Construction Audit Program

I. General Procedures

A. Review the written policies and procedures for completeness, adequacy and proper approval.

B. Verify that employees have system access compatible with their job descriptions. Additionally, ensure that only current employees have system access.

C. Per inquiry and observation determine that user Ids and passwords are adequately protected. Specifically, ensure the following:

1. Passwords are not shared.

2. Passwords are not written or kept near the user's workstation.

3. Passwords should not be trivial or easy to guess.

D. Through inquiry and observation determine that when an employee leaves a workstation, they must sign off or end the session temporarily.

E. Inquire of appropriate personnel regarding controls in place to protect records from theft, misuse, and misappropriation. Determine the adequacy of controls.

II. Official Checks/Accounts Payable

A. Review the monthly reconciliations performed in the prior year and ensure they are being performed timely (monthly basis).

B. Verify the mathematical accuracy of the reconciliations by re-footing them and agreeing the balances to the appropriate subledgers (bank statement).

C. Per review of the bank statements, verify that the balance in the account does not exceed $3,000.

D. Review the sequence of official checks used during the audit period and ensure all numbers are noted as issued or voided. Locate voided checks and investigate any numbers which cannot be accounted for.

E. Review a sample of checks and perform the following:

1. Verify that the checks are properly completed and approved by A/P MANAGER/SUPERVISOR.

2. Verify that payment of the item was properly supported by an approved invoice or other appropriate document.

3. The amount of the check agreed to the invoice.

4. Verify the invoice was paid timely.

III.
Contractor Payments

A. Select a sample of payment vouchers and perform the following:

1. Verify that voucher is properly supported by an approved invoice or other appropriate document. (Agree amounts.)

2. Verify that the voucher/invoice was approved by A/P MANAGER/SUPERVISOR or A/P MANAGER/SUPERVISOR (for environmental affairs).

3. Obtain the corresponding check and agree amounts.

4. Verify the invoice was paid timely.

IV. System Balancing

A. Verify that there is evidence that the balances on the two systems (D-Base and CTI) are compared on a weekly basis to identify any input errors.

V. Bid Process

A. Select a sample of construction jobs (include environmental jobs) and perform the following:

1. Verify that the Construction Department obtained at least three bids for the job prior to awarding the contract.

2. Verify that the lowest bid was selected.

3. If a General Contractor was hired, verify that the GC obtained obtain at least 3 bids from subcontractors and that the selected subcontractors were approved by the Construction Department.

VI. Contractor Requirements

A. Select a sample of construction jobs and perform the following:

1. Verify that a formal contract developed by the American Institute of Architects is on file for large contracts (typically over $5,000) or for smaller contracts, a standard Letter of Authorization not to exceed a specified amount is on file.

2. Verify that there is evidence of insurance with TMC as an additional named insured for the general liability, excess liability, and automobile liability in accordance with the contract specifications. Additionally, verify that a 30 day cancellation notice is included on the insurance policy and TMC is named for notification purposes.

3. Verify that both types of contracts are signed by the contractor and approved by A/P MANAGER/SUPERVISOR.

4. Select a sample of work change orders and verify that they have been authorized in writing by the owner (A/P MANAGER/SUPERVISOR)

5. Verify that lien waivers have been provided by the contractor, subcontractors and suppliers at or before time payment is made in accordance with the schedule in the signed AIA contract.

VII.
Management Reports

A. Review a sample of management reports and perform the following:

1. Verify the accuracy of reports (e.g. Budget, Committed and Spent Report, Estimate to Complete, etc.) by comparing information on the reports to the CTI/D-Base system or other supporting documentation.

2. Determine that the reports are distributed to the appropriate level of management.