RISK ADVISORY SERVICES CONSTRUCTION AUDIT SERVICES

RISK ADVISORY SERVICES CONSTRUCTION AUDIT SERVICES

AS ECONOMIC AND FINANCIAL CHALLENGES WEIGH ON, ORGANIZATIONS FIND IT INCREASINGLY DIFFICULT TO LOCATE ENOUGH MONETARY SUPPORT TO HELP FACILITATE THE CONSTRUCTION OF THEIR CAPITAL PROJECTS, MOREOVER ENSURE THAT SUCH PROJECTS DEVELOP ON TIME AND BUDGET. Managing your construction project, albeit a mine, commercial or industrial asset, oil & gas operation, can be complicated, moreover you want to ensure that your funds are being properly allocated or spent. Changes to project timelines, regulatory requirements, infrastructure requirement as well as financing can create further complications where organizations that are looking to develop their assets want new solutions and products that address these concerns moreover ensure that their assets are efficiently constructed. One way to help address these issues is to engage an independent third-party to help alleviate these concerns through construction audits at any phase of the project cycle. Construction audits provide assurance to organizations in so far that their significant investments are efficiently and effectively allocated throughout the project. New approaches to Construction Audit Services ( CAS ) can also identify cost recovery opportunities during or after the development of the asset. Moreover, these methods shift away from cost-focused audit objectives to more important business focused construction activities such as on-time completion schedules, and construction quality that ultimately provide a truer alignment in capturing realized profits. BDO provides a full range of services tailored to help organizations address their changing needs in key segments of the construction and asset management industry. We offer a personalized approach combined with quality service, accessibility and commitment to our clients. For decades, our more than 100 dedicated construction and real-estate partners and professionals have helped over 8,000 clients in Canada and many more internationally. We understand the issues that our construction clients are facing, including the importance of seeking practical advice that is backed by years of experience.

IN A SUSCEPTIBLE INDUSTRY LIKE CONSTRUCTION, IT IS IMPORTANT TO PRATICE CAUTION WHILE GRASPING THE OPPORTUNITIES. As new methods emerge, the primary objectives of CAS are ever evolving. BDO can assist you in taking a proactive approach to identifying risks associated with your construction activities as they arise, so that risks may be turned into opportunities for improvement and success. We take a risk-based audit approach considering all aspects of the COSO framework. Our review helps ensure that all key operational, financial, strategic and compliance risks are being mitigated by internal controls. By focusing on aspects that are essential to the success or failure of a construction project, we can identify gaps and unmitigated risks, which may impact the organization s ability to achieve its goals and objectives. This approach to risk mitigation combines talent, experience and an exceptionally motivated team with the intention of providing clients like you with innovative, cost-effective and value-added services that make a difference. Some additional benefits to CAS include: Providing senior executives with timely governance related issues. Defining roles and responsibilities which ensures project goals are clear and aligned with those of the organization. Preventing overpayments from occurring. Avoiding litigation. Developing and maintain the appropriate controls and procedures to help mitigate risks. Minimizing the potential impact of environmental, health, and safety reputation, financial and compliance risks. Recent Construction and Asset Management Project Experience Construction audit services for the development of a mine site in Northern Quebec. The audit of three financial models and strategies for the construction of a Light Rail Train in Ottawa. Development of asset management plans, models, fully comprehensive strategies for multiple municipalities across Ontario to abide by Infrastructure Ontario requirements. Preparation of a financial model for a large scale infrastructure project undertaken by the Federal Government (with private partners) involving forecasts of revenues based on macroeconomic models and capital expenditures based on engineering studies. Preparation of a financial model and strategy for a nuclear project involving private commercial parties and the government. Developed forecasts of revenues based on macroeconomic models and capital expenditures based on engineering studies. Assist in the structuring of transaction from a privately held company to a publicly traded REIT. Acted as tax and accounting advisors to a number of consortiums bidding on PPP Infrastructure projects. Recognized leader by clients and colleagues in tax structuring of real estate syndications. Due diligence projects on behalf of mortgage financing companies and for real estate acquisitions as well as investigations relating to potential acquisitions.

