Construction contract audit program

On 30 June , the Ministry paid the supplier Sh million through the Attorney General, leaving a balance of Sh1 billion which continued to attract compounded interest at two per cent per month.

Another Sh1. After a court duel, the supplier was awarded Sh1. However, upon negotiations out of court, the award was revised to Sh15 billion, resulting in an escalation of Sh13 billion. Due to failure to make payments as per the agreement, accrued claims stood at Sh During the project tenure, the Ministry received Sh3.

Gathungu notes in the report that value for money for the program may not be achieved due to underutilized funds. The audit report also flagged the delayed construction of the East Africa Kidney Institute in Nairobi for which the Ministry obtained a year loan for its construction which was to start from December 17, , to December Disclaimer: Any policies, procedures, guidelines, templates, or information provided on the GRCReady website are offered as general guidance only and should be used as a reference.

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Pay when Paid — Typically on a construction project each layer of contractor will hold off paying expenses on a specific project until they have been reimbursed for the work they have completed on that project.

Due to the inherent delays in reimbursements reaching the subsequent layer, attention should be paid to prompt processing of construction invoices, but only after the proper reviews and authorizations have occurred. Labor Rates — The cost per hour for a specific employee can be calculated differently by contractor, project, and position. In order to reimburse the contractually agreed upon allowable expenses the owner must request a breakdown of all the charges in the hourly rate.

The contractor should be required to provide this information during the contract negotiation stage. Union Agreement — Official contract stating pay-rates and benefit packages for a defined period of time, specific to each construction trade.

Union agreements define minimum pay scales and are typically available upon request. Budget Value — Largest dollar value contracts may provide the largest cost recovery opportunity typically resulting from contract non-compliance or the creation of contractor profit centers. Contract Type — Cost Plus contracts typically provide a greater area of audit due to the documentation requirement of actual costs. Skip to content Construction Audit. Types of Audits Construction Contract Audits Compliance with contract terms is the focus of this audit.

Audit findings are presented as follows: Contractor Related — cost recovery opportunities for contractually unallowable costs reimbursed Project Specific — typically non-functioning internal controls creating contract non-compliance Global — project specific observations which are applicable to a variety of capital projects Process Audits A process audit is designed to evaluate the efficiency and effectiveness of a particular workflow and the associated function of the internal controls within the process.

Examples of available process audits include: Bid Process — evaluate compliance with University and Departmental Policies and Procedures Funding Process — confirm funding sources are being utilized in the manner intended System Implementation — serve as a team member to insure controls are being developed Vendor Procurement Audits Operations and Maintenance provides a variety of services to the university dealing with multiple vendors and contract structures.

Data analysis — objective review and quantification of General Ledger or Work Order transactions Contract Audits — major FRES contracts are reviewed to evaluate compliance with contract terms Process reviews Definitions Letter of Intent LOI — This letter is issued to authorize a contractor to proceed, based on intent to award a contract for a specified project or scope of work.