Statements of Position



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This guide supersedes the AICPA industry audit guide, Audits of Construction Contractors, which was published in 1965 as a combination of an accounting guide and an auditing guide that the AICPA had published separately in 1959. Since its issuance, Audits of Construction Contractors has served as an authoritative guide for accounting, auditing, and financial reporting in the construction industry; within the industry, both issuers and users of financial statements use the guide as a manual. However, since the guide was issued, the construction industry and the environment of business and financial reporting have changed substantially. The size, sophistication, and complexity of the industry have increased over the years, and the industry is still growing in each of these ways. Growth in the U.S. economy has produced changes in the forms and uses of contractual arrangements for the production and delivery of goods and services. Changes in the business and financial reporting environments have increased the complexities of accounting for contracts and created the need for additional guidance in the application of generally accepted accounting principles and generally accepted auditing standards in the construction industry. For example, the increasing tendency of contractors to combine in a joint venture in order to perform an individual contract or series of contracts creates questions that need to be addressed and resolved. Official pronouncements establishing generally accepted accounting principles and generally accepted auditing standards have been issued at an increasing rate. Since the original material included in Audits of Construction Contractors was prepared, all the opinions and statements of the AICPA Accounting Principles Board (APB) and the statements and interpretations of its successor body, the Financial Accounting Standards Board (FASB), have been issued. The AlCPA's study group on the objectives of financial statements and the FASB have clarified and expanded the objectives of financial statements and financial reporting. The Securities and Exchange Commission (SEC) has issued numerous accounting series releases and staff accounting bulletins on financial accounting and reporting. The AICPA Accounting Standards Division has issued a number of recommendations. The AICPA Auditing Standards Board and its predecessors have issued numerous pronouncements that have significantly expanded the interpretations of generally accepted auditing standards. Those pronouncements affect in numerous ways financial reporting and auditing in the construction industry but are not covered in the 1965 guide. This guide applies to financial reporting and auditing in the construction industry, although the guidance provided may be useful in other industries for companies whose business involves construction-type contracts. It has been prepared: 1. To provide background information on the nature and characteristics of the construction industry. 2. To update the previous guide to cover all pertinent pronouncements to date of the APB, FASB, SEC, and other standard-setting bodies. 3. To assist contractors in applying generally accepted accounting principles. 4. To assist the independent auditor in applying generally accepted auditing standards and his knowledge of generally accepted accounting principles to his determination of whether generally accepted accounting principles have been applied by management, which has the primary responsibility for financial statements. A statement of position, Accounting for Performance of Construction-Type and Certain Production-Type Contracts, is being issued concurrently with this guide. The statement of position is included as an appendix to this document, and its recommendations on accounting for performance of construction-type contracts are an integral part of this guide.

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Relational Format



Construction industry -- Accounting; Construction industry -- Auditing -- Standards -- United States


Accounting | Taxation


Originally published by: American Institute of Certified Public Accountants; Copyright and permission to reprint held by: American Institute of Certified Public Accountants.

Audit and accounting guide for construction contractors; Exposure draft (American Institute of Certified Public Accountants), 1980, Jan. 5



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