COMPANY:

CCD Construction Company

TEAM POSITION: Senior Advisors to CEO

COMMUNCIATION:

You have received the following memo:

It has come to my attention that the internal

auditing team mentions an issue with R$-$S

contract on the BHRS School Project. Please

report to me with the facts, issues and your

recommendations. You will also present on the

issue to the Board of Directors at the coming

meeting.

J$.$J$.$ Black

CEO, CCD Construction Company

BACKGROUND:

As a general contractor, $CCD$ has entered into a written contract

with R$-$S Roofing for all roofing, decking and sheet metal on the

BRHS School Project in the amount of $$261,000.$ This is one of

several lump sum, fixed price subcontracts that $CCD$ had with R$-$S

over a period of several years prior to this subcontract.

During the course of the job there were three change orders for

additional work for $$1,062\mathrm{.}00,$$$2,380\mathrm{.}00$ and $$21,540\mathrm{.}00.$ All

change orders were approved by the architect and paid by the

owner. During the course of the job, CCD received and paid

several monthly estimates which included the base contract and

two of the smaller change orders. For some unknown reason, R$-$S

did not acknowledge the $$21,540\mathrm{.}00$ or invoice CCC for the same.

The work cover in this change order for $$21,540$ was completed on

schedule as per plans and specifications.

Five months after the job has been completed CCC$\text{'}$s internal

auditors discovered that the $$21,540$ had not been paid by CCC to

R$-$S$.$ Additionally, it was found that R$-$S had signed all lien releases

and gave CCC a paid in full receipt four $(4)$ months ago, thirty $(30)$

days after the job was substantially complete.