Mega Project Assurance: Volume One - The Terminological Dictionary

By John Cunningham

The Mega Project Assurance Series provides effective tools, guidance and instruction for professional accounting, audit, construction, design, engineering, finance, infrastructure, legal, project management and operations practitioners. The purpose of this series is to outline how project assurance professionals mitigate risk, disputes, and generate cost recovery -- real results. The material contained in this series is field tested under actual conditions, on publicly and privately funded mega projects. However, it should be noted that each mega project is unique. Each has its own unique system, time, resources, people, organization, language, design, geography, culture, politics, and economic constraints. This series is designed to accommodate the practitioner’s needs and their actual conditions.

Volume One addresses the terminology used throughout the Mega Project Assurance Series and is a useful reference for practicing professionals and students. The content is broken down into three sections: Project Accounting & Audit; Project Finance, and Construction & Technology.

• Language: English
• Publisher: John Cunningham
• Release date: Jan 26, 2016
• ISBN: 9781310934377

Book preview

Preface

Assurance is an action of assuring, as a pledge or guarantee.  Assurance is also being certain in the mind, giving confidence of mind or manner.

With complex mega-project investments, that exceed one billion in U.S. dollars, being certain of mind and manner can mean the difference between success and disaster. As such, the project assurance function has evolved from a common audit function into a critical part of a successful project delivery.

The Mega Project Assurance Series provides effective tools, guidance and instruction for professional accounting, audit, construction, design, engineering, finance, infrastructure, legal, project management and operations practitioners. The purpose of this series is to outline how project assurance professionals mitigate risk, disputes, and generate cost recovery -- real results. The material contained in this series is field tested under actual conditions, on publicly and privately funded mega projects. However, it should be noted that each mega project is unique. Each has its own unique system, time, resources, people, organization, language, design, geography, culture, politics, and economic constraints. This series is designed to accommodate the practitioner’s needs and their actual conditions.

Volume One addresses the terminology commonly used throughout the Mega Project Assurance Series and is a useful reference for practicing professionals and students. The content is broken down into three sections: Project Accounting & Audit; Project Finance, and Construction & Technology.

As with any business reference, terminological definitions and their uses are dynamic. We are dedicated to maintaining content accuracy and value for all readers, and we welcome your constructive comments, edits and suggestions for improving its value.

J.M. Cunningham

Editor & Publisher

CIPRAS PRESS

Mega Project Accounting & Audit Terms

AAA: See, American Arbitration Association

Acceleration clause: A clause in a contract that states that if a payment is missed, or some other default occurs (such as the debtor becoming insolvent), then the contract is fully due immediately. This is a typical clause in a loan contract; miss one payment and the agreement to pay at regular intervals is voided and the entire amount becomes due and payable immediately.

Acceleration (1): A forced reduction in the project schedule, effectively shortening the time period within which the Work or a designated portion thereof is to be completed.  Effective acceleration requires no change in the end date for the project.

Acceleration (2): Acceleration occurs when the contractor is compelled by the Owner to complete the project ahead of schedule. But, it comes at a price to the Owner. Changes in contract time, whether delay or acceleration, increase the contractor's cost and often become the subject of a claim.

Acceptance Testing: The performance of all testing necessary to demonstrate that installed equipment and/or systems will operate satisfactorily and safely in accordance with plans and specifications. It includes hydrostatic, pneumatic, electrical, ventilation, mechanical functioning, and run-in tests of equipment, portions of systems, and finally of completed systems.

Account Current: An account current is the billing statement an insurance company sends to its producer.

Account Receivable Turnover: A measure used to determine a company's average collection period for receivables. It is computed by dividing net sales (or net credit sales) by average accounts receivable. [net sales/avg. acct. receivable]

Account Receivable: A current asset representing money due for services performed or merchandise sold on credit.

Account: An accounting record, in which the results of transactions are accumulated, shows increases, decreases, and a balance.

Accountability Matrix: (See RESPONSIBILITY ASSIGNMENT MATRIX)

Accountability: The requirement, obligation, or willingness of an individual to accept responsibility for the outcome, results and consequences of their actions and decisions. In a project setting, accountability is inseparable from authority and responsibility.

Accounting Cycle: The procedures for analyzing, recording, classifying, summarizing, and reporting the transactions of a business.

