Audits & Reviews for Construction Bonding
A Surety Bond is a three-party agreement; where the Surety is providing a guarantee to the project owner that the contract will complete the contracts as stipulated in the contract terms.Three Basic Types of Contract Surety BondsBid Bond - assures that the Bid is submitted in good faith. Performance bond - protects the project owner from financial loss if the contractor fails to perform. Payment Bond - assures that the contractor will pay their subcontractors, suppliers, and laborers associated with the project.How can we help? Complete and accurate accounting records are important to the surety companies. The sureties recommend that the financial statements be presented per "The American Institute of Certified Public Accountants' (AICPA) Audit Guide for Construction Contractors on the percentage-of completion accounting method.The percentage-of- completion method represents a contractor's financial condition and most accurately measures results of work performed for the accounting period. The percentage of contract values recognized as revenue typically is done on a cost-of-completion method.The surety knows that the Financial Statements are only as good as the accountant preparing them. That is why it is important to select a CPA who is well versed in cost accounting. Sureties prefer, and at certain levels require, audited financial statements, but may accept a review or compilation statements. (see the audit, review and compilation section for a description of the services).