B2

AUDIT PROGRAM
CONTRACT ADMINISTRATION

A. AUDIT OBJECTIVES AND SCOPE

Audit Objectives:1. To ascertain the availability of approved and complete Contract Administration Manual 2. To ascertain whether the procedures of the Contract Administration Manual is adopted and implemented 3. To ensure that relevant authorities requirement ie Occupational Safety And Health 1994 is included in the Condition of Contract or Letter of Award 4. To ensure that the requirements on Safety Committee, Safety Officer and Safety Policy are being followed 5. To determine whether all variation to the contract sum are supported with relevant Consultants Instruction 6. To ascertain that the variation order claimed are verified by the Consultants representative 7. To ensure that there is a management paper prepared and approved on VO before the issuance of Certificate of Variation of Works 8. To ensure the adequacy of submission of insurance and performance bond upon the site possession by the contractor 9. To ascertain that both the insurance and performance bond are valid and current from the date of commencement to the end of Defect Liability period after any extension of time 10. To assess the adequacy of appointment of consultants and the consultants representative 11. To ensure the proper control on the issuance of the Certificate of Non Completion and the Extension of Time 12. To assess the adequacy of proper progress claims, issuance of consultants certificate and progress payments

APPENDIX B2 - Contract Administration

Page 1 of 10

13. To determine whether all the terms in the Condition of Contract are properly prepared and approved 14. To ensure the level of security in safeguarding the Contract documents

Audit Scopes:1. Peruse the Contract Administration Manual to review the current practice implemented 2. Review the Occupational Safety and Health Policy 3. Peruse all the contractors file under review 4. Peruse the insurance and performance bond related to the contract documents 5. Review of the contract documents available for each awarded contractors

APPENDIX B2 - Contract Administration

Page 2 of 10

B. AUDIT PROGRAM

Key Control Reviewed / Audit Program A 1 Contract Administration Operating Manual Approved Obtain an approved contract and administration operating manual 2 Completeness of manual Review the manual for compliance 3 B 1 Adoption and Implementation Health and Safety Plan Safety and Health requirement stated in the Condition of Contract Review the contract document and trace for any clause on safety and health requirement 2 Safety and Health Policy formulated Obtain safety and health policy available and review the policy for compliance 3 Safety committee is set up at contractors Project Management Department level Ensure that there is a safety committee set up at contract level whereby if there is 40 / more persons employed at the place work Determine if the contractors submit safety and health plan

Satisfactory

Remarks

Appointment of Safety Officer Enquire the management if there is an appointment of Safety Officer, review for regular

APPENDIX B2 - Contract Administration

Page 3 of 10

Key Control Reviewed / Audit Program safety meetings and determine the level of reporting C 1 Variation Order (VO) Instructions by consultants to proceed with the VO Select sample of contract with VO and determine whether there is an application of VO from contractors that subsequently recommended by the consultant to proceed with the VO work 2 Verification done by the Site Clerk/Clerk of Work for the variation works Determine if any verification done by the Site Clerk / Clerk of Work on variation works 3 Management Paper on Variation of Works prepared and approved by The Chairman Determine if there is a management paper prepared for the VO claims that goes to the TCC evaluation and signed by its committee 4 Certificate of Variation of Works available Upon the management paper, determine any approval by the BOD and subsequently the issuance of VO certificate

Satisfactory

Remarks

D 1

Insurance Relevant insurance policies are submitted, valid from the date of commencement to the date of completion Obtain the insurance policy available for the

APPENDIX B2 - Contract Administration

Page 4 of 10

Key Control Reviewed / Audit Program contracts under review Trace for any contract without insurance policy Determine the period covered including the period of EOT and DLP 2 Insurance policies before/as at possession date Trace date of Certificate of Practical Completion and check against the insurance period coverage E 1 Consultants Appointment Contract/Letter of Acceptance (LA) available Obtain a contract / letter of acceptance available 2 Scope of work clearly defined/stated Review of scope of work and determine if it is clearly defined / stated 3 Written acknowledgement of Clerk of Work (COW) sighted Determine whether the appointment is acknowledged by the COW

