CCA CCA Construction Project Management and Controls 2 — Questions and Answers
Question 1: A construction auditor identifies that a contractor submitted invoices for materials that were never delivered to the job site. This finding most directly indicates a failure in which control?
- Receiving and inspection controls (Correct answer)
- Accounts payable cutoff procedures
- Payroll distribution controls
- Insurance verification controls
Correct answer: Receiving and inspection controls
Receiving and inspection controls require physical verification that materials are delivered and accepted before payment is authorized.
Question 2: Which metric is most useful for a CCA auditor assessing whether a construction project's costs are trending toward overrun?
- Estimate at Completion (EAC) (Correct answer)
- Original Contract Amount (OCA)
- Notice to Proceed (NTP) date
- Retention percentage
Correct answer: Estimate at Completion (EAC)
The Estimate at Completion forecasts the total final cost based on current performance trends, alerting auditors to potential overruns before they fully materialize.
Question 3: When reviewing construction project schedules, an auditor should be alert to schedule compression techniques that may increase which project risk?
- Quality defects and rework costs (Correct answer)
- Reduced contractor profit margins
- Lower material unit prices
- Decreased subcontractor utilization
Correct answer: Quality defects and rework costs
Crashing or fast-tracking schedules often leads to concurrent work and reduced quality oversight, increasing defect rates and costly rework.
Question 4: An auditor reviewing project closeout documentation would verify that punch list items are resolved before approving which payment?
- Final payment and release of retention (Correct answer)
- First progress payment
- Mobilization advance
- Material procurement payment
Correct answer: Final payment and release of retention
Final payment and retention release are contingent on completion of all punch list items, ensuring the owner does not pay for incomplete or defective work.
Question 5: Which internal control best prevents a contractor from double-billing labor hours on multiple cost codes for the same workers?
- Reconciliation of certified payroll records to labor cost distribution reports (Correct answer)
- Requiring union membership for all workers
- Verifying contractor's general liability insurance
- Reviewing daily weather logs
Correct answer: Reconciliation of certified payroll records to labor cost distribution reports
Certified payroll records list actual hours and wages per worker, and reconciling these to cost distribution reports exposes duplicate labor charges across cost codes.
Question 6: A CCA auditor finds that change orders consistently increase scope but the project schedule was never formally updated. What risk does this create?
- Inability to accurately assess contractor time extension entitlements or delay damages (Correct answer)
- Reduction in the contractor's profit margin
- Automatic forfeiture of contractor performance bond
- Invalidation of all subcontracts
Correct answer: Inability to accurately assess contractor time extension entitlements or delay damages
Without schedule updates reflecting added scope, it becomes impossible to fairly evaluate contractor delay claims or determine concurrent delay situations.
CCA CCA Construction Project Management and Controls 2
A construction auditor identifies that a contractor submitted invoices for materials that were never delivered to the job site.
This finding most directly indicates a failure in which control?