Accounting Model: The basic accounting assumptions, concepts, principles, and procedures that determine the manner of recording, measuring, and reporting an entity's transactions.

Accounting System: The set of manual and computerized procedures and controls that provide for identifying relevant transactions or events; preparing accurate source documents, entering data into the accounting records accurately, processing transactions accurately, updating master files properly, and generating accurate documents and reports.

Accounting: A service activity designed to accumulate, measure, and communicate financial information about economic entities for decision-making purposes.

Accounts Payable (or Trade Accounts Payable): Are balances owed to others for goods, supplies, or services purchased on open account. Accounts payable arise because of the time lag between the receipt of services or acquisition of title to assets and the payment for them. This period of extended credit is usually found in the terms of the sale. For example: 2/10, n/30 or 1/10, E.O.M. (End Of Month) and is commonly 30 to 60 days. The terms 2/10, n/30 means that, although the credit period is thirty days, the buyer may deduct 2% of the amount of the invoice if payment is made within 10 days of the invoice date.

Accounts Receivable Turnover: Measures the internal collection efficiency and potential bad debt exposure. The calculation is: Acct. Rec. X 360 /Annual Revenue.  Sureties are looking for a figure of 60 days or less.

Accrual Basis: Gross income is recognized when earned.

Accrual-Basis Accounting: A system of accounting in which revenues and expenses are recorded as they are earned and incurred, not necessarily when cash is received or paid.

Accrued Cost: Amounts owed for items or services received, expenses incurred, assets acquired, or construction performed, for which a bill (e.g., progress billing and other billings) has not yet been received or approved.  In earned-value context accruals represent cost (liability) for work performed, and thus costs incurred, for the reporting period even though the bills have not yet been received.  Thus accruals are included in the Actual Cost of Work Performed when reporting performance in the earned value system. It is essential that the accrual methodology be consistent with the time phasing of the Budgeted Cost of Work Scheduled. Note that the time phased Budgeted Cost of Work Scheduled should be consistent with the contractual obligations for procurement of goods and services.

Accrued Expenses: Expenses that arise through adjusting entries when accounting for unrecorded expenses.

Accrued Liabilities: Liabilities that arise through adjusting entries when account for unrecorded liabilities.

Accumulated Depreciation: The total depreciation recorded on an asset since its acquisition, a contra account deducted from the original cost of an asset on the balance sheet.

Acid-Test Ratio (or Quick Ratio): A measure of a firm's ability to meet current liabilities, more restrictive than the current ratio. It is computed by dividing net quick assets (all current assets, except inventories and prepaid expenses) by current liabilities.

Acquisition Executive (AE): The individual designated by the Owner to integrate and unify the management system for a project, and monitor implementation of described policies and practices. Approves all appropriate Critical Decisions, with the exception of mission need, which is to be approved by the designated approval authority.  Selects from among competing systems those that are to be advanced to development, demonstration, and reproduction, operation, and authorizes development of a non-competitive (single concept) system.

Acquisition Performance Baseline (APB): A quantitative expression reflecting total scope of a project with integrated technical, schedule, and cost elements. It is the established risk adjusted, time-phased plan against which the status of resources and the progress of a project(s) is measured, assessed, and controlled. Once established, baselines are subject to change control discipline (modified).

Acquisition Performance Baseline (APB): Includes all cost, schedule, and performance parameters (both objectives and thresholds) for a program/project. Key elements in formulating an APB include the integration and assessment of program/project scope, schedule, and cost baselines: a systematic risk analysis, and the development and inclusion of adequate risk allocation to address factors that might cause technical/schedule/cost growth during project performance. Project completion without an increase in the APB thresholds or extending the schedule, is the primary measure of success in formulating the APB.

Acquisition Plan (AP): Provides the procurement and contracting detail for elements of a program, project, or system. A formal written document reflecting the specific actions necessary to execute the approach established in the approved acquisition strategy and any appropriate guiding documentation. The AP is performance-oriented and provides the framework for conducting and accomplishing a project following MNS approval.

Acquisition Planning: The process by which the efforts of all personnel responsible for an acquisition are coordinated and integrated through a comprehensive plan for fulfilling the agency need in a timely manner and at a reasonable cost. It is performed throughout the acquisition’s life cycle and starts with developing an overall acquisition strategy for managing the acquisition after MNS approval; and from a project standpoint, goes to project turnover.

