Construction audit services (or final project audits) are an independent professional process aimed at examining and evaluating the legality, accuracy, and reasonableness of all investment costs throughout the project's lifecycle. According to statistics from the Ministry of Finance, independent audits help investors reduce unreasonable costs by an average of 51% to 151%, thereby creating a transparent financial foundation and ensuring strict compliance with legal regulations.
In Vietnam, this activity is not only a technical requirement but also a mandatory obligation for projects using state budget funds according to Decree 99/2021/ND-CP. Utilizing quality construction auditing services helps businesses eliminate risks of irregularities in unit prices and norms, while also accelerating the approval process for investment capital settlements at competent authorities, ensuring maximum benefits for both investors and contractors.
What is construction auditing service? Concept and legal nature
Construction auditing services involve the examination by auditors and construction economics experts of investment capital settlement documents. The core objective is to determine whether the settlement value prepared by the investor is consistent with the actual construction, signed contracts, and state regulations on cost management.
Essentially, it's a tool for controlling financial power, ensuring that every dollar spent is used for the right purpose, in the right amount, and at the right market price. For large projects, construction auditing acts as the final "filter" before the project is finalized and officially put into use on the balance sheet.
This activity is based on the foundation of Independent Auditing Law 2011 and Vietnamese auditing standards (VSA), especially Standard 1000 on auditing completed investment capital settlement reports. The combination of financial expertise and technical construction knowledge helps auditors make the most accurate assessments.
Important legal basis when conducting construction audits.
To provide the service construction audit To be precise, auditing units must continuously update their knowledge of legal regulations. This serves as a guiding principle to ensure the legal validity of the final audit report.
The key texts include:
- Construction Law 2014 and its amendments 2020: General regulations regarding project management and costs.
- Decree No. 99/2021/ND-CP: Regulations on the management, payment, and settlement of projects using public investment capital (Replacing Decree 08/2016/ND-CP).
- Circular No. 96/2021/TT-BTC: Guidelines on the settlement of public investment funds clearly specify the forms and verification procedures.
- Decree No. 10/2021/ND-CP: Regarding the management of construction investment costs, regulations on unit prices, norms, and total investment amount are specified.
- Vietnamese Auditing Standard No. 1000: Specific regulations on the methods and reporting of audits for investment capital settlements.
Understanding these circulars and decrees helps construction audit services protect the legitimate rights of clients before inspection and auditing agencies. At the same time, it helps clearly define the boundary between legitimate expenses and expenses that need to be disallowed.
Why do businesses need to use construction auditing services?
In the context of increasingly stringent construction investment management, self-assessment often faces many difficulties due to constantly changing legal regulations. Construction auditing services act as an "extended arm" to help investors resolve administrative procedural and technical cost calculation issues.
Below is a table comparing the benefits of having and not having an independent audit service involved in a project:
| Criteria | There is an independent audit. | No independent audit |
| Transparency | Very high, with third-party confirmation. | Low figures, easily raise suspicions about the accuracy of the data. |
| Legal risks | Low, prompt advice on error correction. | High cost, easily subject to disallowance during audits. |
| Settlement period | Promptly (as per contract commitment) | Often delayed due to incomplete documentation. |
| Cost optimization | Detect and eliminate fictitious and inaccurate expenses. | Investment losses due to errors. |
Construction audit services not only help verify data but also advise on improving internal control systems. This is extremely important for multinational corporations or FDI businesses when they need to report on compliance to their parent company or lending institutions.
Economic benefits of hiring an independent auditing firm.
Many businesses are hesitant about the cost of hiring construction audit services; however, the value these services provide often far exceeds the fees paid.
Tax and cost optimization: Audits help determine the accurate settlement value, providing a basis for reasonable depreciation. If the settlement value is inflated, the business will have to bear unnecessary corporate income tax because the depreciation expense will not be accepted by the tax authorities.
Support for working with government agencies: When a project has a report from a reputable independent construction audit service, the review time by the Department of Finance or the Ministry of Finance is often significantly shortened (reducing waiting time by 30-50 minutes). This helps businesses free up resources and close the project quickly.
