative Accountant's Reports.
• APPENDIX 7A: Standard Compilation Report Corporation on the Accrual Basis
• APPENDIX 7B: Standard Review Report Corporation on the Accrual Basis
• APPENDIX 7C: Standard Compilation Report with Compiled Supplementary Information Presented
• APPENDIX 7D: Standard Review Report with Supplementary Information Covered by Review Procedures
• APPENDIX 7E: Standard Review Report with Supplementary Information Not Covered by Review Procedures
• APPENDIX 7F: Standard Prescribed Form Compilation Report Included in Prequalification and Contractor License Application Filings
• APPENDIX 7G: Prescribed Form Review Report Included in Prequalification and Contractor License Application Filings

CHAPTER 8: CONSULTING SERVICES

• 800 INTRODUCTION
  • Advertising Consulting Engagements
• 801 CONSULTING STANDARDS
  • Standards for Consulting Services
    • Independence and Consulting Services.
  • General Standards
  • Quality Control Standards and Peer Review Standards
• 802 OVERVIEW OF A SMALL BUSINESS CONSULTING PRACTICE
• 803 ENGAGEMENT INITIATION AND PLANNING
  • Identifying the Service Opportunity
  • Completing a Preliminary Survey
  • Obtaining an Understanding of the Company
  • Preparing an Engagement Plan and Budget
  • Preparing the Proposal
    • Basic Content of the Proposal.
  • Completing Engagement Acceptance Procedures
  • Presenting the Proposal
  • Starting the Engagement
• 804 ENGAGEMENT CONDUCT AND CONTROL
  • Developing Detailed Engagement Programs
    • Matters to Be Covered.
    • Determination of Staffing Requirements.
  • Collecting Data
    • Interviewing.
  • Analyzing Data
  • Controlling Engagement Time
  • Meeting with Client
  • Assembling Workpapers
    • Objectives of Workpapers.
    • Extent of Documentation.
    • Documentation of the Consultant's Analytical Approach.
    • Legal Liability Considerations.
  • Preparing a Draft Report
  • Conferring with Client
• 805 ENGAGEMENT REVIEW, REPORTING, AND FOLLOW-UP
  • Engagement Review
    • Review of Workpapers.
    • Review of Report.
    • Engagement Review Checklist.
  • Report Approval and Production
  • Report Presentation and Distribution
    • Consulting Services Standards.
    • Report Format and Content.
    • Closing Letter.
    • Comprehensive Report.
    • Liability Considerations and Reporting.
    • Report Distribution.
    • Summary of Steps to Avoid Liability.
  • Engagement Follow-up
• 806 FINANCING SERVICES
  • Introduction
  • Practice Administration
    • Generating Engagements.
    • Staffing and Training.
    • Fee Considerations.
  • Determining the Client's Financing Needs
    • What Are the Funds Needed for?
    • How Much Funding Is Needed?
    • How Will the Funds Be Repaid?
  • What Costs Are Associated with Financing?
  • What Types of Financing Are Available?
    • Private Sources of Financing.
    • Short-term Financing.
    • Medium-term Financing.
    • Long-term Financing.
    • Choosing among Financing Alternatives.
  • Preparing a Financing Proposal
    • Proposal Summary.
    • Management Profiles.
    • Description of the Business.
