Our client’s need
A large not-for-profit organization was undertaking major construction projects, including extensive renovations, the addition of a new building, and the expansion of its research institute. The organization wanted to ensure that it had a clear picture of risks associated with undertaking large-scale construction projects and sought an independent audit firm to review the internal controls applied to these projects.
Baker Tilly solution
Our goal was to help the organization to avoid unexpected delays, expenses, operational problems, or accounting concerns. Key construction documents were reviewed and interviews were conducted with project managers, financial personnel, and management team members to understand key risk areas. The design of internal controls and information flows in the high risk areas of contractor and sub-contractor procurement and oversight, financial reporting, accounting and project management information flow, close-out-processes, change order processes, and information systems were also reviewed. We then assessed the adequacy of documented policies and procedures, the effectiveness of the purchasing process to meet fiduciary requirements, and controls surrounding the construction information technology (IT) system.
Management proactively addressed internal control concerns that could have resulted in erroneous payments to contractors and/or management letter comments from the external auditors. Additionally, the institution enhanced its internal monitoring procedures and improved communication and information flow between construction and accounting personnel.