Show the audit work of the given capital project, Auditing

In planning the audit work of the Ministry, the audit staff member collected these details relating to the construction of an office complex.

1. In September 1994, the Ministry requested the assistance of the Ministry of Works, for the preparation of plans and preliminary drawings to ‘set up a building to accommodate its departments' of approximately 6000m2 at an estimated budgeted cost of Rs 50 million.

2. In September 1995, an architectural competition was launched with a view to have the best design and the winner was to be engaged as the Consulting Architect subsequently. The design was prepared on a project area of approximately 12,827m2, with costs estimated at Rs 127 million. In August 1997, the winner of the design competition was appointed the Consulting Architect and he was to charge a fee of 6 per cent of the construction cost.

3. The Consulting Architect discussed major requirements directly with the client ministry and brought major modifications to the design without informing the Ministry of Public Infrastructure.

4. In September 1997, the client ministry requested changes to be made to the proposed building to accommodate parking for 100 cars and making provision for three additional floors for future expansion.

5. In February 1999, confirmed that funds of Rs 285 million were available for the construction of the building that would comprise of three levels of approx. 13,460 m2 and provision of three additional floors.

6. In June 1999, the client proposed further modifications, semi-basement to be full basement and finished to be upgraded. The costs were estimated at Rs 326 million.

7. In September 1999, the client requested for the project cost to be curtailed to Rs 175 million. After The Central Tender Board had given its approval, the consultants brought modifications to the design and plan of the buildings and prepared the tender documents.

8. In April 2002, the contract was awarded to XYZ Builders Ltd at a contract price of Rs 161,310,621 and contract had to be completed on 17 January 2004. Soon after, i.e in August 2002, the client ministry again requested major modifications to accommodate two other units on both the first and second floors in place of the administrative block. Further modifications were made to the revised plan in July 2003 and March 2004 to consider the urgent needs of the client.

9. The project was completed and Consulting Architect issued the Practical Completion Certificate in October 2005. All works were completed on 21 August 2006.

10. In the Cost Report dated August 2005, the Quantity Surveyor mentioned the following extra costs related to the project:

a. Loss & expense claim from the contractor of Rs 44 million;
b. Claim of Rs 25 million for running the site beyond practical completion date;
c. Claim of Rs 6 million representing increases in costs of materials and labour;
d. Loss and expense claim from the subcontractor for electrical works of Rs 15 million.
11. On September 2007, the Central Tender these additional payments were approved
a. Consulting Architects - Rs 3,857,230 (inclusive of VAT)
b. Project Manager - Rs 1,739,130 (inclusive of VAT)
c. M&E Consultant - Rs 915,478 (inclusive of VAT)
d. Structural Consultant - Rs 87,000
e. Quantity Surveyor Consultant - Rs 561,000
12. The final cost of the project was much higher than the contractual price of Rs 161,310,621.

Required

(i) List down the audit work you would perform in respect of the above capital project.

(ii) List down 10 (ten) shortcomings that you could bring to the attention of the Accounting Officer of the ministry following the examination of any capital project. You may use the above- mentioned case as a reference.

Posted Date: 11/16/2013 12:28:04 AM | Location : United States







Related Discussions:- Show the audit work of the given capital project, Assignment Help, Ask Question on Show the audit work of the given capital project, Get Answer, Expert's Help, Show the audit work of the given capital project Discussions

Write discussion on Show the audit work of the given capital project
Your posts are moderated
Related Questions
Problem 1: You have been asked to design a system of controls so as to prevent unauthorized payments being made from the bank account. You are required to identify the controls

Role of Accountant The Accountant's Role Every year a lawyer who such handles client's money is used to created to the Law Society of US a report through a qualified accoun

Skills and Objectivity of Expert The skills and competence of the expe rt Whether planning to require the work of an expert, so the auditor should assess the professiona

Why is studying Auditing different from studying other accounting topics?

IFRS 5 Non-Current Assets IFRS 5 Non-Current Assets Held for Discontinued and Sale Operations The Discontinuing Operation is a component of an enterprise: (a)  Such the

QUESTION 1: Part A When planning a financial statement audit, an audit manager must understand audit risk as well as its components. The firm of Jack and Jackie calculates

factors that influence auditors judgement on sufficiency of audit evidence

Financial Institutions and Banks - Audit Situations Financial Institutions Because of the recent collapse of many financial institutions, this is still a heavily regu

Accounting Principles - Intangible Assets IFRS 3 prescribes the financial reporting through an entity whenever it undertakes a business combination. A business combination is

a. Discover Fifty strengths and Fifty weaknesses after conducting an internal audit of a company. b. What procedures could then be used to determine the most important of these?