Someone outside it, looking at it.

When people call us

The common thread is that someone needs a number they did not produce and cannot simply take on faith.

• A partner buyout. One owner is buying the other out and the valuation rests on financials only one of them has ever controlled
• A divorce. A closely held business is a marital asset and its reported earnings are suddenly, conveniently, down
• A bookkeeper or controller you have begun to doubt. Something did not reconcile, an explanation did not hold, and you need someone outside to look
• Buying a small business. The seller's numbers are unaudited and the broker's summary is a sales document
• An inherited interest. You own part of a company you have never operated and have no basis for trusting what you are being told
• A lender or an investor who wants an independent read before advancing money

What this engagement is, precisely

We are direct about this because the words carry professional meaning and blurring them helps nobody.

• It is a non-attest engagement. We perform procedures agreed with you in writing before we begin, and we report what those procedures found
• It is not an audit. We do not express an opinion on the financial statements taken as a whole
• It is not a SSARS review or a compilation, and it does not carry the limited assurance those engagements provide
• It is performed by a CPA firm with no stake in the outcome and no prior relationship with either side of the dispute
• The deliverable is a written report of findings, with the underlying support attached, in language a non-accountant can follow
• If your situation genuinely requires an audit or a SSARS review, we will say so at scoping and decline the smaller engagement

Where we look first

Small company misstatement is not usually exotic. It is the same short list, year after year.

• Owner and related party transactions, including personal expenses run through the business and compensation that does not match the work
• Revenue cutoff and recognition, especially where the period end conveniently improves or worsens the picture
• Cash and bank reconciliations traced to statements we obtain rather than statements we are handed
• Accounts receivable aging and collectibility, and whether the balance represents money anyone expects to receive
• Inventory and work in progress existence and valuation
• Payroll, contractor payments, and whether the people being paid perform work
• Debt, guarantees, leases and off balance sheet commitments that were never disclosed
• Distributions recorded as shareholder loans with no note, no rate, and no repayment history

How it runs

Four stages, and you can stop after the first two if what you learn is enough.

• Scoping conversation, no charge. What you are trying to decide, who else is involved, what records exist and who controls them
• A written engagement letter naming the specific procedures, the period covered, the deliverable, and the fee. We do not begin without your signature on the scope
• Fieldwork, typically two to five weeks, working from source documents and third party confirmations rather than from a summary someone prepared for us
• A written report of findings, delivered to you and walked through in person or on a call, with every finding traced to its support

Why an outside firm

The company's regular accountant is rarely the right choice for this work, and often cannot take it. They have a continuing relationship with one side, they may have prepared the very records now in question, and their independence with respect to the matter is compromised before they open a file. That is not a criticism of them. It is the structure of the situation. We take these engagements precisely because we have no history with either party, no fee stream to protect, and no reason to prefer one answer over another. Where we do have a relationship with anyone involved, we say so immediately and decline.

Questions we get asked first