Acquisition Program/Project: Acquisition programs and projects are distinct elements of work, equal to or greater than $5 million, regardless of the funding source or type, that delivers or creates a product, service, or capability, with a specified beginning and end, a stated cost, and expected performance objectives. They are directed, funded efforts whose purpose is to provide a useful, material capability in response to a validated mission or business need. An acquisition program may be facility construction, infrastructure repairs or modifications, system, production capability, remediated land, closed site, disposal effort, software development, information technology, space system, research capability, or other asset.  Acquisition programs, as they related to projects, are generally made up of multiple projects, related by a common mission, in which each project remains a useful segment and able to perform it’s intended function.

Acquisition Strategy (AS): A business and technical management approach designed to achieve acquisition objectives within the resource constraints imposed. It is the framework for planning, directing, contracting, and managing a system, program, or project. It provides a master schedule for research, development, test, production, construction, modification, Post-production management, and other activities essential for success. The AS is the basis for formulating functional plans and strategies (e.g., acquisition strategy, competition, systems engineering, etc.). Once approved, it should reflect the approving authority’s decisions on all major aspects of the contemplated acquisition.  See ACQUISITION PLAN.

Act of God: An event that is caused solely by the effect of nature or natural causes and without any interference by humans whatsoever. Insurance contracts often exclude acts of God from the list of insurable occurrences as a means to waive their obligations for damage caused by hurricanes, floods or earthquakes, all examples of acts of God.

Activity Based Budgeting – ABB: A method of budgeting in which the activities that incur costs in every functional area of an organization are recorded and their relationships are defined and analyzed. Activities are then tied to strategic goals, after which the costs of the activities needed are used to create the budget.  Activity based budgeting stands in contrast to traditional, cost-based budgeting practices in which a prior period's budget is simply adjusted to account for inflation or revenue growth. As such, ABB provides opportunities to align activities with objectives, streamline costs and improve business practices.  By looking at the cost structure of an organization via the processes that are actually being performed, managers can more effectively analyze the profit potential of a company's products and services. Cost efficiencies can be found by comparing activities performed in different areas of the organization and consolidating or rerouting certain functions.  At its essence, activity-based budgeting begins by looking at results and the activities that created them, as opposed to cost-based budgeting, which often begins with raw input and material and works outward. ABB can also help firms create more accurate financial forecasts.

Activity Reports of the internal auditing department highlight significant audit findings and recommendations and inform senior management and the board of any significant deviations from approved audit work schedules, staffing plans, and financial budgets, and the reasons for them.

Activity: A component of work performed during the course of a project. An activity normally has an expected duration, an expected cost and expected resource requirements.  Activities are often subdivided into tasks.

Actual Cost of Work Performed (ACWP): Total costs incurred (direct and indirect) in accomplishing an identified element or scope of work during a given time period. See also EARNED VALUE.

Add Value – Organizations exist to create value or benefit to their owners, other stakeholders, customers, and clients.  This concept provides purpose for their existence. Value is provided through their development of products and services and their use of resources to promote those products and services. In the process of gathering data to understand and assess risk, internal auditors develop significant insight into operations and opportunities for improvement that can be extremely beneficial to their organization. This valuable information can be in the form of consultation, advice, written communications, or through other products all of which should be properly communicated to the appropriate management or operating personnel.

Addendum (1): (Addenda) Written information adding to, clarifying or modifying the bidding documents. An addendum is generally issued by the Owner to the contractor during the bidding process and as such, addenda are intended to become part of the contract documents when the construction contract is executed.

Addendum (2): Written information, including drawings or other graphic documents, issued to bidders between distribution of the RFP and before award of the Work, to formally communicate modifications to, or interpretations of, the bidding documents (i.e. RFP, Contract Documents and/or Construction Documents).  Addenda become part of the Contract Documents at the time they are issued.  Each Addendum should state that it supersedes and supplements all portions of the bidding documents with which it conflicts.

Additional Insured: A person, company or entity protected by an insurance policy in addition to the insured.

Additional Services Request: An ASR for additional Professional services may, upon request or approval, be rendered by a party under direct contract to the Owner in addition to the basic services identified in the agreement between the Owner and the other contracting party.

