Middle Market Case Study:
Covenant Audit

PREPARING FOR A BANK AUDIT

CHALLENGE:
Concern Over An Unexpected Audit

A company undergoing an unexpected bank covenant audit was concerned about the following items:
• Were company records arranged in such a way as to facilitate an efficient audit?
• Did the underlying records accurately reflect the transactions shown in the financial statements?
• Once the audit is complete, would the auditors reach the same conclusions about the company’s compliance with bank covenants as management had reached?

SOLUTION:
Focused Research, A Mimicked Audit

CMF defined a plan to address and resolve these concerns, including:
• Designing an audit that mimics a bank covenant audit
• Searching through the company’s records to find any potential items that would represent violations of bank covenants
• Assisting the client with any remediation efforts that are necessary prior to the arrival of the bank covenant auditors
• Preparing professional schedules, analyses, backup and details for the bank auditors

OUTCOME:
Complete Preparation, Smooth Path to Compliance

• Bank covenants that needed remediation and could be remediated prior to the audit were resolved.
• The bank auditors quickly got through their work and the client’s finance department was able to continue its focus on business operations.