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In the field of construction engineering, there is often a topic that has attracted much attention and heated discussion in the process of project settlement, that is, "trial reduction but not increase". Although there is no legal basis for the unspoken rule of the appraisal or auditing industry, the reduction or non-increase has become a convention to a large extent. The general reason is that due to the information asymmetry between Party A and Party B, Party B knows its own account book best, and if it is underreported or omitted, it will be regarded as a waiver of this part of the right.
1. What is "trial reduction but not trial increase"?
"Reduction without addition" means that the auditor usually does not accept the practice of supplementing the settlement proposed by the construction party in the process of project settlement audit. If it is more popular, that is, in the project settlement that has been submitted by the construction party, the missing project cost, such as the missing design changes, visas, etc., and the missing project cost has not been submitted to the construction party, as the auditor only reviews the excess part of the project settlement (review and reduction), and does not increase the missing project cost (not review).
2. Why is there a situation of "trial reduction but not trial increase"?
◆1. Role positioning and incentive mechanism of the auditor:
As a third party, the income of the audit unit is often linked to the amount of audit reduction, which leads to its preference for "audit reduction" rather than active "audit increase" in order to maximize economic benefits.
2. Information asymmetry:
The asymmetry of information caused by the asymmetry of information caused by the auditor to be cautious about the "audit increase" due to the fact that the construction party knew the details of the project well, while the auditor relied on the information provided by the construction party.
◆3. Mentality and strategy of the construction party:
When the construction party prepares the settlement, it often has the habit of overestimating to ensure profit margins, and the psychological expectation of the auditor coincides with this, which further exacerbates the "reduction but not increase".
3. Is the practice of "trial reduction but not trial increase" reasonable?
In the process of project audit, there is a practice of "reducing but not increasing", is it reasonable? The answer depends on the contract.
If the construction contract clearly stipulates that the project settlement audit adopts the practice of "review and reduction without review and increase", and both parties agree to this agreement, then this practice of "review and decrease but not increase" is reasonable.
If there is no binding clause in the construction contract of "review and reduction without review", as an audit institution, it should increase and reduce the increase in accordance with the fair, just and realistic auditing standards. Because the purpose of the project cost audit is to ensure the accuracy and rationality of the project cost, if you only focus on the part that reduces the project cost and ignores the part that increases the project cost, it will lead to inaccurate or unfair audit results.
4. How to deal with the situation of "trial reduction but not trial increase"?
◆1. Strengthen communication and transparency: When the auditor finds a missing item, it should notify the construction party to supplement the declaration and solve it through formal channels to enhance transparency.
◆2. The contract clearly stipulates: clarify the audit principles in the contract, reduce the gray area, and ensure the rights and interests of both parties.
◆3. Legal means: In the face of disputes, when the negotiation fails, make reasonable use of legal means to protect their own rights and interests.
4. Enhance professional ability: the construction party strengthens the ability of cost management and cost compilation, and the auditor improves the fairness and professionalism of the audit, so as to jointly promote the fairness and efficiency of the project settlement.
When conducting the project cost audit, the auditors should follow the principles of comprehensiveness, objectivity, impartiality and independence, and conduct a comprehensive audit of the project settlement submitted by the construction party according to the relevant provisions of the construction contract, including the increase and decrease of the part. At the same time, the cost of the construction unit should also strengthen the promotion of business skills, realistically cooperate with the audit unit to complete the settlement audit of the project, when there are discrepancies in the audit process, should be in line with the attitude of active consultation, eliminate differences, so that the project settlement audit work can be carried out smoothly.