CCA Construction Internal Controls and Financial Reporting

Question 1

What internal control framework is most commonly referenced in construction audit engagements?

Accepted Answer

COSO Framework

Answer

PCAOB Standards

Answer

GAAS Guidelines

Answer

ISO 9001

Question 2

Which component of the COSO framework addresses organizational structure and the assignment of authority and responsibility?

Accepted Answer

Control Environment

Answer

Risk Assessment

Answer

Monitoring Activities

Answer

Information and Communication

Question 3

In construction auditing, a Work-in-Progress (WIP) schedule is primarily used to:

Accepted Answer

Assess the financial status of contracts currently in progress

Answer

Track employee overtime hours on job sites

Answer

Monitor subcontractor insurance certificate expiration

Answer

Document the approval chain for change orders

Question 4

Which of the following is an example of a preventive control in a construction company's disbursement process?

Accepted Answer

Requiring dual signatures on checks above a dollar threshold

Answer

Reconciling bank statements at month-end

Answer

Investigating cost overruns after project completion

Answer

Reviewing completed subcontractor invoices for accuracy

Question 5

Under the percentage-of-completion method in construction accounting, revenue is recognized based on:

Accepted Answer

The proportion of contract costs incurred to date relative to total estimated costs

Answer

Cash actually received from the project owner

Answer

The number of contractual milestones achieved

Answer

Final inspection and acceptance approval

Question 6

Which segregation of duties is most critical in the construction accounts payable process?

Accepted Answer

Separating invoice approval authority from check signing authority

Answer

Separating project management from field supervision responsibilities

Answer

Separating cost estimating from project scheduling functions

Answer

Separating design oversight from construction oversight roles

Question 7

In construction auditing, 'three-way matching' in the procurement cycle refers to matching which three documents?

Accepted Answer

Purchase order, receiving report, and vendor invoice

Answer

Labor hours, equipment hours, and material quantities

Answer

Budget estimate, approved change orders, and final cost report

Answer

Contract amount, billings to date, and costs incurred to date