An Organization Has Recently Incurred Significant Cost Overruns on One

Multiple Choice

An organization has recently incurred significant cost overruns on one of its construction projects. Management suspects that these overruns were caused by the contractor improperly charging for costs related to contract change orders. Which of the following procedures are appropriate for testing this suspicion? 1. Determine if the contractor has received proper approval of change orders from management. 2. Determine if the contractor has billed for original contract work cancelled by the change orders. 3. Determine if the contractor has charged change orders with costs already billed to the original contract. 4. Determine if the contractor has been paid for change orders that have not yet been completed.

A) 1 and 2 only
B) 1 and 3 only
C) 2 and 3 only
D) 3 and 4 only