CCA Construction Billing and Payment Verification 1

Question 1

A Schedule of Values (SOV) is primarily used in construction billing to:

Accepted Answer

Allocate the contract sum among work components for progress payment purposes

Answer

Define subcontractor warranty obligations

Answer

Set labor wage rates

Answer

Track equipment depreciation

Question 2

When auditing a contractor's pay application, which document is most critical for verifying that work-in-place percentages are accurate?

Accepted Answer

Field inspector's or owner's representative's progress report

Answer

Contractor's financial statements

Answer

Subcontractor's invoice

Answer

Insurance binder

Question 3

Overbilling on a construction project most commonly occurs when a contractor:

Accepted Answer

Bills for work not yet performed or materials not yet incorporated

Answer

Uses a lump-sum contract

Answer

Submits pay applications on time

Answer

Provides detailed cost breakdowns

Question 4

What is the purpose of a stored materials provision in a construction contract's payment clause?

Accepted Answer

To allow payment for materials delivered to the site or approved off-site storage before installation

Answer

To limit the contractor's profit on material purchases

Answer

To require materials to be pre-inspected by regulators

Answer

To set the maximum retainage percentage

Question 5

Which auditor procedure best detects duplicate billing of a single invoice across multiple pay applications?

Accepted Answer

Cross-referencing invoice numbers across all pay applications

Answer

Reviewing the contractor's safety plan

Answer

Inspecting subcontractor credentials

Answer

Verifying labor classifications

Question 6

Retainage in a construction contract serves primarily to:

Accepted Answer

Provide the owner financial leverage to ensure project completion and defect correction

Answer

Compensate the contractor for mobilization costs

Answer

Fund the contractor's insurance premiums

Answer

Cover material price escalation