    • Specific Information about the Loan Requested.
    • Company Financial Statements.
    • Personal Financial Statements of Guarantor, If Any.
    • Prescribed Forms.
    • Checklist of Contents for a Financing Proposal.
  • Negotiating the Financing
    • Guarantees.
    • CPA Participation in Negotiations.
  • Engagement Activities and Administration
    • Client Understanding--The Engagement Letter.
    • Detailed Engagement Work Program.
    • Representation Letter.
    • Reporting on a Financing Services Engagement.
    • Closing Letter.
• 807 CLAIM SETTLEMENT SERVICES
  • Introduction
  • Ways to Resolve Contractor Claims
    • Mediation.
    • Arbitration.
    • Combined Mediation/Arbitration.
    • Neutral Evaluation.
    • Other ADR Techniques.
    • Applicability of Section Guidance to Methods of Resolving Claims.
  • Identifying Events or Conditions That May Result in Damages
    • Delays.
    • Disruption.
    • Changes in Scope.
    • Changed Conditions.
    • Termination.
    • Summary of Events or Conditions That May Cause Claims.
    • Other Considerations in Identifying Events or Conditions That May Result in Damages.
  • Calculating Contractor Damages
    • Total Cost Approach.
    • Modified Total Cost Approach.
    • Estimated Cost Approach.
    • Discrete Approach.
    • Labor and Labor-related Benefits/Burdens.
    • Equipment Use Costs.
    • Home Office Overhead.
    • Material and Supply Cost Overruns.
    • Field Office Overhead.
    • Profits or Markup on Direct Costs.
    • Revenue-based Costs.
    • Interest and Financing Costs.
    • Other Miscellaneous Costs.
    • Capturing and Documenting Costs.
    • Penalties for Submitting False Claims.
  • Engagement Activities and Administration
    • Characteristics of Claim Settlement Support Services That Affect Administration.
    • Staffing and Training.
    • Billing and Collection.
    • Generating Engagements.
    • Engagement Acceptance Considerations.
    • Engagement Letters.
    • Planning and Budgeting.
    • Written Reports.
• APPENDIX 8A: Engagement Acceptance Form for Construction Contractors--Small Business Consulting
• APPENDIX 8B: Construction Company Background Information Form--Small Business Consulting
• APPENDIX 8C: Engagement Review Checklist for Construction Contractors--Small Business Consulting
• APPENDIX 8D: Sample Engagement Letter for Construction Contractor Financing Services
• APPENDIX 8E: Procedures and Reporting Checklist for Construction Contractor Financing Services
• APPENDIX 8F: Data Collection Checklist for Construction Contractor Financing Services Engagements
• APPENDIX 8G: Checklist of Contents for a Construction Contractor Financing Proposal
• APPENDIX 8H: Sample Representation Letter for a Construction Contractor Financing Services Engagement
• APPENDIX 8I: Transmittal Letter for a Construction Contractor Financing Proposal
• APPENDIX 8J: Closing Letter for a Construction Contractor Financing Proposal
• APPENDIX 8K: Engagement Letter for Litigation Support Services--Drafting Form
• APPENDIX 8L: Document Request Letter Drafting Form
• APPENDIX 8M: Conflict of Interest Search Form

