CCA CCA Subcontractor and Vendor Management Auditing

Question 1

When auditing a general contractor's subcontractor selection process on a public construction project, which practice would most likely constitute a compliance violation?

Accepted Answer

Awarding a subcontract to a related-party firm without competitive bidding or disclosed relationship

Answer

Requiring subcontractors to carry at least $2 million in general liability insurance

Answer

Conducting a pre-bid conference to clarify scope before subcontractor bids are received

Answer

Requiring subcontractors to submit certified payroll records

Question 2

A CCA auditor reviewing subcontractor invoices finds that the GC consistently approves and pays subcontractor invoices within 48 hours without any field verification. This practice most likely indicates:

Accepted Answer

Absence of required receiving, inspection, and verification controls over subcontractor payments

Answer

An efficient payment process that improves subcontractor cash flow

Answer

Compliance with prompt payment statutes requiring rapid payment

Answer

A valid waiver of inspection rights negotiated in the subcontract

Question 3

Which document is most critical for an auditor verifying that a subcontractor performed the work they were paid for on a unit price subcontract?

Accepted Answer

Field-measured quantity take-off reports signed by the owner's inspector

Answer

Subcontractor's own quantity summary submitted with the invoice

Answer

GC's project manager approval email

Answer

Subcontractor's certified payroll for the billing period

Question 4

What is pass-through billing in the context of construction subcontractor auditing, and why is it a concern?

Accepted Answer

A GC billing the owner for subcontractor costs plus unauthorized markups beyond contract-permitted rates

Answer

A subcontractor invoicing the GC directly instead of through the prime contract

Answer

An owner paying subcontractors directly to bypass the general contractor

Answer

A cost-plus arrangement where all subcontractor costs are passed to the owner at cost

Question 5

During a subcontractor audit, an auditor discovers that 30% of payments to a key subcontractor were made by checks payable to the subcontractor's owner personally rather than to the subcontractor entity. This finding suggests:

Accepted Answer

Potential diversion of project funds and tax reporting irregularities

Answer

Compliance with the subcontractor's preferred payment method

Answer

Proper handling of owner draws from a sole proprietorship

Answer

A valid retainage release procedure

Question 6

An auditor reviewing subcontractor lien waiver practices should verify that conditional waivers are obtained at which point in the payment process?

Accepted Answer

At the time of payment, before the check clears, conditioned on the payment being received

Answer

After the project reaches substantial completion

Answer

Before the subcontractor begins work on the project

Answer

When the general contractor submits the prime contract pay application