Construction Accounting

In my experience I have found it very difficult to get them to keep proper records in terms of receipts, etc. I have really had to force some of my construction-related clients to do a better job of this. I told them I must have good records in order to protect them from IRS and our State.

Wayne Brasch

First thing that comes to my mind is you may have to deal with holdbacks.

In construction, 10% of an invoice/contract is held back in case someone farther up the food chain fails to pay their subs or suppliers. So, if the roofer fails to pay for the materials to do a roof, the general contractor had be approached to settle the bill for the roofer.

In Canada, Ontario specifically, you must obtain proof of Workers Compensation coverage, general liability insurance coverage and obtain a Ministry of Labour form 1000 (Registration of Contractors and Employers Engaged in Construction).

In case you can't figure it out, I work in construction... ;)

I'd think revenue recognition. Are the % completion? Did they calculate and record it properly?

Then I'd think dealing with the subs. Are they actual subs, and not kickbacks or fake entities? Are the same subs performing the same job under multiple IDs, for multiple pay? (lots of area for fraud)

-Holly