Adequate Control – Present if management has planned and organized (designed) in a manner that provides reasonable assurance that the organization's risks have been managed effectively and that the organization’s goals and objectives will be achieved efficiently and economically.

Adjudication: This term is most frequently encountered in the construction industry in the U.K. Adjudication is a binding decision made by an appointed neutral, often a quantity surveyor, either by deciding on the basis of submitted documents, or as is increasingly the case, after a hearing. It is designed to provide a speedy, if not always elegant, resolution to enable work to continue on site without interruption. Either party may appeal the adjudicator's decision to court or arbitration, or indeed settle the dispute by mediation. The Housing, Grants, Regeneration Act 1996 in the United Kingdom has greatly increased the use of adjudication.

Adjusted Gross Income: An individual taxpayer's total income minus deductions (adjustments) for individual retirement plan contributions and alimony paid.

Adjuster: A person who investigates and settles losses for an insurance carrier. In the surety industry, those persons are more often referred to as claims representatives, claims attorneys, or consultants.

Adjusting Entries: Entries required at the end of each accounting period to recognize, on an accrual basis, revenues and expenses for the period and to report proper amounts for asset, liability, and owners' equity accounts.

Adjustments to Gross Income: Amounts deducted from the gross income of an individual taxpayer in arriving at adjusted gross income, includes contributions to individual retirement plans and alimony paid.

Administered Arbitration: The parties select an agency (for-profit or not-for-profit) which serves as an intermediary between parties and the arbitrator (like a middle-man). The agency's fees are in addition to the arbitrator's.

Administrative Closure: Generating, gathering, and disseminating information to formalize project completion.

Admitted Carrier: A company doing business, under a Certificate of Authority issued by a State’s Department of Insurance subject to the laws and regulations of the State.

ADR Rider to Bond: While contracting parties in the construction process have been moving towards alternative disputes resolution processes for many years, the surety industry has traditionally favored litigation as the means of resolving its disputes. Increasingly, sureties are embracing mediation and other techniques to avoid and resolve disputes. For example, the Dallas Fort Worth Airport Capital Development Plan’s Subcontractor Master Surety Program marked one of the first efforts to provide a pre-default agreement by sureties to use ADR procedures. The ADR rider to the performance bonds on that project utilize step negotiation, facilitation and a non-binding advisory opinion by a third party neutral in the event of a dispute over the propriety of a subcontractor termination.

ADR: See, Alternative Dispute Resolution.

Advance Payment Bond: A bond that guarantees repayment or liquidation by the principal of funds advanced in connection with a construction supply or other type of contract.

Adverse Opinion: Audit report indicating the auditor believes the overall financial statements are so materially misstated or misleading that the statements do not fairly represent the financial position or results of the operations and cash flows.

Advisory Opinion: A nonbinding statement by an arbitrator, facilitator, mediator, or project neutral of its interpretation of the facts and law on a matter submitted for that purpose. Federal Courts are constitutionally prohibited from issuing advisory opinions by the case or controversy requirement.

AE: Architect-Engineer:  An individual, firm or design team offering professional services as both architect and engineer.

Affiliate / Affiliated Owner: Any company or other legal entity that (a) controls a party either directly or indirectly, or (b) is controlled by a party either directly or indirectly, or (c) is directly or indirectly controlled by a company or other legal entity that directly or indirectly controls a party. In this definition, the words controls, controlled and "control' mean the right to exercise 50% or more of the voting rights in the appointment of directors or of the voting shares of such company or legal entity.

AGC Surety Bond Committee: One of the standing committees of the Associated General Contractors of America, this committee works closely with the Surety Association of America and the National Association of Surety Bond Producers to develop policy on such issues as directed suretyship, bond forms, and alternative default insurance products.

Agent or Broker of Record Letter: Surety companies will work with only one agent representing a principal at any one time. In order to change agent representatives, the surety may require the customer to provide a signed and dated Broker of Record letter spelling out whom the principal want as its agent. The surety may send a copy of the letter to the original agent or broker, allowing the original agent an opportunity to obtain a countermanding broker of record letter.

Agent: The authorized representative of an insurance company or companies.

Aging Accounts Receivable: The process of categorizing each account receivable by the number of days it has been outstanding.

