Webinar Examines Contract Terms to Mitigate
Fraud During Payment
When it comes to financial review and auditing of construction documents,
there are terms and clauses that can be included to help mitigate fraud.
That was the message conveyed during a webinar hosted by Grant Thornton
titled “Construction Contract Terms to Mitigate Fraud During the Payment
Process.” Presenters were Jim Schmid, CPA, CFE with Grant Thornton, and
attorney Dennis Schultz, Esq., with Dawda, Mann, Mulcahy & Sadler
In discussing payment application forms and supporting documents, Schmid
said there are a number of common problems. These can include unusual,
inconsistent or incomplete pay application forms; a lack of cost back
up; a lack of field documentation; and missing attachments (such as a
lien waivers). In order to mitigate such problems, presenters encouraged
the use of payment forms such as the AIA G702 and G703. G702 allows the
contractor to apply for payment and the architect to certify that payment
is due, while G703 breaks the contract sum into portions of the work in
accordance with a schedule of values required by the general conditions.
Schultz also suggested that contract terms specify daily construction
reports. “In the event that there is suspicion that the building is improper
… outside or inside auditors will need the daily construction reports
to determine, for example, whether a piece of equipment for which a billing
is being submitted is 1) on the project, and 2) that there is construction
activity reported in the daily construction report that reasonably can
be tied to the utilization of that piece of equipment,” Schultz said.
When it came to the discussion over some of the accounting problems related
to change orders, Schmid said the number-one concern is work being performed
before the price is negotiated.
“This is simply going to happen … no matter how adamant you are,” Schmid
said. “While you need to have the scope defined before you can do any
work, you can still be arguing over price while the work is being done.
If this is happening make sure [you] are stipulating that [you are] collecting
field information on that change order activity so that as you continue
the negotiation of price … you can maybe settle on something related to
cost and you’ve gotten all the cost documentation inplace that will give
you an estimate of that actual cost.”
USGlass and AAMA Launch New Website for Contract Glaziers
USGlass Magazine, together with the American Architectural Manufacturers
Association (AAMA), has launched a new website dedicated to providing
news and information to contract glaziers: www.usglassmag.com/contractglazing.
The new site includes information ranging from business news to company
announcements to coverage of industry events. The site also includes a
selection of in-depth features from USGlass Magazine targeted specifically
toward contract glaziers, as well as one-on-one video interviews with
professionals in the industry. The site will be updated continuously,
and the daily USGNN.com™
newsletter will announce the latest posts.
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