Construction Audits

How Construction Audits Provide Independent Oversight

Independent construction audits give project owners greater visibility into whether contractor billings, project costs and work performed comply with contract requirements. Complex contract structures, subcontractor activity, wage rate compliance, change orders and retainage provisions can make it difficult to determine whether charges are supported and whether the work performed is consistent with the agreement.

An independent review can help owners identify billing discrepancies, unsupported costs and other contract compliance issues while providing greater accountability throughout the construction project. For organizations managing multimillion-dollar capital projects, this independent perspective can provide greater visibility into how project funds are being spent and whether contract requirements are being met.

Weaver has audited billions of dollars in construction projects for government entities and large private institutions, bringing an independent perspective to capital project oversight.

Construction audits generally focus on contract compliance or construction management processes, depending on the project owner’s objectives and areas of concern. Contract audits evaluate whether costs and billings align with the agreement. Management and process audits assess the controls and practices used to oversee the project. An audit may incorporate elements of both based on the project and scope of review.

Construction Contract Audits

Construction contract audits evaluate contractor billings for compliance with contract terms, validate costs and determine whether those charges are supported and allowable within the contract. The audits also can support compliance with state and federal requirements, such as the Davis-Bacon Act. The review may consider areas such as labor and material costs, pay applications, change orders, retainage and supporting documentation to identify potential billing discrepancies or costs that do not align with contractual requirements.

Construction Management and Process Audits

Construction management and process audits examine contracted versus invoiced costs and evaluate the effectiveness of construction management practices, including internal controls related to procurement, contract administration and payment approval. This broader review can identify process or control gaps that affect project oversight and provide opportunities to strengthen how current and future capital projects are managed.

When Should You Conduct a Construction Audit?

Construction audits can be conducted at any stage of a project, including during active construction, at project closeout or after completion to review final costs. However, early involvement by auditors can be helpful. Auditors can help identify contract issues before the projects start, billing errors and cost overruns as they occur, and resolve disputes before they escalate into claims. Post-project audits provide an independent review of whether final payments align with contract terms and provide opportunities for cost recoveries.

What Construction Audits Review

Construction audits review contractor and subcontractor billings, project costs and supporting documentation to determine whether charges are accurate, supported and consistent with contract terms. Common areas of review include change order approvals, labor, equipment and material costs, contract pricing and retainage. Auditors may also compare job cost reports with pay applications, evaluate costs charged outside the approved scope of work and determine whether contractor charges are supported by sufficient documentation.

What is a construction audit?

A construction audit is an independent review of project costs, billings and supporting documentation to determine whether charges comply with contract terms and project requirements. The review can identify potential overpayments, unsupported costs, billing errors and other discrepancies that may affect project costs or final payments. Weaver applies a contract-driven approach, evaluating contractor billings and project records against the terms of the construction agreement.

Can a construction audit identify potential overpayments?

Yes. A construction audit can identify potential overpayments by identifying charges that are incorrect or not in accordance with the contract terms. Construction audits can also prevent overpayments by identifying incorrect charges before the completion of the project so that the charges can be corrected prior to the final billings.

What is the difference between a construction audit and a financial statement audit?

A construction audit focuses on costs, contractor billings and compliance with the terms of a specific construction project. A financial statement audit focuses on an organization’s comprehensive financial statements. A construction audit may involve testing of change orders, pay applications, retainage, labor, equipment, materials and other project costs, far beyond what a financial statement audit would cover. Our construction audit team tailors construction audit procedures to the project’s contracts, cost structure and specific areas of risk.

What documents are typically needed for a construction audit?

The documents needed for a construction audit depend on the project and audit scope but typically include the construction contractor billings and records from the contractor that support those billings. These may include payment applications, subcontractor invoices, contractor payroll records, change orders, job cost reports, invoices, retainage calculations and other supporting documentation. Weaver evaluates the available project records against applicable contract terms to determine whether additional documentation or testing is needed.

Who can benefit from a construction audit?

Organizations undertaking significant capital projects can benefit from an independent construction audit when they need greater visibility into contractor billings, project costs or contract compliance. Construction audits can be relevant for government entities and private organizations managing complex construction projects, particularly when contracts, change orders, subcontractor activity or payment processes require additional oversight. We work with project owners to focus the audit on the costs, contract requirements and areas of risk most relevant to the engagement.

Can a construction audit be performed if a project is already complete?

Yes. A construction audit can be performed after a project is complete to evaluate final costs and contractor billings against contract terms. A post-completion review may identify unsupported charges, billing discrepancies or potential recovery opportunities that were not addressed during construction. Weaver can review completed projects to assess final payments and identify findings that may also inform contract administration and controls on future capital projects.