CONSTRUCTION CONTRACTORS COMPILATION AND REVIEW PRACTICE AIDS (CON-CR)

• CON-CR-1: Engagement Acceptance Form
• CON-CR-2: Checklist for a Step-down Engagement (Audit to Review or Compilation/Review to Compilation)
• CON-CR-3: Illustrative Engagement Letters
  • CON-CR-3.1: Illustrative Engagement Letter--Compilation
  • CON-CR-3.2: Illustrative Engagement Letter--Management-use-only Financial Statements
• CON-CR-4: Illustrative Engagement Letter--Review
• CON-CR-5: Client Information Form
• CON-CR-6: Compilation Procedures, Review, and Approval Forms
  • CON-CR-6.1: Compilation Procedures, Review, and Approval Form (Comprehensive)
  • CON-CR-6.2: Compilation Procedures, Review, and Approval Form (Summarized)
  • CON-CR-6.3: Compilation Procedures, Review, and Approval Form for Recurring Interim Engagements
  • CON-CR-6.4: Procedures, Review, and Approval Form for Management-use-only Financial Statements
  • CON-CR-6.5: Procedures, Review, and Approval Form for Recurring Interim Engagements to Provide Management-use-only Financial Statements
• CON-CR-7: Review Procedures, Review, and Approval Form
• CON-CR-8: Trial Balance Preparation Checklist
• CON-CR-9: Inquiry and Analytical Procedures Program
• CON-CR-10: Compilation Reporting Checklist
• CON-CR-11: Review Reporting Checklist
• CON-CR-12: Illustrative Representation Letter
• CON-CR-13: Routing Instructions for Processing Financial Statements
• CON-CR-14: Consultation, Differences of Opinion, and Engagement Withdrawal Documentation Form
• CON-CR-15: Analytical Procedures Documentation Form

FIRM POLICIES (CON-FP)

• CON-FP-1: Audit Team Members

CONSTRUCTION CONTRACTORS CHECKLISTS AND PRACTICE AIDS (CON-CX)