Detailed content of the professional construction audit process.
A standard construction audit typically includes five main audit areas. Each area requires meticulous attention to detail and in-depth knowledge of both economics and engineering.
Verify the legal validity of the project documents.
Auditors will review the procedural steps from the investment preparation stage to the completion stage. This includes examining the investment policy, project approval, design documents, cost estimates, and contractor selection decisions.
The goal is to ensure the project does not violate bidding regulations or exceed the authorized approval process. If legal errors are detected, the construction audit service will advise the investor to supplement or legalize them in accordance with current regulations to avoid delays during state-level review.
Check the source of investment capital.
This section focuses on comparing the allocated and loaned capital with the actual value of the work performed. Auditors will examine the allocation of capital over the years, interest payments during the construction period, and related financial expenses. A detailed breakdown of capital sources is typically presented as follows:
| Funding | The plan has been approved. | Actual implementation | Difference |
| State Budget Funds | 100 billion | 95 billion | -5 billion |
| Bank loans | 50 billion | 52 billion | +2 billion |
| Enterprise equity | 20 billion | 20 billion | 0 |
| Total | 170 billion | 167 billion | -3 billion |
Check construction and equipment costs.
This is the core of construction auditing services. Auditors perform quantity take-offs based on as-built drawings and compare them with actual conditions. Next, they check the application of unit prices, norms (such as the regulations in Decree 10/2019/QD-BXD), and construction price indices.
For equipment, auditors review invoices, import documents (CO, CQ), transportation costs, installation, and commissioning. Detecting instances of inflated equipment prices or the use of incorrect materials is crucial to protecting the investor's capital.
Check other expenses
"Soft" costs such as project management, design consulting, supervision, insurance, and mine clearance costs often account for a large proportion but are easily overlooked. Construction audit services will recalculate these costs based on the percentages stipulated in Circular 12/2021/TT-BXD or actual contracts.
Check accounts payable and assets being handed over.
Finally, the auditors determine the value of the newly formed fixed assets to be handed over to the managing entity for use. At the same time, they reconcile the accounts payable between the investor and contractors to ensure there are no financial disputes when the project is completed.
Common types of construction audits today
Depending on the scale and management requirements, construction auditing services are divided into various forms to flexibly meet the needs of clients.
- Audit the entire project: This is implemented from the start of construction to completion. This is the safest option for large projects.
- Audit each contract/item separately: This applies when the investor wants to settle payments early with a specific contractor in order to disburse funds.
- Auditing to determine the original cost of assets: Focus on the creation of fixed assets for accounting and depreciation purposes.
- Auditing for dispute resolution: Provide independent opinions on actual quantities when there is a conflict between the client and the contractor.
Choosing the right type of construction audit service helps businesses save on audit costs while still achieving their desired management goals.
The process of deploying construction audit services at reputable firms.
To ensure quality, construction audit services must be carried out according to a strict process, divided into four main stages:
Phase 1: Audit Planning
The auditing unit receives preliminary documents, conducts site surveys, and assesses risks. Based on this, the audit team (including auditors and construction engineers) will develop a detailed audit program and assign specific tasks.
Phase 2: Conduct on-site and office audits
This is the most time-consuming phase. Auditors conduct detailed checks of documents and invoices, and break down the completed work volume. Direct discussions with the project management team and contractors are held to clarify any discrepancies in the figures.
Phase 3: Compilation and drafting of the report
After obtaining preliminary data, the construction audit service will send a draft report to the investor. The two parties will discuss proposed adjustments to reduce the final settlement value. Transparency at this stage helps the investor clearly understand the contractor's errors.
Phase 4: Issuance of the official audit report
The final audit report is issued with the signature of the practicing auditor and the seal of the auditing firm. This report is the highest-ranking legally binding document for the purpose of settling investment capital accounts.
Reference price list for construction audit services.
