INDUSTRIES / MANUFACTURING
Manufacturers borrow against receivables and inventory at every stage of production, so the borrowing base only holds up if each stage is valued correctly. Our exams trace inventory from raw materials through finished goods, test how costs are built up, and confirm that receivables reflect real shipments to real customers.
RISKS WE TEST FOR
- Work-in-process carried at full value when it has little liquidation value
- Standard costs that have drifted from actual, inflating inventory
- Capitalized overhead and variances parked on the balance sheet
- Slow-moving and obsolete stock still counted as eligible
- Customer concentration and extended dating terms
- Bill-and-hold and pre-billed sales recognized before shipment
WHAT THE EXAM COVERS
- Inventory breakdown by raw, WIP and finished goods, reconciled to the general ledger
- Standard-to-actual cost review and overhead capitalization analysis
- Test counts and roll-forward of perpetual records
- Aging and turnover of inventory by SKU or category
- AR aging, dilution, shipping tests and cut-off review
- Gross margin test and inventory reserve adequacy
COMMON INELIGIBLES
- Work-in-process
- Slow-moving and obsolete inventory
- Consigned or off-site goods without access agreements
- Bill-and-hold invoices
- Cross-aged accounts
- Contra accounts with vendors who are also customers
Full ineligibles directory →