AIA Documents: The AIA Contract Documents Program, one of the oldest and most comprehensive programs of its kind in the world, develops standardized contract forms and administrative procedures that provide the building industry with a basis for nationwide uniformity for contractual relationships in the design and construction process. Although opportunity for industry-wide input into these documents is afforded, they are decidedly pro-design professional.

Aleatory: A type of contract. The term is usually applied to insurance contracts in which payment is dependent on the occurrence of a contingent event, such as injury to the insured person in an accident or fire damage to his insured building.

Allowance for Uncollectible Accounts: A contra asset, deducted from Accounts Receivable that shows the estimated losses from uncollectible accounts.

Allowance Method: The recording of estimated losses due to uncollectible accounts as expenses during the period in which the sales occurred.

Allowance: An incremental amount (technical margin, cost and schedule contingency) that is made part of an estimate or baseline and is expected to be required, or applied when complete. It is normally developed from experience or risk analysis.

All-Risk: An insurance policy which endeavors to cover any loss or damage to an insured property unless such loss is specifically excluded by the policy language.

Alternate Bid: Amount stated in the bid to be added or deducted from the base bid amount proposed for alternate materials and/or methods of construction.

Alternate Dispute Resolution Procedure: A voluntary or contractually agreed upon procedure used by parties to resolve disputes instead of litigation.  Also known as ADR.  ADR includes arbitration, mediation, dispute review boards, and mini-trials.  The Owner General Conditions include a form of ADR, the Dispute Resolution process defined in the Agreement, for resolution of claims.  The advantages of ADR are speed and money: it costs less and is quicker than court litigation. ADR forums are also private. One form of multi-step ADR is the 'wise man' procedure, typically used when problems arise in long-term partnerships such as those in the oil and gas industry. The wise men (or women) are respected senior executives of each company who are uninvolved in the project. These officials are given a fairly short time frame (sometimes just 30 days) to investigate the dispute. If that fails, the matter goes to a third step, usually binding arbitration. Sometimes called progressive negotiation or mutual escalation, this procedure refers matters first to a partnership committee which oversees the day-to-day operations of the project. If the problem cannot be resolved at that level, the wise-man option the next ADR step is employed.

Amendment: A written modification to the Contract terms and conditions signed by both parties.

American Arbitration Association: The largest full-service ADR provider in the U.S.  The American Arbitration Association assists in the design and implementation of ADR systems for corporations, unions, government agencies, law firms and the courts.  Administers mediation, arbitration, and dispute review boards.

American Institute of Architects (AIA): Based in Washington, D.C., the American Institute of Architects (AIA) has been the leading professional membership association for licensed architects, emerging professionals, and allied partners since 1857.

American Insurance Association (AIA): The American Insurance Association (AIA) is a property and casualty insurance trade organization.

Amortization: The process of cost allocation that assigns the original cost of an intangible asset to the periods benefited.

Analytical Auditing Procedures: are performed by studying and comparing relationships among both financial and non-financial information. The application of analytical auditing procedures is based on the premise that, in the absence of known conditions to the contrary, relationships among information may reasonably be expected to exist and continue. Examples of contrary conditions include unusual or nonrecurring transactions or events; accounting, organizational, operational, environmental, and technological changes; inefficiencies; ineffectiveness; errors; irregularities, or illegal acts.

Annual Report: Companies send their shareholders an annual report at the end of a fiscal year. The magazine or brochure sizes up company operations and displays earnings, sales, balance sheets and financial footnotes.

Annuity: A series of equal amounts to be received or paid at the end of equal time intervals.

Application for Payment: Written request for payment of amount due, from a party under direct contract to the Owner, for completed portions of the Work and, if the Contract so provides, for materials delivered and suitably stored pending their incorporation into the Work.

Application: A questionnaire which must be completed, when required, by an applicant for a fidelity or surety bond. On a surety bond, it also may contain the applicant’s agreement to indemnify the surety in the event of loss.

Appointment: The instrument providing documentation certifying a company’s desire that an agent represent that company in the sale of insurance or surety products. An agent may be appointed by any number of companies legally doing business, but must be sponsored at all times by at least one company to maintain an active license to sell insurance.

