2025 Construction Contractors: Audit and Accounting Guide

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Guide for working with contractors

This guide provides the information you need to understand the nuances of accounting for construction entities and auditing considerations specific to contractors.

This guide gives you:

• Background on the construction industry and types of contracts
• An introduction to the bonding and surety underwriting process
• Examples of the controls contractors typically use, such as controls over estimation, bidding, jobsite accounting, billing, costs and revenues
• Industry-specific accounting guidance, such as accounting for investments in joint ventures and revenue recognition for contracts
• Auditing guidance and procedures tailored to the construction industry
• Updated illustrative financial statements, annotated with further guidance and insight

New for 2025

In addition to the latest guidance on leases and credit losses, this edition has been updated for several other pronouncements, including but not limited to:

• SAS No. 142, Audit Evidence
• SAS No. 143, Auditing Accounting Estimates and Related Disclosures
• SAS No. 145, Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement
• SAS No. 146, Quality Management for an Engagement Conducted in Accordance With Generally Accepted Auditing Standards
• SQMS No. 1, A Firm’s System of Quality Management
• FASB ASU No. 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions
• FASB ASU No. 2023-05, Business Combinations—Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement
• FASB ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures
• FASB ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures
• FASB ASU No. 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets