CCA Audit Methodology and Procedures 3

Question 1

In a cost-plus-fee contract audit, the auditor's primary concern regarding indirect costs is:

Accepted Answer

Whether indirect costs are appropriately allocated and within agreed overhead rates

Answer

Auditors must verify that indirect costs are allocated using agreed-upon rates and that only allowable, allocable costs are charged to the project.

Question 2

Which document is the primary basis for verifying that a contractor's labor costs on a prevailing wage project are compliant?

Accepted Answer

Certified payroll reports

Answer

Certified payroll reports are the legally required documentation that demonstrates workers were paid at least the prevailing wage rate for their classification.

Question 3

An auditor finds that a contractor charged the same employee's labor costs to three different projects simultaneously for the same time period. This is an example of:

Accepted Answer

Double-billing or cost allocation error

Answer

Charging the same labor costs to multiple projects for the same time period constitutes double-billing, whether intentional or due to an accounting error.

Question 4

The purpose of a 'schedule of values' in construction contract administration is to:

Accepted Answer

Provide a breakdown of the contract sum assigned to project components for progress billing

Answer

The schedule of values allocates the contract sum among work items and serves as the basis for evaluating monthly progress payment applications.

Question 5

When reviewing change orders during a construction audit, which red flag most warrants further investigation?

Accepted Answer

A high volume of change orders for work that falls within the original contract scope

Answer

Change orders for work within the original contract scope may indicate scope creep manipulation or an attempt to bill separately for already-included work.

(CCA) Certified Construction Auditor Practice Test

(CCA) Certified Construction Auditor Practice Test

CCA Audit Methodology and Procedures 3