Comprehensive Collateral and Examination Services offers efficient and cost-effective review, analysis, and reporting.
Full Scope Recurring Examinations
Full scope asset based lending examinations are conducted as pre-funding and recurring due diligence reviews of books and records to determine the quality of a company’s financial and collateral internal controls.
These examinations involve analytical review, reconciliations, and substantive testing of all significant balance sheet accounts with an emphasis on working capital assets and liabilities.
Pre-funding full scope examinations normally include a 24-month trend analysis of working capital accounts and other asset and liability accounts of interest. These exams include detailed descriptions of the business activities from its origination to the current period, including changes to organizational structure, product and service offerings, geographical coverage, operating locations, significant ownership and management changes, and financial performance. Of special focus is the investigation of internal controls over collateral and any issues impacting collateral valuation and quality.
Recurring examinations are similar to pre-funding examinations but are limited to the period since the last examination.
Asset based lending examinations are generally conducted in connection with working capital lines of credit since they are generally riskier. Accounts receivable and inventory collateral changes on a daily basis as inventories are purchased and then sold, which then creates an accounts receivable that may or may not be collectible, depending on a variety of factors.
Equipment and real estate loans are not subject to the same risk volatility. That is not to say, however, that a creditor providing real estate and equipment loans would not be interested in checking debtor representations of financial condition and performance.
Limited Scope Examinations
Limited scope examinations are less comprehensive than full scope examinations, They are limited to various facets of a full scope examination. For example, a limited scope examination might be limited to
- a review of accounts receivable and inventory activity and/or testing
- inventory valuation and/or count testing
- checking the accuracy of the accounts receivable and/or accounts payable agings
Contact Us today to discuss your particular needs!