A private, non-profit university had completed the construction of two new residence halls and a parking structure with plans for additional construction in the coming years. However, the institution lacked clear-cut construction processes and controls. It engaged Baker Tilly to work collaboratively with its internal audit team to perform an audit of the recent construction work, evaluate the quality of its current construction processes and controls, and evaluate allegations of potential fraud on the completed projects.
An eleven-week internal audit plan defined Baker Tilly’s strategy for on-site testing of high risk areas and to determine if processes for bidding, billing, and calculating costs were compliant and efficient. As part of this process, university management and its internal audit function partnered with our team on interviewing ten university staff to gather detail on existing business processes and procedures. For example, our team assessed whether subcontracting relationships presented any conflicts of interest.
The project finished on time and on budget. Audit results enabled us to develop a construction process template of policies and procedures, which the university could customize and submit to its Board for ratification. We reviewed and updated the university’s draft internal audit report. We also provided recommendations for improving the control systems for construction projects to reduce the opportunity for fraud and potentially reduce costs on future projects.