University Cost Analysis and Negotiation Techniques Report

This report delves into the critical aspects of cost analysis and negotiation techniques within the context of financial auditing and contract management. It begins by defining contract audits, explaining their purpose in verifying and evaluating controls within long-term contracts, particularly in construction and maintenance. The report highlights the importance of contract audits in providing recommendations, monitoring government property, and ensuring contractor compliance. It outlines the steps involved in conducting a successful audit, including defining scope, establishing objectives, and identifying potential issues. The usefulness of contract audits is explored across pre, during, and post-contract phases, emphasizing their role in fostering relationships, clarifying responsibilities, and ensuring adherence to regulations. In conclusion, the report underscores the significance of contract audits in mitigating confusion and promoting effective collaboration among all parties involved in a contract.

Running head: COST ANALYSIS AND NEGOTIATION TECHNIQUES
Cost Analysis and Negotiation Techniques
Student’s Name:
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Author Note

1COST ANALYSIS AND NEGOTIATION TECHNIQUES
Table of Contents
Introduction................................................................................................................................2
Contract audit and its purpose....................................................................................................2
Usefulness of the contract audits................................................................................................3
Conclusion..................................................................................................................................3
References..................................................................................................................................5

2COST ANALYSIS AND NEGOTIATION TECHNIQUES
Introduction
Audit is an essential step in the financial proceedings of any organization. This means
that audit of the financial statements and other financial operations of business is a mandatory
step undertaken in every organization. Contract audit refers to the audit of the long-term
contracts or the projects planned to be complete within two or more accounting periods. The
construction and maintenance contracts are the mostly audited contracts.
Contract audit and its purpose
Contract audit essentially refers to the process of verification and evaluation of the
controls imposed by the contractor or the sub contractor on the policies and systems of the
contract by inspection of the accounting statements. The purpose of contract audit is
primarily to obtain audit recommendation or advice by the contracting officer. The advice or
recommendation that justifies the purpose of contract audit revolves around advice or
suggestion in regards to the amount paid for proprietary. It also is concerned with the amount
that the GSA has to pay to a contractor particularly when such amounts depend on time or
cost determination or on variable features in relation to the results of the operations of the
contractor. Another purpose of the contract audit is monitoring that the contactor has
implemented enough measures in order to protect the Government property under its control.
The compliance of the contractor with the obligations of the contract is another purpose of
the contractual audit. A contract auditor is also responsible for imposing internal controls for
variable or flexible features of the contracts (Aguado-Romero, López-Hernández & Vera-
Ríos, 2014).
In order to perform a successful audit of the contracts the auditor at first should
determine the appropriate scope and parameters of the auditing procedure undertaken for

3COST ANALYSIS AND NEGOTIATION TECHNIQUES
performing audit of the assigned contract. Next, the auditor should develop clear objectives
that the auditing report aims to find out. Another important step that is to be followed while
performing contract audit is that the auditor along with reviewing the contract should also
review the other parties included within the contract. Evaluation of the entire contract along
with its included parties gives the auditor enough scope to examine and analyze the contract
in a better way. Lastly, the contract auditor should make it a point to identify the potential
issues in the contract and rectify the issues as and when they arise (COŞKUN ARSLAN &
DEMİRKAN, 2017).
Usefulness of the contract audits
The usefulness of the contract audit in the pre contract phase pertain to the fact that
successful auditing procedure ensure improved relationship among the participants of the
contract, implementation of effective internal controls and substantial savings. However, the
timing of the contract is also very important (Moroney & Trotman, 2016).
During the course of the contract, contract audit also proves to be useful by clearing
out the roles and responsibilities that are to be executed by the different participants of the
contract.
In the post contract phase, contract audit becomes useful by ensuring whether the
terms of the contract are in accordance to the rules laid down by the legislation and also
investigate and point out the areas of concern in the contract. It also evaluates the reporting
technique adopted by the organization in order to measure the effectiveness of the contract
(Guixiang & Jie, 2013).

4COST ANALYSIS AND NEGOTIATION TECHNIQUES
Conclusion
Thus as it can be understood from the above discussion auditing of contracts are very
important. In case of a contract, all the parties involved in it agree to work together in order to
achieve a common goal. However, audit of such a contract mitigates the occurrence of
unwanted confusion and miscommunication among the participants of the contract by
clearing its terms and objectives.

5COST ANALYSIS AND NEGOTIATION TECHNIQUES
References
Aguado-Romero, J., López-Hernández, A. M., & Vera-Ríos, S. (2014). AUDITING
PROCUREMENT CONTRACTS FOR DEFENSE MATERIAL IN SPAIN: IN THE
FOOTSTEPS OF THE US MODEL. Journal of Public Procurement, 14(2), 252.
COŞKUN ARSLAN, M., & DEMİRKAN, S. (2017). Auditing And Assurance Services.
Journal of Accounting & Finance.
Guixiang, X., & Jie, X. (2013). On the contract auditing of basic construction projects [J].
Jiangsu Building Materials, 1, 037.
Moroney, R., & Trotman, K. T. (2016). Differences in Auditors' Materiality Assessments
When Auditing Financial Statements and Sustainability Reports. Contemporary
Accounting Research, 33(2), 551-575.