Satisfactory

Remarks

F 1

Performance Bond Performance bond is submitted, valid and current from the date of commencement to the end of Defect Liability Period (DLP) Obtain the original copy of the Performance Bond and determine that the period is valid and current from the date of commencement to end of DLP

Performance bond is extended up to DLP after

APPENDIX B2 - Contract Administration

Page 5 of 10

Key Control Reviewed / Audit Program Extension of Time (EOT) If there is EOT, ensure that the period of Performance Bond is extended up to DLP after the EOT G 1 Certificate of Non-Completion Liquidated Ascertain Damages (LAD) stated is as per Conditions of Contract Ascertain whether LAD imposed is in accordance to the conditions of contracts 2 Certificate of non-completion issued and signed by the Superintending Officer (SO) Determine whether the LAD imposed is upon the issuance of Certificate of Non- Completion 3 H 1 LAD issued Progress Claim, Interim Certificate and Progress Payments Progress claim received from contractors Trace all progress claims received from contractors Determine the end sequence number to ensure all progress claims are recorded 2 All progress claims were certified Trace the progress claim to the interim certificate and determine whether the consultant certifies it promptly and progress claims are certified before payment 3 4 Consultant Certificates certified promptly Proper site evaluation on progress claim Determine the adequacy process of site evaluation on progress claim 5 Interim certificate signed by SO

Satisfactory

Remarks

APPENDIX B2 - Contract Administration

Page 6 of 10

Key Control Reviewed / Audit Program Determine the signatories for the interim certificate and the Superintending Officer (SO) duly signs it I 1 Contract Document Contract Document signed by relevant parties Obtain the original contract document and determine whether relevant parties duly sign the document 2 Completeness of Conditions of Contract Review the contract document and ensure the compliance J 1 Extension of Time (EOT) Certificate of EOT is promptly issued Determine written notice of the cause(s) of delay from the contractors is submitted and a certificate of EOT is issued upon submission of the written notice 2 Certificate of EOT is approved by the SO Determine the approval of the certificate of EOT by the SO, Executive Director and TCC and subsequently distributed to contractors K 1 Retention Sum Retention sum correctly deducted from progress payment Determine the % of retention sum deducted from progress payment and check the accuracy from the contract register available and check for compliance against the condition of contract 2 Retention sum released with Certificate of Practical Completion or expiry of DLP Determine the date of retention sum released

Satisfactory

Remarks

APPENDIX B2 - Contract Administration

Page 7 of 10

Key Control Reviewed / Audit Program and compare against the date of issuance of Certificate of Practical Completion or expiry of DLP and check for compliance against condition of contract L 1 Certificate of Practical Completion (CPC) CPC been issued promptly Determine the date of completion, check against the condition of contract, unless there is EOT completion date will date extended Determine the issuance of CPC

Satisfactory

Remarks

Has original contract sum been reconciled with the final contract sum? Ascertain whether the final contract sum is agreed with relevant parties and determine whether reconciliation is done

3 M 1

Contractor agreed and signified the CPC Statement of Final Account Statement of Final Account prepared and agreed both by the Contractor and BOD Obtain statement of Final Account for completed projects and review the statement and check for accuracy Determine the approval by the BOD and agreed by the contractors

All advances been recovered Trace for advances and check its recoverability

Certificate of Fitness obtained from Local Authority concerned available

APPENDIX B2 - Contract Administration

Page 8 of 10

Key Control Reviewed / Audit Program Obtain the certificate of fitness from the local authority upon the completion of the project N 1 Security of Contract Documents and Record Keeping Security measures are in place Determine the security measures in place and assess the control of record keeping

Satisfactory

Remarks

Contract Registers for recording the movement of Contract Documents ie in and out Determine the checklist of contract documents available

Custodian of Contract Documents Determine the custodian of the contract documents

APPENDIX B2 - Contract Administration

Page 9 of 10