What it is
The audit of a contractor turns on one schedule: work in progress. Revenue, the contract asset and liability, the loss provision and backlog all come from it, and each input is an estimate or a cutoff: contract price and change orders, cost to date, estimated cost to complete and billings.
This program covers those inputs and the areas around them: job cost and cutoff, subcontractor payables and retainage, surety and bonding, equipment, payroll and financing covenants. Steps are numbered with the assertion each addresses, a sample-size note, a W/P reference and sign-off columns.
When to use it
- Planning the audit of a general or specialty contractor that recognizes revenue over time.
- To document the response to risks in estimates at completion and contract revenue.
- As a base to tailor to cost-plus, fixed-price, design-build or unit-price contracts.
What’s inside
- Contracts, backlog and WIP schedule recomputation
- Estimates at completion, gross profit fade and loss contracts
- Job cost, revenue recognition and cutoff
- Receivables, retainage, subcontractors and pay applications
- Surety, financing, equipment and covenants, plus a tie-out tab and general procedures
Standard cited
This template follows AU-C 330 / ASC 606 / ASC 605-35. It is written in our own words, except for phrases the standard requires the document to contain, with [bracketed placeholders] for client details, amounts in USD and dates as MM/DD/YYYY. Check it against the current standard and your firm’s methodology before use. See AU-C 330 explained.
Questions
What is the highest risk area on a contractor audit?
The estimate of total cost at completion on open jobs. A small change moves revenue earned to date, the over or under billing and the loss provision. Test it against subcontract and purchase commitments, the project manager’s forecast, costs after year end and the job’s history of gross profit fade.
How is an anticipated loss on a contract accounted for?
The entire expected loss is recognized when it becomes known, not as the job progresses (ASC 605-35-25-45 through 25-49). The WIP workbook in this library calculates the part of the loss not already recognized through percent complete.
Should we test every job?
No. Select by size and risk: all jobs above a threshold tied to performance materiality, jobs with losses, fade, large change orders or unapproved claims, jobs near completion, and a sample of the rest under your sampling policy.
Related templates
- Construction WIP Schedule (Over / Under Billings)
- Audit Program: Accounts Receivable and Revenue
- Search for Unrecorded Liabilities Workpaper
- Audit Planning Memo (AU-C 300)
Last updated 11/05/2026. All free templates.