Audit Requirements – MDOT Revised Prequalification Rules
Wednesday, January 13, 2010
In a December 16, 2009, MITA bulletin (Engineering), several revisions to the MDOT Administrative Rules Governing the Prequalification of Construction Contractors that became effective on December 4, 2009, were described.
One of those rule revisions allows contractors with an overall financial rating of $10 million or greater to choose to file an application for prequalification (renew) every 2 years, rather than annually. That bulletin stated that eligible contractors who choose the 2-year renewal cycle could save the cost of one audited financial statement compared to renewing annually.
Since the publication of that bulletin, MITA and MDOT have both received inquiries from accounting firms questioning the actual audit requirements for contractors who choose to renew their prequalification on a 2-year cycle.
In response to those inquires MDOT has determined that a full scope audit, conducted in accordance with Generally Accepted Auditing Standards (GAAS), is required for eligible contractors who choose to renew their prequalification on a 2-year cycle.
Click here to view and print MDOT’s Contractor Announcement – CPA Clarification for Revised Administrative Rules concerning this determination.
“It appears, based on this MDOT determination, that those eligible contractors who choose the 2-year prequalification renewal cycle won’t save the full cost of one audited financial statement as we originally believed”, said Glenn Bukoski, MITA’s vice president of engineering services. “However, it is our understanding that the cost of the required audit for those contractors that choose the 2-year renewal cycle can be substantially less than the audit costs they would incur with an annual renewal, and, those contractors will have administrative costs and effort savings since they will be renewing every two years, rather than annually. In today’s economy, any dollars our members can save in overhead is a good thing.”
If you have any questions about this administrative rule change, contact Glenn Bukoski, Vice President of Engineering Services at firstname.lastname@example.org or Doug Needham, Director of Technical Services at email@example.com or call them at the MITA office at 517-347-8336.