STAKEHOLDER COLLABORATION BDO Contstruction Audit Methodolgy Our advisory professionals have substantial training and experience, which allows them to help clients assess the efficiency and effectiveness of their existing internal controls. We find this assessment beneficial as it assists in setting an expectation for the construction project. As such, we have developed a standard 5 Phase CAS Approach & Methodology to identify the nature and strength of internal controls in various processes to determine risks and focus the audit. Understand the Project QUALITY ASSURANCE Reporting 5 1 2 Collaboration 4 Execution Risk Assessment Planning and Design CONTINUOUS COMMUNICATION 3 > > > PROJECT MANAGEMENT > > > PROCEDURES Understand the Project 01 Risk Assessment 02 Planning and Design 03 Execution 04 Reporting 05 > > > QUALITY CONTROL > > > Obtain a thorough understanding of the client s business, its goals and objectives, and the construction project. Establish an understanding of the construction life cycle, including project planning, choosing a team, selection of vendors and materials, construction in progress, and postconstruction phases. Identify the schedules, committed spending, responsibilities, and terms of payment that are in place. Complete a high-level impact and diagnostic analysis. Establish a risk universe and align risks with business objectives. Quantify key risks and assign risks to owners. Meet with the designated project manager to finalize the objectives of the engagement. Review contracts, associated change orders and other relevant documentation and prepare customized procedures to ensure the scope and objectives are achieved. Establish the timing of the audit. The audit can take place after the project is over/as phases are complete or as the project is in progress. Identify resources and produce a detailed strategic plan. Interview key owners and review key documentation. Execute tests for selected key controls to provide detailed information on the risks and control weaknesses. CAS autidtable processes include: project feasibility, financing, and approval process, project management, monitoring and reporting process, bidding strategy process, procurement process, and contract monitoring process. Utilize analytical procedures such a s inspection, observation, enquiry and re-performance/ re-calculation. Focus placed on items such as reimbursable expenses, construction invoices, vendor invoices, and change orders. Assist with corrective actions or remediation. Establish management reports. Final summary report. > > > QUALITY CONTROL > > > Communicate with management updates of findings. Significant findings will be communicated by BDO project manager to the individuals. DELIVERABLES Detailed timelines and milestones Risk matrix with mapping of mitigating strategies Detailed project plan Execution of test plans Summary of Key Findings and Recommendations < < < PROJECT MANAGEMENT < < <

OUR CAS SERVICE TEAM Our team is a dedicated National practice with professionals that have extensive experience in providing internal audit and risk management services, including CAS, to our clients. All of our team members have obtained or are in the process of obtaining one or more of the following designations: Chartered Accountant (CA), Certified Internal Auditor (CIA), Certified Information Systems Auditors (CISA), Certified Information Systems Security Professional (CISSP) and Masters in Business Administration (MBA) designations. Additional relevant designations held by our personnel include: Certified Public Accountant (US) (CPA), Certified Fraud Examiner (CFE), Certified in Risk and Information Systems Control (CRISC), GIAC Systems and Network Auditor (GSNA), Certified Internal Controls Auditor (CICA), and Certified Risk Management Assurance (CRMA). The members of BDO s Risk Advisory Services team have also achieved appropriate business and professional experience in one or more of the following areas: internal audit, accounting, information system auditing and overall business managements and administration. Our core competencies and knowledge of respective professional and industry accepted practices and standards ensure that we have the skills and capability to perform engagements in an efficient and effective manner, while adhering to our methodologies and professional requirements. Our industry experience in construction, mining, oil & gas and real-estate allows our senior team members to better understand the needs of our clients. We in turn have the ability to use this knowledge to better direct our auditors and senior auditors toward more efficient and effective engagements outcomes, with higher quality deliverables, greater value for the investment and higher client satisfaction. Contact Info: Sam Khoury, CPA, CA IT, CITP, CRISC Partner Direct: 416 369 6030 skhoury@bdo.ca Carlo Mariglia, CPA, CA, CIA, CISA Partner Direct: 416 369 3078 cmariglia@bdo.ca David Knott, CISA, CRISC Senior Manager Direct: 416 815 3016 dknott@bdo.ca Ziad Akkaoui, CPA, CA, CISA Senior Manager Direct: 416 369 6048 zakkaoui@bdo.ca Stefan Piech, MES (BE) Manager, Sales Direct: 416 815 3005 spiech@bdo.ca About BDO BDO has over 90 years of experience providing value-added assurance, accounting, taxation and advisory services to a broad range of clients across the country. Our national team of more than 3,000 partners and professionals has the industry knowledge and expertise to understand your professional needs. From Vancouver, British Columbia to St. John s, Newfoundland, we build strong relationships with businesses and communities coast to coast. BDO Canada LLP is a member firm of the international BDO network. As the fifth largest international accounting and advisory network, our Canadian professionals have access to over 1,000 offices in more than 100 countries.

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