Financial Due Diligence For Business and Nonprofits 818.468.2246
Our due diligence includes using data analytics and financial ratios to detect fraud. While everything is not fraud, business owners need to be aware of the red flags and warning signs of suspicious or fraudulent activity. In addition, Ipsen Management Services utilizes mathematical models to examine your accounting records and financial statements in order to confirm your suspicions or provide a piece of mind that all is fine.
Fraud Detection Audit
Within 3 to 5 business days, IMS using Data Analytics can provide business owners with a piece of mind knowing whether or not fraud or other suspicious activity is present in their business. While not everything is considered fraud, items found during this audit that are suspicious in nature are reported back to the client. This often means taking action, exploring further or discontinuing the examination at no additional charge. Either way, the client is provided with a full written report.
As simple as uploading the books to your CPA, business owners can email the same files to IMS in an Excel format. From there, an examination will be conducted looking for duplicate payments, fraudulent billing, suspicious vendors, erroneous payments, nonstandard or fraudulent ledger entries, human error and fraudulent shipments. Remember, depending on the size of the files, IMS will most often provide a full report within 3 to 5 business days.
Site Inspection is usually a one day commitment looking into existing weaknesses and is often viewed as a method of prevention. The following areas will be examined:
- Accounts Payable - Purchasing and Billing / Expense and Vendor Controls - Payroll inspection looking for accuracy of reporting / Ghost Employees - Bank Deposits and Reconciliation - General Ledger - Cash Register Controls - Physical / Computer Controls - Travel Expense Reporting Fraud Examination is used to pinpoint the origination of the fraud or when a terminated employee(s) are suspected. It is recommended that you first contact your attorney prior to the start of the examination should you believe the incident will progress into a civil or criminal complaint.
Fraud Risk Assessment is a prevention measure that is recommended when examining all areas or departments within your organization that are susceptible to fraud.
Financial Due Diligence for Commercial Real Estate Development
Discover Missed Revenue Opportunities Unlike traditional "property due diligence," IMS conducts its due diligence on existing or redevelopment projects from a financial perspective. Our goal is two-fold:
- We look for opportunities that can potentially make more money for your project, - Second, identify problems of fraud or areas in need of attention.
Examples of such may include seller misrepresentation and fraudulent billing by vendors. IMS surveys the project and meets with both developers and borrowers looking for missed opportunities that could possibly lead to additional sources of revenue and the reduction of unwarranted expenses.
Our Due Diligence includes:
- Meeting with borrowers and developers - Surveying the project for additional sources of revenue - Examination and comparison of financial forecasts for their relevance and reliability - Reviewing the underwriting and financial Analysis - Reviewing the Property Appraisal, Estoppels, SNDAs and Closing Statements - Reviewing the Property's Books and Records "Before Sale or investment."
In addition, IMS asks "Who is the Seller?"
-IMS examines the seller to determine if the "seller" owns the property or has the legal authority to convey the property, etc. -IMS answers questions as to; who has the authority to bind the seller and is the payoff sufficient to cover all liens?
Financial Due Diligence for Lenders
Reviewing Previous Audits - Ipsen Management Services starts by reviewing the borrower's previous audits looking for opinions and the number of times an auditing firm has been replaced in the past 5 years. In addition, IMS checks to see if the borrower has followed the recommendations of auditors?
Analysis of Internal Controls and Financial Ratios - IMS will perform an analysis of internal controls and financial ratios looking for red flags indicating the concealment of liabilities, fraudulent activity, fictitious sales or receivables, embezzlement or a sudden increase in debt to equity.
Examination of Financial Statements - IMS employing Data Analytics examines Profit & Loss statements looking for significant changes. - Further due diligence calls for the examination of other financial and tax transactions that may signal unpaid obligations or pending litigation.
- IMS will will review and compare balance sheets against mathematical models looking for possible earnings manipulations as well as determining the overall financial health of the borrowing entity. - IMS examines the borrower's income projections to determine the feasibility and correctness of the risk associated with the investment.
Fraud Risk Assessment
The Fraud Risk Assessment was developed by the Association of Certified Fraud Examiners and is a tool used by business and nonprofit organizations consisting of a series of questions designed to zoom in on areas of risk and formulate the controls needed to minimize the opportunity of fraud from occurring.
- Identify the potential inherent fraud risks. - Evaluate whether the identified controls are operating effectively and efficiently. - Identify and evaluate residual fraud risks resulting from ineffective or nonexistent controls. - Determine what internal controls need to be added.
Topics Discussed within the Fraud Risk Assessment
- Employee Assessment / Policies - Payroll - Management / Key Employee Assessment - Expenses - Physical Controls to Deter Employee Theft and Fraud - Inventory and Equipment - Skimming - Proprietary Information - Cash Larceny - Corruption - Check Tampering - Conflicts of Interest - Cash Register Controls - Financial Reporting - Purchasing and Billing - Computing
This three to four hour assessment may reveal certain residual fraud risks within your own organization that possibly have not been adequately mitigated due to lack of, or non-compliance with appropriate preventive and detective controls.
Be aware, this assessment much like a balance sheet only provides a snapshot of a particular point in time. The dynamic nature of organizations requires routing monitoring and updating of their financial risk assessment processes in order for them to remain effective. At no time does Jerold Ipsen or Ipsen Management Services allege any wrongdoing by a specific individual.
Artist & Business Proposals
IMS assists business and artists with their business needs to include proposal writing for investment, the review of existing proposals and contracts, writing business plans, contract negotiations and due diligence.