What it is
A contractor’s revenue depends on estimates of total cost and progress on each job. Small changes in an estimate at completion move revenue and margin, and management may have bonding or bonus reasons to lean one way. This checklist walks through the contract, estimate, job cost, billing and bonding risks that drive a contractor audit.
It is written for a nonissuer audit under AU-C and ASC 606. Each requirement is a yes, no or N/A question with a column for the workpaper reference, so it can sit in the file next to the audit program.
When to use it
- Planning or completing an audit of a general or specialty contractor.
- When the client reports a work in process schedule to a surety or lender.
- As a review aid for the revenue and job cost sections of a construction file.
What’s inside
- Planning, fraud risk and surety covenant checks
- ASC 606 over-time revenue, modifications, claims and loss contracts
- Job cost vouching, estimate at completion tests and cutoff
- Billings, retainage, confirmations and allowance
- Liabilities, warranty, insurance and disclosure
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
How should I test an estimate at completion?
Recompute it with the project manager for a sample of open jobs, agree remaining costs to subcontracts, purchase orders and quotes, and compare with prior-year estimates and with job results after year end. Retrospective review of last year’s estimates is how AU-C 540 expects you to look for management bias.
Are over and under billings netted?
No. Contract assets and contract liabilities are computed job by job, and a job in an overbilled position is a liability even if other jobs are underbilled.
Does ASC 606 still use percentage of completion?
The term is gone but the idea remains. Revenue is recognized over time when an over-time criterion is met, and cost-to-cost is a common input method to measure progress. Loss provisions for contracts remain in ASC 605-35.
Related templates
- Audit Program: Accounts Receivable and Revenue
- Journal Entry Testing Workpaper (AU-C 240)
- Search for Unrecorded Liabilities Workpaper
Last updated 11/05/2026. All free templates.