Baker Tilly was engaged to assist a major U.S. airport in conducting financial, compliance, economy efficiency and performance audits to ensure that project funds were properly used according to the agreements and contracts for the project.
Baker Tilly solution:
The Baker Tilly team reviewed and assisted with Federal Aviation Administration (FAA) procedures and practices in addition to the developer’s, design-builders and subcontractors’ business practices, procedures, internal controls and procurement practices as requested and in coordination with the airport.
Baker Tilly performed a final Guaranteed Maximum Price (GMP) risk analysis and line-item budget assessment. The team reconciled the proposed line item GMP to the contract terms and estimates to arrive at a baseline budget. This budget is now used for evaluating contingency usage and change orders. Additionally, the team performed an interim audit on the first $900 million of spend and an insurance coverage assessment.
The team documented the project controls environment. This documentation was shared with the airport as well as the city’s internal audit department to demonstrate the integrity of the project controls environment with the results of the transaction testing.
In response to the audit, excessive insurance premiums have been embedded in the GMP. Anticipated recovery is to exceed $2 million. The direct labor testing resulted in a 14% labor overcharge from insurance, holiday, vacation and unauthorized labor charges. The expected recovery is to exceed $10 million.*
*The following observations are based on key personnel interviews, documentation review, GMP analysis, contract risk analysis and transaction testing.
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