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Examinations are performed by Foster Consulting on the lender's own workpapers and according to its standards. Reports are in the lender's format, minimizing the impact of using an outside source.
Our time both in the field and writing reports will fall within Bank guidelines for its own examiners, and turnaround time and expense billings are also according to Lender policy. We endeavor to make our services as close to using the Lender's own staff as is possible.
Audits can be performed by a single examiner or in a team. We have been routinely requested to train audit staff of some of our Lender clients. Our examiners are available for nationwide travel. Foster Consulting has performed examinations in 37 states and 7 foreign countries.
Audit scopes is arranged prior to field visits according to lender requirements, and may include
any of the following depending on bank policy and loan issues:
Accounts Receivable/ Accounts Payable:
- Verify the authenticity of receivables.
- Examination of sales dilution, bad debts, contra accounts.
- Review of credit and dunning procedures and analysis of receivable
customers and quality.
Inventory:
- Examine components of inventory and their tracking systems.
- Test inventory costs and sample count against company records.
- Determine the salability of inventory in liquidation through proper examination of all inventory issues and discussions with well-respected liquidators who have experience selling the items.
Trade Debt:
- Review trade debt invoices, agings and/or payables listings to determine liquidity strengths or weaknesses and general trade position.
- Examine other bank or officer debt, leasing exposure, and their trends.
Books & Records:
- Examine sufficiency of accounting systems, backup and personnel.
Cash and Loan Accounts:
- Audit cash receipts and disbursements to uncover unusual flows of funds.
- Check to see that all cash payments are received as required under loan repayment agreements.
Insurance:
- Determine the adequacy of property insurance to cover losses against bank collateral at all applicable locations.
- Review general and product liability coverages and warranty coverages or internal reserves.
Taxes:
- Review ledgers, internal tax records and cancelled checks to determine the current status of tax payments.
- Tax records can be verified directly through the IRS (upon proper documentation with the customer).
Financial Reporting:
- Reconcile ledgers and reports into financial statements to confirm accuracy.
- Verify Borrowing Base reporting.
- Upon request we will review financial trends, balance sheet, cash flows, profitability and projections.
- Understand how management strategies will affect future financial performance and the bank's collateral position.
Foster Consulting has performed examinations on companies with sales of under $1 million to over $1 billion, and loan sizes from under $200,000 to syndicated accounts over $500 million. Our examiners are trained to work closely with the Lender's audit staff and loan officers to keep the lender apprised of any immediate issues. As our examiners have direct lending experience, we are attuned to our responsibility in maintaining the client relationship as a representative of the lending institution. Since we have bank experience, Foster Consulting looks at the credit issues that have a direct bearing on the collateral and bank position, rather than inconsequential variances that may be highlighted by CPA firms. Through our workout experience, we also understand the nature of liquidation as the basis of collateral valuation. Foster Consulting personnel are required to attend auctions and bank liquidations periodically to keep abreast of liquidation values and the issues facing collateral disposal. We have examiners based in Massachusetts, Maine and Connecticut, but we also travel nationally and internationally.
Tell us how we can help you manage your audit needs. Contact Stephen Foster at (617) 439-8661, or e-mail foster@ablservices.com.
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