• CON-CX-1: Planning and Preliminary Engagement Activities
  • CON-CX-1.1: Engagement Acceptance Form
  • CON-CX-1.2: Engagement Continuance Form
  • CON-CX-1.3: ET Interpretation 101-3 Documentation Form
• CON-CX-2: Financial Statement Materiality Worksheet for Planning Purposes
• CON-CX-3: Understanding the Entity
  • CON-CX-3.1: Understanding the Entity and Its Environment
  • CON-CX-3.2: Engagement Team Discussion
  • CON-CX-3.3: Fraud Risk Inquiries Form
  • CON-CX-3.4: Audit Inquiries Summary Form
• CON-CX-4: Understanding Internal Control
  • CON-CX-4.1: Understanding the Design and Implementation of Internal Control
  • CON-CX-4.2: Financial Reporting System Documentation Forms
    • CON-CX-4.2.1: Financial Reporting System Documentation Form--Significant Transaction Classes
    • CON-CX-4.2.2: Financial Reporting System Documentation Form--IT Environment and General Computer Controls
  • CON-CX-4.3: Walkthrough Documentation Table
• CON-CX-5: Activity and Entity-level Control Forms
  • CON-CX-5.1: Control Activities Form for Cash
  • CON-CX-5.2: Control Activities Form for Accounts Receivable and Sales
  • CON-CX-5.3: Control Activities Form for Inventory
  • CON-CX-5.4: Control Activities Form for Property
  • CON-CX-5.5: Control Activities Form for Investments and Derivatives
  • CON-CX-5.6: Control Activities Form for Other Assets
  • CON-CX-5.7: Control Activities Form for Accounts Payable and Other Liabilities
  • CON-CX-5.8: Control Activities Form for Notes Payable and Long-term Debt
  • CON-CX-5.9: Control Activities Form for Income Taxes
  • CON-CX-5.10: Control Activities Form for Equity
  • CON-CX-5.11: Control Activities Form for Contract Billings and Cost-related Accounts
  • CON-CX-5.12: Control Activities Form for Income and Expenses (Other Than Contract Billings and Cost-related Accounts)
  • CON-CX-5.13: Control Activities Form for Financial Close and Reporting
  • CON-CX-5.14: Control Activities Form for General Computer Controls
  • CON-CX-5.15: Entity-level Control Form for Control Environment
  • CON-CX-5.16: Entity-level Control Form for Risk Assessment
  • CON-CX-5.17: Entity-level Control Form for Information and Communication
  • CON-CX-5.18: Entity-level Control Form for Monitoring
• CON-CX-6: Identifying Risk
  • CON-CX-6.1: Risk Identification Form
  • CON-CX-6.2: Fraud Risk Factors
• CON-CX-7: Risk Assessment
  • CON-CX-7.1: Risk Assessment Summary Form
    • CON-CX-7.1.1: Contract Risk Assessment Summary Form
  • CON-CX-7.2: Inherent Risk Assessment Form
• CON-CX-8: Planning Substantive Procedures
  • CON-CX-8.1: Planning Worksheet to Determine Extent of Substantive Procedures for Noncontract Accounts
  • CON-CX-8.2: Sampling Planning and Evaluation Form--Substantive Procedures for Noncontract Accounts
  • CON-CX-8.3: Sampling Worksheet for Testing Account Coding and Classifications
• CON-CX-9: Analytical Procedures
  • CON-CX-9.1: Substantive Analytical Procedures Worksheet
  • CON-CX-9.2: Ratio Analysis Worksheet
• CON-CX-10: Test of Controls
  • CON-CX-10.1: Test of Controls Form
  • CON-CX-10.2: Test of Controls Sampling Planning and Evaluation Form
• CON-CX-11: Other Checklists for Performing Further Audit Procedures
  • CON-CX-11.1: Inventory Counting Procedures
  • CON-CX-11.2: Confirmation Summary Form for Noncontract Accounts
  • CON-CX-11.3: Accounts Receivable Statistics Form
  • CON-CX-11.4: Confirmation Reconciliation Form
  • CON-CX-11.5: Checklist for Determining the Applicability of SFAS No. 133 to a Nonconstruction Contract
  • CON-CX-11.6: Data Extraction Software Analysis Documentation Form
  • CON-CX-11.7: Construction Contractor's Tax Preparation Checklist
  • CON-CX-11.8: Percentage-of-completion Calculation Workpaper
  • CON-CX-11.9: Construction Contract Change Order Accounting Worksheet
  • CON-CX-11.10: Claims under Construction Contracts Accounting Worksheet
  • CON-CX-11.11: Construction Contract Options and Additions Accounting Worksheet
  • CON-CX-11.12: Investments in Joint Ventures by Construction Contractors Accounting Worksheet
  • CON-CX-11.13: Combining Construction Contracts Accounting Worksheet
  • CON-CX-11.14: Segmenting Construction Contracts Accounting Worksheet
  • CON-CX-11.15: Significant Contract Terms and Other Information
• CON-CX-12: Evaluating Audit Differences
  • CON-CX-12.1: Closing Entry and Audit Adjustment Form
  • CON-CX-12.2: Audit Difference Evaluation Form
• CON-CX-13: Disclosure Checklists
  • CON-CX-13.1: Disclosure Requirements for Financial Statements of Nonpublic Businesses (Long-form Disclosure Checklist)
  • CON-CX-13.2: Additional Disclosures for Construction Contractors and Homebuilders
• CON-CX-14: Review and Wrap-up
  • CON-CX-14.1: Supervision, Review, and Approval Form
  • CON-CX-14.2: Audit Documentation Checklist
• CON-CX-15: Evaluating Internal Control Deficiencies
  • CON-CX-15.1: Control Deficiency Evaluation and Aggregation Worksheet
  • CON-CX-15.2: Control Deficiency Comment and Management Point Development Worksheet
• CON-CX-16: Other Checklists for Concluding the Audit
  • CON-CX-16.1: Going Concern Checklist
  • CON-CX-16.2: Significant Estimates Identification Checklist
  • CON-CX-16.3: Concentrations Identification Checklist
  • CON-CX-16.4: Accounting and Auditing Issues
• CON-CX-17: Engagement Administration
  • CON-CX-17.1: Client Billing Information
  • CON-CX-17.2: Engagement Status Report
  • CON-CX-17.3: Audit Time Summary
  • CON-CX-17.4: Confirmation and Correspondence Control

