Audit Methodology and Procedures Flashcards
7 cards from real CCA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Audit Methodology and Procedures flashcards as text
During a construction audit, an auditor discovers that the contractor submitted invoices for materials that were never delivered to the job site. This is best classified as:
Answer: Fraudulent billing
Invoicing for materials not delivered constitutes fraudulent billing, a serious finding requiring escalation beyond typical audit reporting.
Which sampling method is most appropriate when an auditor wants to ensure every item in a population has an equal chance of selection?
Answer: Random sampling
Random sampling gives each item in the population an equal probability of selection, reducing selection bias.
A CCA auditing a lump-sum construction contract should focus primarily on:
Answer: Contract compliance, scope changes, and allowances
Under lump-sum contracts, the auditor's main focus is verifying that scope changes and allowances are properly authorized and documented.
The term 'substantial completion' in construction auditing is significant because it typically triggers:
Answer: The start of the warranty period and punch-list obligations
Substantial completion marks the point when the owner can use the facility for its intended purpose and starts the warranty and punch-list period.
When auditing equipment rental charges on a cost-plus contract, the auditor should compare rental rates against:
Answer: Published industry rate guides such as the AED Green Book
Industry rate guides like the AED Green Book provide objective benchmarks for verifying that equipment rental charges are reasonable and customary.
An auditor identifies that a subcontractor's invoices consistently lack supporting backup documentation. The best immediate audit step is to:
Answer: Issue a formal audit finding and request documentation from the subcontractor
The auditor should issue a finding and formally request documentation rather than unilaterally disallowing costs without due process.
Which of the following best describes 'field verification' in construction auditing?
Answer: Physically inspecting the job site to confirm quantities, conditions, and progress
Field verification involves on-site inspection to confirm that reported quantities, installed materials, and construction progress match documented claims.