Appreciation means the ability to recognize the existence of problems or potential problems and to determine the further research to be undertaken or the assistance to be obtained.

Arbiter: See, Arbitrator.

Arbitration Agreement or Arbitration Clause: A contract by two or more individuals or entities to submit a particular dispute that has arisen or disputes that may arise in the future to arbitration rather than to court. Such an agreement usually specifies the binding nature of the arbitration, that any arbitrator’s decision may be enforced in court, and whether the arbitration proceedings will be confidential.

Arbitration: An alternative dispute resolution method by which an independent, neutral third person (arbitrator) is appointed to hear and consider the merits of the dispute and renders a final and binding decision called an award. The process is similar to the litigation process as it involves adjudication, except that the parties choose their arbitrator(s) and the manner in which the arbitration will proceed.

Arbitrator: An arbitrator is independent and impartial and is selected by the parties or on their behalf (by the Institute or by another appointing authority) on the basis of their arbitral/technical expertise, reputation and experience in the field of activity from which the dispute stems.

Arm's-Length Transactions: Business dealings between independent and rational parties who are looking out for their own interests.

Articulation: The interrelationships among the financial statements.

As-Built Drawings: (also known as Record Drawings) Contract drawings marked up to reflect changes made during the construction process. It is good practice to make As-Built drawings by marking the changes on reproducible drawings for the duplication purposes later.

Ask: This is the quoted ask, or the lowest price an investor will accept to sell a stock. Practically speaking, this is the quoted offer at which an investor can buy shares of stock.

Assessment: The act of assessing, or to assess, estimate, judge, value, or evaluate against a known standard.

Asset Condition Index (ACI): Asset Condition Index (ACI) is a standard benchmark in the asset management industry, which is used to objectively assess the current and projected future condition of an asset. By definition, the ACI is defined as the ratio of current year required renewal repairs to asset replacement value. It is often used as a snapshot in time as a comparator to similar assets or as an index, which quantifies the adequacy of a funding level over a longer period of time.

Asset Planning: Capital Asset Planning in a traditional financial sense involves calculating the value of an asset based, typically, on straight-line depreciation over varying periods of time. Asset Planning in the future will involve more carefully assessing the worth of an asset based on activities which truly extend the lifecycle of an asset and, hence, its book value. This will require integration of Financial, Maintenance, Facility and Construction Program management systems to provide a comprehensive picture of the value, funding requirements, future liabilities and lifecycle of organizational assets.

Asset Renewal: Changes to the physical characteristics of an existing facility asset or installed equipment so that it can be used more effectively for its currently designated purpose.

Asset Turnover Ratio: An overall measure of how effectively assets are used during a period. It is computed by dividing net sales by average total assets.

Assets: Economic resources that are owned or controlled by an entity.

Assignment of Intellectual Property: Contractual provisions whereby rights to, and ownership of intellectual property (includes patents, copyrights, trade secrets and trademarks which are considered grants of some privilege, property or authority made by the Owner to a company or one or more individuals) developed and/or owned by one party are assigned to another party.

Association of Attorney Mediators: AAM is a non-profit trade association of qualified, independent attorney-mediators. Members of AAM must meet qualifications and ethical standards, which meet or exceed state or Federal requirements for mediators. AAM's role in the mediation process is to help potential users of mediation services find the attorney-mediator best suited to assist the parties in resolving their dispute. AAM fulfills its mission through a National Office located in Dallas, Texas. As a trade association, AAM promotes the use of mediation and protects the mediation process. AAM conducts seminars for attorneys, assists the Judiciary in drafting and implementing local rules and procedures for mediation; submits amicus briefs to the Courts on selected issues involving mediation; and monitors legislation concerning the mediation process.

Association of Independent Sureties: This is the association for the many small and mid-sized surety companies in the United States.

Assurance Services: An objective examination of evidence for the purpose of providing an independent assessment on risk management, control, or governance processes for the organization. Examples may include financial, performance, compliance, system security, and due diligence engagements.

Attachment: Those attachments designated in (and incorporated and made a part of) the Standard Form of Agreement or Short Form of Agreement: for example, "Attachment A – General Conditions, and Attachment B – Project Release".

