The value of claims audit support from a consultant
The role of a good claims consultant is not just to make peace or battle things out for you on the proverbial front line. It’s also to support the client and their business through the real life implications that a claim can present. When it comes to company finances, this can manifest in several ways through claims audit support.
The general benefits of audit support
As you will know, in general, an audit is where documents are independently assessed to make sure they’re accurate and compliant with industry standards or against a set of specific rules. In much the same way that you might audit a set of accounts, a claims audit will see experienced claimed consultants review reports to:
- Check that the financial/commercial figures are correct
- Check that cash flow been properly thought through
- Confirm that the liabilities and opportunities real
- Independently evaluate the risks and opportunities against the client’s goals
Presenting claims on company balance sheets
Audit support on construction projects can also provide benefits following a dispute.
Under GAAP regulations, large companies are permitted to capitalise certain claims. For the auditors to allow that when profit and loss reports are compiled at the end of the year, they must justify it under the contract where there is a claim, to show that even if monies have not yet been received, it’s been written and is going for a settlement.
Our team frequently handle situations like this, where we engage separately with auditors to explain the claim. Construction claims is not a specialist area for auditors, and for them to do their job properly they need information presented effectively.
While finances themselves are the domain of your accountant, knowledge of their application and associated risks within the construction industry lie with a different type of independent knowledge.
In our experience, many consultants put together a good claim, but very few want to explain it for risk of revealing its holes. At Tungsten Capital, we are frequently enlisted to do audit reports on claim situations, variation valuation and overall forecast out-turn figures. We know the industry and as seasoned professionals are happy to support financial professionals who have their own expertise.
We have found that it’s especially beneficial for supporting board level discussions regarding valuations, projections and cash flow, ensuring relationships stay intact and that the conversation is rooted in unbiased, independent assessment.