RubinBrown’s Construction Group recently attended the Joint AGC/CFMA National Conference in Las Vegas, NV.
The Conference started with a great discussion on fraud. Speakers were kind enough to share stories and specific accounts of fraud that occurred within their organizations. Several statistics were also shared relating to common themes identified in fraud investigations. Some of the most common fraud schemes found in the construction industry include the following:
- Corruption (conflicts of interest, kick-backs, economic extortion)
- Billing Schemes (shell companies)
- Expense Reimbursements (overstated, fictitious, multiple submissions of the same expense)
Tips from employees through whistleblower hotlines led to the most fraud detection. Many construction companies have fraud hotlines wired straight to corporate legal counsel or to the company President/CEO. In some cases, the hotline goes directly to their CPA firm.
The second day started with an economic update provided by FMI Corporation. Common trends that specifically relate to the construction industry include the following:
- Ownership transfer and leadership development for many firms undergoing succession planning implementation
- Globalization – opportunities and challenges related to working internationally
- Increasing use of construction management firms or other project consultants by owners
- Convergence of design and construction
The forecast for construction put in place for 2015 through 2018 was robust. Growth for the next three years in the residential market is expected to be in the 7% - 10% range year-over-year. For the same period, nonresidential growth is forecasted at 5% year-over-year while nonbuilding structures (i.e. Highway, Sewage, Water, etc.) will be in the 2% - 3% range.
Day 2 / 3:
A potpourri of topics was covered throughout the rest of the conference. Succession planning was one common theme covered in a few of the breakout sessions with some great strategies shared related to family run businesses and the challenges that go along with family ownership. Ownership by family members that are not involved in the business activity was covered at length. In addition, several discussions related to the effectiveness and utilization of certain entity structures is imperative for conveying ownership to that next generation.
Finally, Larry Smith of the Financial Accounting Standards Board (FASB) provided us with an accounting update. Larry shared FASB’s ongoing agenda and specifically covered the latest on Lease Accounting and changes that may occur within this area of accounting. FASB’s goal is to issue the final Lease Accounting standard in 2015, but the implementation date is not expected until 2017 or 2018.
RubinBrown’s Construction Group will continue to be active in the construction industry and work to identify relevant topics to be shared with you.
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