Dunlop Ltd., a property management company, has a subsidiary, Riber Ltd., that is constructing an office building to be operated as a rental property by Dunlop. The building is being constructed by an independent contractor on the basis of direct costs plus 20 percent. Direct costs are defined as material used hnd labour costs incurred in the construc¬ tion. The 20 percentjs intended to cover overhead and profit.

At August 31, 2001, the degree of completion is estimated at 75 percent. Brett Dunlop, president of Dunlop, has just asked you as Dunlop's and Riber's auditor to conduct an investigation of the labour costs which are about $1 million over estimates. Dunlop has some concerns about the contrac¬ tor's honesty. He says that he is satisfied with the material costs, however.

A review of the contract between Riber and the contractor and a talk with Dunlop reveal the following:

1. Wage rates, specified in the contract, are based on union contracts. The rates vary with the trade and worker's experience.

2. Employees are paid by the contractor. The payroll records are kept by an independent computer service bureau. The contractor sends a monthly payroll summary by employee to Riber to support her invoice.

3. Brett Dunlop explained that construction workers' mobility made it very difficult to verify that employees listed on the monthly summary actually worked on the site. He added that he had no confidence in the time¬ keeping system used on the site.

4. The contract provides Riber with the right to examine the books of the contractor.
Required List the procedures you would perform to carry out the investigation requested by Dunlop. State why you would perform each procedure.