Construction Company Audit
Contracts, work in progress, materials, subcontractors
Go to the Voluntary Audit serviceChecked against the official source:
Accounting in construction is more complex than in most industries because of the long cycle: revenue is recognised neither when payment is received nor when the contract is signed, but as the work is performed — and this is where most errors arise.
Rules the auditor tests
- revenue under construction contracts for IFRS reporting — as the performance obligation is satisfied, at a point in time or over time (IFRS 15);
- changes in the volume and price of work — adjustment of the VAT base (Art. 257 of the Tax Code);
- construction not completed within the standard period — property tax at 3% (Art. 415).
Key audit areas
- Revenue recognition on long-cycle contracts and whether the chosen method is appropriate
- Accounting for work in progress and whether the recorded costs are justified
- Write-off of materials and whether actual usage matches the norms
- Settlements with subcontractors and confirmation of the volume of work performed
- Warranty obligations on completed projects
The main risk
Overstating or understating a project's stage of completion directly shifts the financial result between periods. The audit compares the stated stage of completion with actual costs and signed completion certificates — a mismatch here almost always points to a misstatement in the financial statements.
Audit your construction business
We will test revenue recognition and work-in-progress accounting for your projects.
Go to the Voluntary Audit serviceFrequently asked questions
Does the auditor visit the sites?
Where volumes are material — yes, to observe stocktakes and assess the actual state of the work. A desk review of completion certificates does not always confirm that the work was actually done.
How is unfinished construction taxed?
With property tax at 3% if the project is not completed within the standard period (Art. 415 of the Tax Code).
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