Construction Project Management and Controls Flashcards

When auditing a construction project's contingency reserve, an auditor should verify that the reserve is:

Answer: Separately identified and subject to owner approval for use

Contingency reserves should be explicitly tracked and require owner authorization before drawdown to prevent unauthorized spending.

Which internal control helps prevent a project manager from approving their own invoices on a construction project?

Answer: Dual-signature requirement for payments

Requiring two authorized signatures on payment approvals ensures no single individual can unilaterally approve their own expenditures.

An auditor finds that a construction project's work breakdown structure (WBS) does not align with its cost codes. This discrepancy most likely impairs:

Answer: Accurate cost tracking and performance measurement

Misalignment between the WBS and cost codes makes it impossible to accurately track costs by work package and measure performance.

In construction project auditing, a 'look-ahead schedule' is primarily reviewed to assess:

Answer: Near-term work planning and resource availability

A look-ahead schedule (typically 3–6 weeks) documents near-term work plans and reveals whether resources and materials are being properly coordinated.

Which variance threshold trigger should a construction auditor recommend as a best practice for mandatory management reporting?

Answer: Variances exceeding 5–10% of budget or a defined dollar threshold

A percentage or dollar threshold (commonly 5–10%) ensures significant variances receive management attention without creating noise from minor fluctuations.

A construction project auditor detects that baseline schedules have been revised multiple times without documented owner approval. This is an indicator of:

Answer: Unauthorized schedule manipulation

Repeated baseline revisions without owner approval may hide schedule slippage and distort performance metrics.