CONSTRUCTION CONTRACTORS CONFIRMATION AND CORRESPONDENCE LETTERS

• CON-CL-1: Engagement Letters
  • CON-CL-1.1: Audit Engagement Letter
  • CON-CL-1.2: Engagement Letter Change Order Form
  • CON-CL-1.3: Resignation Letter--Drafting Form
• CON-CL-2: Legal Letters
  • CON-CL-2.1: Request for Legal Representation--Lawyer Is Requested to Provide Information
  • CON-CL-2.2: Request for Legal Representation--Lawyer Is Requested to Confirm Information Provided by Client
• CON-CL-3: Management Representations
  • CON-CL-3.1: Management Representation Letter
  • CON-CL-3.2: Summary of Audit Differences
  • CON-CL-3.3: Updating Management Representation Letter
• CON-CL-4: Internal Control Communications
  • CON-CL-4.1: Communication of Significant Deficiencies
  • CON-CL-4.2: Communication of Significant Deficiencies and Material Weaknesses
  • CON-CL-4.3: Communication of Significant Deficiencies That Indicates No Material Weaknesses in Internal Control
  • CON-CL-4.4: Separate Communication Indicating No Material Weaknesses
• CON-CL-5: Communications with Those Charged with Governance under SAS No. 114
• CON-CL-6: Cash Confirmations and Letters
  • CON-CL-6.1: Standard Form to Confirm Account Balance Information with Financial Institutions
  • CON-CL-6.2: Request for Subsequent Bank Statements
  • CON-CL-6.3: Receipt for Cash Counted by Auditor
• CON-CL-7: Receivables Confirmations and Letters
  • CON-CL-7.1: Positive Accounts Receivable Confirmation Request--Itemized Statement Enclosed (See CON-CL-7.8 for Confirmation of Contract Receivables)
  • CON-CL-7.2: Positive Accounts Receivable Confirmation Request--Open Item (See CON-CL-7.8 for Confirmation of Contract Receivables)
  • CON-CL-7.3: Positive Accounts Receivable Confirmation Request--without a Statement (See CON-CL-7.8 for Confirmation of Contract Receivables)
  • CON-CL-7.4: Negative Accounts Receivable Confirmation Request (See CON-CL-7.8 for Confirmation of Contract Receivables.)
  • CON-CL-7.5: Blind Accounts Receivable Confirmation Request (See CON-CL-7.8 for Confirmation of Contract Receivables)
  • CON-CL-7.6: Confirmation Request for a Bill-and-hold Transaction
  • CON-CL-7.7: Confirmation of Note Receivable
  • CON-CL-7.8: Confirmation of Contract Billings, Accounts Receivable, and Retentions
• CON-CL-8: Investments and Securities Confirmations and Letters
  • CON-CL-8.1: Receipt for Securities Counted by Auditor
  • CON-CL-8.2: Confirmation of Securities Held by Brokers
  • CON-CL-8.3: Confirmation of Securities Held by a Third Party
• CON-CL-9: Inventory Confirmations and Letters
  • CON-CL-9.1: Confirmation of Inventories Held by a Third Party--Listing of Inventories Not Enclosed
  • CON-CL-9.2: Confirmation of Inventories Held by a Third Party--Listing of Inventories Enclosed
• CON-CL-10: Payables and Debt Confirmations and Letters
  • CON-CL-10.1: Accounts Payable Confirmation (See CON-CL-10.8 for Confirmation of Subcontractor Accounts Payable and Retentions)
  • CON-CL-10.2: Note Payable Confirmation (to Parties Other Than Financial Institutions)
  • CON-CL-10.3: Confirmation of Debt for Which No Written Loan Agreement Exists
  • CON-CL-10.4: Confirmation of Mortgage Debt
  • CON-CL-10.5: Confirmation of Compensating Balances
  • CON-CL-10.6: Confirmation of Line of Credit
  • CON-CL-10.7: Confirmation of Contingent Liabilities with Financial Institutions
  • CON-CL-10.8: Confirmation of Subcontractor Accounts Payable and Retentions
• CON-CL-11: Defined Benefit Confirmations and Letters
  • CON-CL-11.1: Request for Defined Benefit Plan Information
  • CON-CL-11.2: Request for Plan Asset Information--Defined Benefit Pension and Other Postretirement Benefit Plans
• CON-CL-12: Other Confirmations and Letters
  • CON-CL-12.1: Standard Confirmation Inquiry for Life Insurance Policies
  • CON-CL-12.2: Confirmation of Insurance Coverage (Except Life Insurance)
  • CON-CL-12.3: Confirmation of Lease Agreement
  • CON-CL-12.4: Related Party Confirmation
• CON-CL-13: Predecessor/Successor Communications
  • CON-CL-13.1: Request for Predecessor Auditor to Release Information to Successor Auditor
  • CON-CL-13.2: Letter Granting Successor Auditors Access to Workpapers
  • CON-CL-13.3: Client Consent and Acknowledgment Letter
  • CON-CL-13.4: Communication with Predecessor Auditor Prior to Final Engagement Acceptance
• CON-CL-14: Principal and Other Auditor Communications
  • CON-CL-14.1: Request for Representations from Other Auditor Who Audits the Financial Statements of a Subsidiary, Division, or Branch
  • CON-CL-14.2: Request for Representations from Other Auditor Who Performs Audit Procedures on Certain Elements, Accounts, or Items in Financial Statements
  • CON-CL-14.3: Inquiry of Principal Auditor by Other Auditor
  • CON-CL-14.4: Principal Auditor's Response to Inquiries from Other Auditor
  • CON-CL-14.5: Letter from Principal Auditor to Other Auditors Regarding Related Parties

AUDIT PROGRAMS--CORE (CON-AP)

• CON-AP-1: Audit Program for General Planning Procedures
  • Other Audit Procedures for General Planning Procedures
• CON-AP-2: Audit Program for General Auditing and Completion Procedures
  • Other Audit Procedures for General Auditing and Completion Procedures
• CON-AP-3: Audit Program for Cash
• CON-AP-4: Audit Program for Accounts Receivable
  • Other Audit Procedures for Accounts Receivable
• CON-AP-5: Audit Program for Inventory
  • Other Audit Procedures for Inventory
• CON-AP-6: Audit Program for Inventory Observation
  • Other Audit Procedures for Inventory Observation
• CON-AP-7: Audit Program for Property
  • Other Audit Procedures for Property
• CON-AP-8: Audit Programs for Investments and Derivatives
  • Other Audit Procedures for Investments and Derivatives
• CON-AP-9: Audit Program for Other Assets
  • Other Audit Procedures for Other Assets
• CON-AP-10: Audit Program for Accounts Payable and Other Liabilities
  • Other Audit Procedures for Accounts Payable and Other Liabilities
• CON-AP-11: Audit Program for Notes Payable and Long-term Debt
• CON-AP-12: Audit Program for Income Taxes
• CON-AP-13: Audit Program for Equity
  • Other Audit Procedures for Equity
• CON-AP-14: Audit Program for Contract Billing and Cost-related Accounts
  • Other Audit Procedures for Contract Billing and Cost-related Accounts
• CON-AP-15: Audit Program for Job Site Visits
• CON-AP-16: Audit Program for Income Statement Accounts Other Than Contract Billings and Costs
  • Other Audit Procedures for Income Statement Accounts Other Than Contract Billings and Costs
• CON-AP-17: Audit Program for

AUDIT PROGRAMS--SPECIFIED RISK (CON-AP-S)

• CON-AP-1-S: Audit Program for General Planning Procedures--Specified Risk
• CON-AP-2-S: Audit Program for General Auditing and Completion Procedures--Specified Risk
• CON-AP-3-S: Audit Program for Cash--Specified Risk
• CON-AP-4-S: Audit Program for Accounts Receivable--Specified Risk
• CON-AP-5-S: Audit Program for Inventory--Specified Risk
• CON-AP-6-S: Audit Program for Inventory Observation--Specified Risk
• CON-AP-7-S: Audit Program for Property--Specified Risk
• CON-AP-8-S: Audit Program for Investments and Derivatives--Specified Risk
• CON-AP-9-S: Audit Program for Other Assets--Specified Risk
• CON-AP-10-S: Audit Program for Accounts Payable and Other Liabilities--Specified Risk
• CON-AP-11-S: Audit Program for Notes Payable and Long-term Debt--Specified Risk
• CON-AP-12-S: Audit Program for Income Taxes--Specified Risk
• CON-AP-13-S: Audit Program for Equity--Specified Risk
• CON-AP-14-S: Audit Program for Contract Billings and Cost-related Accounts--Specified Risk
• CON-AP-15-S: Audit Program for Job Site Visits--Specified Risk
• CON-AP-16-S: Audit Program for the Income Statement Accounts Other Than Contract Billings and Costs--Specified Risk

INITIAL AUDIT PROGRAMS (CON-IA)

• CON-IA-1: Additional General Planning Procedures for an Initial Audit
• CON-IA-2: Additional General Auditing and Completion Procedures for an Initial Audit
• CON-IA-3: Additional Audit Procedures for Cash Beginning Balance in Initial Audit
• CON-IA-4: Additional Audit Procedures for Accounts Receivable Beginning Balance in Initial Audit
• CON-IA-5: Additional Audit Procedures for Inventory Beginning Balance in Initial Audit
• CON-IA-6: Not Used
• CON-IA-7: Additional Audit Procedures for Property Beginning Balance in Initial Audit
• CON-IA-8: Additional Audit Procedures for Investments and Derivatives Beginning Balance in Initial Audit
• CON-IA-9: Additional Audit Procedures for Other Assets Beginning Balance in Initial Audit
• CON-IA-10: Additional Audit Procedures for Accounts Payable and Other Liabilities Beginning Balance in Initial Audit
• CON-IA-11: Additional Audit Procedures for Notes Payable and Long-term Debt Beginning Balance in Initial Audit
• CON-IA-12: Additional Audit Procedures for Income Taxes Beginning Balance in Initial Audit
• CON-IA-13: Additional Audit Procedures for Equity Beginning Balance in Initial Audit
• CON-IA-14: Additional Audit Procedures for Contract Billing and Cost-related Accounts Beginning Balance in Initial Audit

Continuing Professional Education

CPE & Training Solutions

INDEX