Attestation: The acts of watching someone sign a legal document, such as a will or power of attorney, and then signing your own name as a witness. When you witness a document in this way, you are attesting -- that is, stating and confirming -- that the person whom you watched sign the document in fact did so. Attesting to a document does not mean that you are vouching for its accuracy or truthfulness. You are only acknowledging that you watched it being signed by the person whose name is on the signature line.

Attorney in Fact: The person to whom authority is given under a Power of Attorney.

Attorney Work Product Privilege: A rule that protects materials prepared by a lawyer in preparation for trial from being seen and used by the adversary during discovery or trial.

Attorney’s Fees: The usual and ordinary meaning of the words attorney's fees is the consideration that a litigant pays or becomes liable to pay in exchange for legal representation.

Attorney-Client Privilege: A rule that keeps communications between an attorney and her client confidential and bars them from being used as evidence in a trial, or even being seen by the opposing party during discovery.

Audit Committee: Members of a client's board of directors who are responsible for dealing with the external and internal auditors.

Audit Objectives: Broad statements developed by internal auditors and define intended audit accomplishments.

Audit Procedures: The tasks the internal auditor undertakes for collecting, analyzing, interpreting, and documenting information during an audit. Audit procedures are the means to attain audit objectives.

Audit Program: A document, which lists the audit procedures to be followed during an audit. The audit program also states the objectives of the audit.

Audit Report (1): A report issued by an independent auditor, or CPA that expresses an opinion about whether the financial statements present fairly a company's financial position, operating results, and cash flows in accordance with generally accepted accounting principles (GAAP).

Audit Report (2): A signed, written document, which presents the purpose, scope, and results of the audit. Results of the audit may include findings, conclusions (opinions), and recommendations.

Audit Scope: Refers to the activities covered by an internal audit. Audit scope includes, where appropriate: Audit objectives; Nature and extent of auditing procedures performed; Time period audited. Related activities not audited in order to delineate the boundaries of the audit 

Audit Work Schedules: Include (a) what activities are to be audited; (b) when they will be audited; and (c) the estimated time required, taking into account the scope of the audit work planned and the nature and extent of audit work performed by others.

Audit Working Papers: Documents that record the information obtained, the analyses made, and conclusions reached during an audit. Audit working papers support the bases for the findings and recommendations to be reported.

Audit: The result of an independent auditor/accountant's review of the statements and footnotes to ensure compliance with generally accepted accounting principles (GAAP) and to render an opinion on the fairness of the financial statements.

Auditable Activities: Those subjects, units, or systems, which are capable of being defined and evaluated. Auditable activities may include: Policies, procedures, and practices; Cost centers, profit centers, and investment centers General ledger account balances; Information systems (manual and computerized); Major contracts and programs; Organization units such as product or service lines; Functions such as electronic data processing, purchasing, marketing, production, finance, accounting, and human resources; Financial statements Laws and regulations.

Auditee: Any individual, unit, or activity of the organization that is audited.

Authenticity, Bond: Obligees should always verify the authenticity of surety bonds they are being asked to accept. The most reliable way to authenticate a surety bond is to contact the issuing surety company directly. However, it is often difficult to ascertain the correct address, telephone number or person to contact at the surety. The Surety Association of America has published a guide that contains a list of surety companies together with information as to how they can be contacted for the purposes of authenticating a bond.

This guide is available at: http://www.surety.org/obligeus.htm  

Authority, Agent’s Apparent: Authority of an agent that is created when the agent oversteps actual authority, and when inaction by the surety or insurance company does nothing to counter the public impression that such authority exists.

Authority, Agent’s Express: Express authority is exemplified by the agent’s agency agreement, which is kept on file by the agent and sponsoring company. It is also exemplified in the power of attorney granting the agent power and authority to take certain acts or bind The Owner to specified obligations.

Authority, Agent’s Implied: Although certain functions an agent may perform are not set out in the express authority documentation (agency agreement or power of attorney), the routine performance of these may lead the public to reasonably believe the agent has been given express authority where none exists.

Authority: The power or right granted or assigned to an individual to (a) lead, guide, and direct an activity, (b) make decisions, (c) authorize action, and (d) influence or control other individuals. In a project setting, authority is inseparable from accountability and responsibility.

Authorization: Implies that the authorizing authority has verified and validated that the activity or transaction conforms with established policies and procedures.

