Process and Controls Report 50 Points
You are currently working as an independent consultant.
You are approached by a new client, Prof Moulton. Prof Moulton is investigating starting a construction company but is new to the construction industry. Prof Moulton has heard a lot of terms but wants to get a full understanding.
Prepare a detailed report for Prof Moulton regarding the following:
· Why construction financial management is different from financial management in other industries.
· What a job cost ledger is and how it should be laid out.
· The difference between job costs and overhead costs.
· Percentage of completion accounting, how does it work and what is cost in excess and billing in excess.
· The controls that should be introduced on site regarding purchase of materials and issuing subcontracts. Explain why this should be done.
· The controls that should be introduced on site regarding approving subcontractor invoices. Explain why this should be done.
· Explain the controls that should be introduced on site regarding labor costs.
· Provide a standard procedure regarding change orders – owner and subcontractor.
· Explain the importance of internal controls and segregation of duties when setting up accounting systems.
· Explain the difference between cost recording and cost control.
The report should be detailed enough that Prof Moulton has sufficient information to understand the topics, the reasons for your recommended controls and procedures and to be able to implement them without further discussion being required.