Current Developments in Financial Management and Accounting for the Construction Industry

Current trends in financial management and accounting for the construction industry include:

IT Control Considerations.  An ever changiong aspect of a company's control environment is the evolution of internal accounting controls through the implementation, use, and reliance on IT controls. Certain software packages, now allow for various "built-in" IT controls. The majority of these types of controls are prevent type controls, which typically can be the most efficient control.  See new 1-1 Financial Management and Accounting for the Construction Industry § 1.10.

Dispute Resolution. Construction contracts call for dispute resolution provisions because "experienced construction project participants know that some incidence of conflicts or disputes shouuld be an expected part of each job, and they plan accordingly." Construction claims dispute resolution provisions historically have tended to lean towards litiagion or arbitration, preceded by non-binding mediation. More recently, there has been gravitation toward using alternate dispute resolution (ADR) mechanisms, particularly with complex projects. See new 1-6 Financial Management and Accounting for the Construction Industry § 6.02.

M-Theory: Spheres of Influence. In order for any design and/or construction company to fully succeed, every manager and line supervisor must comprehend the interrelatedness of a diverse set of project-related factors that, when properly administered, will lead to the successful achievement of the basic goals and objectives upon which the mission is founded. These characteristics, the M-Theory Spheres of Influence, affect the operation of every design, procurement, and construction venture.  See new 2-23 Financial Management and Accounting for the Construction Industry § 23.05.

Immigration Compliance. Under the Immigration Reform and Control Act of 1986, 8 U.S.C. §§ 1324a, 1324b, 1324c, and the Immigration Act of 1990 (collectively "IRCA" or the "Act"), employers must verify that each of their employees is authorized to work in this country. IRCA, however, also subjects employers to severe sanctions if they discriminate against current or prospective employees on the basis of national origin or citizenship. Therefore, IRCA forces employers to walk a fine line between verification and discrimination. Remarkably, despite the potential for substantial liability under IRCA, the government estimates that many employers are unaware of its provisions. See new Chapter 26B.

Bonus Depreciation, Qualified Leasehold Improvements, and IRC Section 179. Five stimulus bills have provided favorable tax relief through increased deductions for qualifying fixed assets. The opportunities center around three key areas: bonus depreciation, 15-year straight-line depreciation provision for qualified leasehold improvement property (QLIP), qualified restaurant property (QRP), and qualified retail improvement property (QRIP), and increased expense limits under IRC Section 179. See new 2-30 Financial Management and Accounting for the Construction Industry § 30.02.

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