The construction industry is a delivery based Industry. The construction industry in India is not yet completely organised. These service providers have unique challenges faced by the industry and also the risks are unique in nature. This section is intended to highlight some of the significant challenges that the construction industry faces so as to enable the internal auditor to plan and perform the internal audit accordingly.
The internal auditor is required to perform such audit procedures specific to the entity as deemed necessary to ensure systematic evaluation of risk management, control and governance processes. Some of these challenges are given below:
(i) Challenges of meeting time schedules, cost schedules and compliance with the scope of work has been key for success and, thus, meeting them has been the greatest challenge for any entity operating in the construction industry. The internal auditor can assess the business risk, and also brand and reputation risk of not complying with deadlines. The effectiveness of controls can also be assessed by the internal auditor
(ii) The biggest challenge faced by an entity operating in the construction industry is availability of adequate manpower with appropriate skill sets at a reasonable cost. This is the most important factor to control for sustained growth of the entity. The internal auditor might analyse and assess the prospects of the business in future, apart from business risk.