1. Acceptance of client develops overall audit strategy.

Output audit plan

Focus of auditor: Planning aspect
1. Understanding the client. May specialty din ang construction companies.
2. Knowing the environment what is considered the peculiarity of the construction company.
3. Internal control
2. Planning stage the auditor must also consider the going concern capability of the client.
Conditions manifesting on the going concern. The more common danger signal: 1. Continuous
losses 2. Negative na ang she and net cash flow sa operating activities.
3. Audit output of audit committee. Usually 3 members one chairman. Sa kanila nag rereport ang
internal audit ng company si audit committee ang magfifinal assessment and will report on the
board of directors. Concern ng audit committee: financial reporting risk and judgement na part
ng fs. May impact sya sa external auditor.

INTERNAL CONTROL

After ng assessment ng audit risk deretcho sa evaluation of internal control. Focus on

construction company auditor:

1. Revenue process ng construction starts on biding. Focus dapat ni auditor na measure nya na may
reasonable assurance sa bids formulated dapat in compliance with the necessary requirement such as
estimated cost, revenue and profitability. Questionable if the company bids lower than the minimum
required. (Adequate documentation and verification especially the estimated cost)

2. Project management assuming nanalo sa bidding conducting the consruction. Walang nanakaw
walang wasted man power and walang delay. 10% ang dagdag if natapos ng maaga ang project if
government same din if delayed.

3. Substantive testing gathering of supporting evidence.

1. Visitng the job site.

2. Specific account title primary concerns such as contract cost estimates on biding, income
recognition (percentage of completion method), and last concentration on accounts receivables
specifically aging. (May retention policy and advance payment policy) meron pa din unbilled recievable
upon finish kelan mo sya pwedeng I bill? Basta may sales covered ng ifrs 15. Ang focus sa construction
company is the reasonable estimate, quantitative discussion according to standard, earning on
contracts, contracting progress and completed contract, disclosed dapat ang subsequent collection and
lastly the backlog of the company it means yung lateness sa schedule of the company.

Other audit considerations: 1. Capitalizations

2. Compliance on legal and regulatory pd1746 and regular eo’s.

3. related party transactions.