Below is a reference price range for construction audit services based on the total investment (Note: Actual prices may vary depending on the level of detail in the documentation):
| Total investment for the project | Audit fee rates (for reference) | Note |
| Under 10 billion VND | 0.4% – 0.6% | Minimum fee varies by unit. |
| From 10 billion to 100 billion VND | 0.2% – 0.4% | According to technical complexity |
| From 100 billion to 500 billion VND | 0.1% – 0.2% | Applicable to Group B projects |
| Over 500 billion VND | Agreement based on state-mandated standards | Group A, key project |
Common errors discovered by construction audit services.
During the process of conducting construction audits, experts often discover the following common errors:
- Incorrect weight: Calculations may involve duplicated quantities, failure to subtract displacements (such as steel displacement in concrete), or incorrect geometric dimensions.
- Incorrect unit price: Applying material unit prices at an inappropriate time, not in accordance with the price announcement of the Joint Department of Finance - Construction.
- Incorrect to the standard: Using higher-than-actual cost estimates (for example, using machinery but applying manual cost estimates).
- Lack of legal documentation: Payment was processed despite the lack of acceptance reports and material testing results.
Timely detection of these errors through construction audit services helps investors avoid heavy fines when the Government Inspectorate or the State Audit Office intervenes.
Criteria for selecting a reputable construction audit service provider.
To ensure that the audit report is valid and substantive, businesses should select a construction audit service provider based on strict criteria regarding competence and professional ethics:
- In-depth professional expertise: The team must include Certified Public Accountants (CPAs) with strong financial knowledge, working in conjunction with Grade I and Grade II Construction Cost Estimators who are knowledgeable in quantity surveying and technical standards.
- Practical experience: The unit has a history of successfully conducting audits for projects of similar scale (Group A, B projects or complex infrastructure projects).
- Legal status and authority: Auditing firms must be included in the list of qualified auditing firms published and updated annually by the Ministry of Finance.
- Transparency and trust: They have a good reputation in the market, are committed to absolute information security, and have a scientific and transparent work process at every stage.
Conclude
Construction auditing services play a crucial role in ensuring financial transparency and investment efficiency in projects. Through rigorous control processes and a thorough understanding of construction laws, auditors help investors promptly detect errors, mitigate risks, and protect their rights when projects enter the inspection and final settlement phases. Choosing a reputable auditing firm early on helps businesses save costs and time, and strengthens their long-term reputation.
If you are looking for a reliable partner to assist you in the final settlement of investment capital, contact MAN – Master Accountant Network today. We pride ourselves on having a team of experienced professionals in the field of construction auditing services, committed to providing accurate, transparent financial solutions that strictly adhere to legal regulations. Let MAN help you transform complex numbers into sustainable value for your project.
Service contact information at MAN – Master Accountant Network
- Address: No. 19A, Street 43, Tan Thuan Ward, Ho Chi Minh City
- Mobile/Zalo: 0903 963 163 – 0903 428 622
- Email: man@man.net.vn
Content production by: Mr. Le Hoang Tuyen – Founder & CEO MAN – Master Accountant Network, Vietnamese CPA Auditor with over 30 years of experience in Accounting, Auditing and Financial Consulting.
FAQ – Frequently Asked Questions about Construction Auditing Services
How are construction audit service fees calculated?
Typically, audit fees are calculated as a percentage (%) of the project's final settlement value as stipulated in Circular 96/2021/TT-BTC or by agreement based on the project's complexity.
Is a construction audit mandatory for private projects?
Current legislation does not mandate that privately-funded projects like 100% undergo auditing. However, private investors frequently hire construction auditing services to monitor contractors and ensure transparency of costs with shareholders or banks.
How long does it take to conduct a construction audit?
Depending on the scale of the project, civil engineering works typically take 15-30 days, while large infrastructure projects can last from 3-6 months.
Can an independent audit report replace a report from the State Audit Office?
No. The report from the independent construction audit service serves as the basis for the investor to prepare the final settlement documents to submit to the competent authority. The State Audit Office performs its duties according to the plan of the National Assembly and has the highest legal value in terms of budget.