Authorized Stock: The amount and type of stock that may be issued by a company, as specified in its articles of incorporation.

Authorizing: Includes initiating or granting permission to perform activities or transactions.

Available-for-Sale Securities: Debt and equity securities not classified as trading, held-to-maturity, or equity method securities.

Award: The decision of an arbitrator or other non-judge in a dispute submitted to him or her.

Back charge: A cost charged by the Owner or by a party under direct contract to the Owner to a vendor, or supplier, of products, services, or work for the non-performance of work scope or damages caused to others.  Back charges are usually a zero cost to the Owner.

Backlog Funding: An accumulation of uncorrected or deferred deficiencies that represents a liability (in both physical and financial terms) for an asset. When a Backlog is permitted to exist from year to year, some deficiencies may result in major long-term economic losses or safety risks.

Bad Debt: An uncollectible account receivable.

Bad Faith: Accusations by policyholders that insurers took steps to deliberately delay, underpay, or deny a claim.

Balance Sheet: (statement of financial position): The financial statement that shows the assets, liabilities, and owners' equity of an entity at a particular date.

Bank Reconciliation: The process of systematically comparing the cash balance as reported by the bank with the cash balance on the company's books and explaining any differences.

Bar Chart: A graphic display of schedule-related information. In the typical bar chart, activities or other project elements are listed down the left side of the chart, dates are shown across the top, and activity durations are shown as date-placed horizontal bars.

Baseball Arbitration: In this process, used increasingly in commercial disputes, each party submits a proposed monetary award to the arbitrator. At the conclusion of the hearing, the arbitrator chooses one award without modification. This approach imposes limits on the arbitrator's discretion and gives each party an incentive to offer a reasonable proposal, in the hope that it will be accepted by the decision-maker. A related variation, referred to as night baseball arbitration, requires the arbitrator to make a decision without the benefit of the parties' proposals and then to make the award to the party whose proposal is closest to that of the arbitrator

Basket Purchase: The purchase of two or more assets acquired together at a single price.

Benchmarking: An improvement process in which an organization, agency or company measures its performance against that of best-in-class organizations, agencies, or companies; determines how those organizations, agencies, or companies achieved their performance levels; and uses the information to improve its own performance. Benchmarking can compare strategies, operations, processes, and procedures.

Beneficial Use or Occupancy Date: The process by which the Owner gains beneficial use, or occupancy of building, or facility, portions thereof, or the last piece of principal equipment, is released for use by others, prior to final acceptance. Non-integral or subsidiary items and correction of design inadequacies subsequently brought to light may be completed after this date. On multiple-facility projects, beneficial use of the overall project will be the beneficial use date of the last major building or facility. This activity is always documented and approved by the responsible parties.

Beta: This measures the volatility of a share of stock. A high beta stock, for example, will raise more in value than the stock market average on a day when shares in general are rising. In addition, it will fall more sharply than the average on a day when shares are falling. The S&P 500 Index of stocks, an index that represents large-company stocks, has a beta of 1.

Bid Bond: A bid bond assures the Owner that, upon acceptance of the contractor's proposal, the contractor will proceed to enter into a contract and will furnish performance and payment bonds if required by the bid documents.  Failure to satisfy these requirements generally leads either to forfeiture of the bid bond (usually in the penal sum of 5% to 20% of the bid) or more commonly, payment of the difference between the bidder's price and the second low bidder's price or the bond amount, whichever is less. Bid bonds are often required on public projects where formal competitive bidding is required, but are less frequently used on private projects. 

Bid Listing: A procurement system in which a general contractor must submit with its bid the names of the subcontractors they intend to use if awarded the contract.

Bid Shopping: A practice by which contractors, both before and after their bids are submitted, attempt to obtain prices from potential subcontractors and material suppliers that are lower than the contractors' original estimates on which their bids are based, or after a contract is awarded, seek to induce subcontractors to reduce the subcontract price included in the bid.

Bid Shopping: The practice of a general contractor asking, requiring, or otherwise pressuring a subcontractor to lower bids for subcontracts, or accepting lower bids from subcontractors, after submitting a bid without passing the savings from the lower bids back to the project owner. Some states prevent bid shopping by bid listing, a system in which a general contractor must submit with its bid the names of the subcontractors they intend to use if awarded the contract.

Bid: This