Louis Plung

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Request For Proposal

Collateral Audit

Louis Plung & Company works with commercial and other asset-based lenders to perform field examinations for asset-based loans. The two most common types of collateral audits analyze accounts receivable and inventory. Although the specific procedures will vary based on the type of collateral audit, the goal remains the same: to minimize the lender’s risk by verifying that a company’s short-term assets are secure and non-diluted.

Accounts Receivable

  • Understand the company’s revenue recognition and billing policy
  • Analyze any long-term service contracts, and review the terms and conditions of billing the customer
  • Perform various data mining procedures on the accounts receivable aging subsidiary ledger
  • Verify accuracy of accounts receivable aging subsidiary ledger
  • Identify duplicate invoices or billing amounts; accounts with balances exceeding credit limits or negative balances; and bad debts by performing a liquidation of the account receivables balance
  • Using the aging subsidiary ledger, select a sample of customers to verify outstanding balance
  • For construction clients, review current job activity to identify potential issues surrounding collectability of outstanding receivable balances

Inventory

  • Perform thorough on-site field examination to verify quality and quantity of inventory assets
  • Conduct physical count of inventory items and reconcile inventory counts to general ledger
  • Review and test inventory samples, turnover, and control procedures
  • Account for and analyze slow-moving or obsolete inventory, inventory mix, and gross margins
  • Understand the company’s accounting policies and procedures for recording and verifying its outstanding inventory balances
  • For manufacturers, review cost accounting system with an emphasis on capitalizing overhead and indirect operating cost

Because we also routinely perform audits, reviews, and compilations of financial statements, our professionals are able to provide skilled insight beyond the traditional collateral audit, such as cash flow analysis, review of accounting policies and procedures, and risk assurance.

Primary Contact

 
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Richard Fischer

Richard Fischer

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