Attention Construction Contractors! Are you aware that Governor Ron DeSantis unveiled his Florida Leads budget for Fiscal Year 2021-2022? The proposed budget provides the following leads on transportation and infrastructure:
- $2.5 billion for highway construction to include 210 new lane miles
- $1 billion in resurfacing to include 2,689 lane miles
- $122.6 million in seaport infrastructure enhancements
- $331 million for aviation improvements
- $516 million for scheduled repairs of 89 bridges and replacement of 18 bridges
- $717 million for rail/transit program advancements
- $172.2 million for safety initiatives
State law requires contractors to be prequalified with the Florida Department of Transportation (“FDOT”) in order to bid on construction contracts greater than $250,000. Applicants must register with the FDOT and electronically submit a timely application with the required type of financial statements listed below.
Financial Statement Requirements
Financial statements should cover the 12-month period through the calendar year end (usually January 1st – December 31st).
The applicant must submit the application within four months after year end (applicants with a calendar year ending December 31st must submit their application by April 30th).
Applicants seeking prequalification to bid on projects more than $250,000 but less than $1,000,000 can apply by submitting “Reviewed” financial statements by a Certified Public Accountant (CPA).
Applicants seeking prequalification to bid on projects more than $1,000,000 can apply by submitting “Audited” financial statements by a CPA.
Late applications are acceptable. However, the financial report date must include additional (“Interim”) financial statements.
Interim financial statements have exactly the same requirements as annual financial statements. They are just for a shorter period.
Prequalification is not required for the following:
- To bid as a prime contractor on projects of $250,000 or less
- To bid as a subcontractor in any amount
- To bid on buildings (A general contractor’s license is required for this type of project)
- To bid on maintenance contracts
Financial Statement Options: Audit versus Review
If you want to be prequalified to bid on the work announced by the Governor specified above, you should understand the difference between these two types of statements. The main difference between an Audit and Review lies in their objectives and correspondingly in the nature of the required underlying documentation that will be examined or reviewed by the outside CPA.
For an Audit, the objective should be in accordance with the generally accepted auditing standards (“GAAS”). GAAS requires the CPA to plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. In contrast, the objective of a Review will be in accordance with the standards for accounting and review services (“SSARS”). SSARS requires the CPA to express limited assurance about whether the financial statements are free from material modifications. Also, when it comes to an Audit, the CPA states his opinion about the financial statements as a whole; whereas, in a review the CPA isn’t required to develop and understanding the entity’s system of internal control.
As you can see form the above, when it comes to fee, an Audit requires a higher investment than a Review.
Engaging a Construction CPA – Which firm is right for me?
Not all CPA firms are the same. Some criteria to consider:
- Industry experience – engage a firm that specializes in your industry such as construction. Understanding your business is key;
- Qualifications – again engage a firm that specializes in your industry. The firm should be able to explain how they have served others in your industry;
- Communication – do the professionals speak ‘your language?’
- Reputation of the CPA firm – ask for references or get referrals from your peers.