Construction Job Costing Audit Checklist

Find ways to increase estimating accuracy, identify cost reduction opportunities and discover inefficiencies within your construction accounting systems with Smartsheet auditing numbers and processes so as to protect job level profitability for each project.

Construction job costing is an effective method for monitoring all of the expenses related to a particular project, including labor, materials, and overhead expenses. Furthermore, job costing allows users to quickly analyze future profitability more accurately.

1. Review Financial Statements
Accessing all costs as they arise is essential to understanding your company’s profitability. An effective job costing structure enables you to monitor expenses for projects within budget and on schedule.

Effective tracking helps prevent unnecessary spending, maintain costs consistently and accurately, and help determine which projects to bid on in the future. It also makes it easy to identify areas of potential risk so that prevent any costly overruns.

Document all departmental budget processes and capital project budgeting practices (actual versus forecast results), using spreadsheets or narratives as necessary. Interview department staff to examine and test processes for classifying internal costs either as direct project costs or overhead charges on construction projects.

2. Review Timecards
As part of your construction job costing audit checklist, it’s essential that timecards are reviewed thoroughly to ensure all relevant data has been recorded accurately – including time spent on specific tasks by specific individuals and how long their work took to complete.

Also part of timekeeping is making sure there are no over or under allocations of hours between tasks or employees, and any discrepancies identified through timecard review, so your company can address issues before they escalate further.

An effective job costing system allows companies to remain transparent with their budgets while easily tracking project progress throughout its completion. If there’s any sign of overruns on budget, companies can quickly take necessary steps to find cost savings that improve profitability and ensure greater profits.

3. Review Subcontractor Invoices
An intensive construction job costing audit is an in-depth analysis of actual costs incurred during a project, to verify whether all contractor bills are legitimate and in accordance with contract terms, while simultaneously uncovering any overpayments, inefficiencies or potential fraud that might exist in their billings.

An effective construction audit can save businesses money by uncovering billing errors. Common errors include duplicate invoices, overcharges, accounting mistakes, unreconciled allowances or credits and unwarranted expenditures.

Additionally, DCAA can determine the value of a project’s profitability so owners can budget appropriately and apply for financing. Usually this starts with an RFP (Request for Proposals), with DCAA’s Termination Settlement Proposal Checklists helping assess adequacy.

4. Review Equipment Invoices
Conducting a construction job costing audit is an invaluable opportunity for business owners to take a sweeping view of their company numbers and processes, uncovering inefficiencies that might hamper profitability, as well as opportunities to improve productivity in office processes such as timecards, estimates/quotes and invoices.

As part of this process, it’s essential that you regularly review equipment invoices to make sure that they are accurate and reconcile with vendor invoices. In addition, job level data (labor, materials and equipment) should also be checked against its proper classification in the system. A well-designed job costing structure allows real-time budget monitoring while helping identify areas of potential risk before they affect your bottom line – helping identify ways in which cost savings may help lower budget costs.

5. Review Material Invoices
An audit review can identify billing errors, overpayments and inefficiencies as well as ensure that the amount billed is legitimate, consistent with contract terms, and represents actual expenditures.

An audit of construction-related contracts and financial records can save both time and money. A thorough audit ensures accurate budgeting, provides insight into loan applications’ values, identifies areas for improvement and allows companies to build better services, higher quality contractors and become more competitive in their marketplace. Furthermore, auditing also allows for faster budgeting of future projects while providing insight into loan applications’ values – something particularly essential for companies with cost reimbursement contracts.