Importance of Audits in Your FDOT Construction Prequalification Process
Originally published on December 13, 2022
Updated on October 31st, 2023
Florida’s 2022-2023 budget includes $12.6 billion for transportation investments—the largest budget in Florida Department of Transportation (FDOT) history. That’s a lot of construction work out there waiting for companies to perform it.
Without FDOT construction prequalification, however, your company could be left on the side of the road. So it’s critical to get that process right the first time—including the all-important audit component.
The jobs at stake
The record-setting FDOT budget earmarks funding for a wide range of work, including:
- $4.4 billion for highway construction (to include 180 new lane miles)
- $1.2 billion in resurfacing (to include 2,690 lane miles)
- $236.6 million for bridge maintenance repairs and replacements
- $135.9 million in seaport infrastructure enhancements
- $314.5 million for aviation improvements
- $867 million for rail and transit program advancements
- $160.1 million for safety initiatives
If you want in on the action, you must be prequalified for any projects $250,000 and over. (You don’t, however, need to be prequalified to bid as a subcontractor or to bid on buildings or maintenance contracts.)
What’s involved with FDOT construction prequalification?
There’s a long list of required materials and information needed to complete the FDOT construction prequalification application:
- Audited or reviewed financial statements for the fiscal year
- Completed affidavit
- Resumes of key staff
- Depreciation schedule of owned equipment and/or letter from equipment rental company
- Letters of recommendation
- Lists of contracts underway and contracts completed within the last 3 years
- Additional information based on work classes applying for
- My Florida Market Place (MFMP) number
- Previous business name(s)
- Charter number and date, and the state in which incorporated
- Information regarding debarment, suspension, contract crime, or failure to complete construction contracts, and bankruptcy information
- Officer titles for the applicant
- Percentage each stakeholder owns of the applicant
- Affiliates and stakeholders
- Amount and description of:
- Notes receivable
- Construction contracts receivables
- Non-construction accounts receivables
- Subsidiary and affiliate investments/receivables
- Real estate
- Capital leases (book and present value)
- Leasehold improvements
- Accounts/notes payable and contingent liabilities
Submit the FDOT construction prequalification application within 4 months after year-end. If you don’t make this due date, you also must submit interim financial statements (in addition to your annual statements).
Gathering the documentation and information required for your FDOT construction prequalification application is a sizable effort. A knowledgeable construction CPA is a great resource to help this process go smoothly. Not only can they assist with FDOT audit requirements for your application, but they can also serve as an intermediary between you and FDOT.
The role of audited financial statements
An important part of FDOT construction prequalification support centers around your financial statements. Compliant financial statements must be audited or reviewed by a licensed CPA firm.
All projects over $1 million require fully audited statements. An audit is the highest level of assurance that your financial statements are compliant with generally accepted accounting principles (GAAP). The completeness and accuracy of your financial statements are completely examined through customized risk-based audit procedures and testing.
For projects less than $1 million but over $250,000, however, you may submit reviewed financial statements. A review provides limited assurance that no material modifications are needed to make your financial statements compliant. Since it’s not as thorough as a full-on audit, the cost of a review is significantly lower. For this reason, reviews are often used by smaller businesses with simpler funding sources.
What is the audit process?
The audit typically takes between 3-6 weeks to complete (an important time frame to remember in your FDOT construction prequalification process). If it’s your first full audit, plan on the process taking up to 30% more time so the CPA firm can get to know you and your business.
An audit should begin with a client meeting, which sets the stage for the entire audit. Your auditor should take time to learn about the key elements of your financial processes, learn about your operations and agree upon expectations. After this initial meeting, the audit includes planning, fieldwork and reporting. The final audit report will be included with your FDOT construction prequalification application.
However, your CPA’s assistance shouldn’t stop there. They should keep you informed about issues that might impact you long after your FDOT construction prequalification application has been submitted. Keeping their lines of communication open with you and collaborating with you on unusual accounting challenges should be major focuses. And you should be able to contact them any time of the year with questions.
What can I do to help during the audit process?
Your cooperation and thorough record-keeping increase the chances of a smooth audit. And a smooth audit helps provide the compliant financial statements you need for your FDOT construction prequalification application.
Maintain clean and accurate business accounting records throughout the year. Once the audit starts, provide any requested assistance in a complete and timely manner. This assistance would likely include gathering documents during the preliminary phase of the audit.
We’re more than just an audit firm.
When you partner with us, you’ll work with a team focused on understanding your business and finding effective strategies to help you overcome your difficulties and achieve your objectives. Whether this means improving job cost controls, implementing the right accounting software, interpreting the numbers to accurately project profitability, or creating timely and accurate financial statements to help increase bonding, we’re with you every step of the way.
Our Construction Services Team serves nearly 200 contractors, with a focus on serving heavy construction road and bridge builders. This team includes CPAs who work almost exclusively with companies like yours.
Our experience has given us the knowledge to help you deal with key construction industry issues. Lack of skilled labor, how weather impacts jobs, the decision to purchase or lease heavy equipment…they’re just a few factors that play a critical role in completing your projects. James Moore is ready to help you navigate all of these challenges and more.
We also utilize Lean Six Sigma (LSS) processes during many of our consulting services, including FDOT audit planning. LSS helps organizations streamline their processes by focusing on activities that add value and eliminating ones that waste time. Because we have LSS-certified professionals, we can work with you to customize your processes to address inefficiencies, bottlenecks and errors. This, in turn, increases capacity and ultimately creates value.
Having the right CPA firm performing your audit can help you land that coveted FDOT project. When you need help with your FDOT audit planning or any other construction-related consulting service, call on the Construction Services Team experts at James Moore.
Other Posts You Might Like