ARIZ Collateral & Consulting LLC

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Our field examination services are designed and based upon banks and financial institutions perspectives which can be customized to our clients’ specific needs. We provide the following services:

Examination & Assurance

ABL Examination is a process of assessing and evaluating financial records to provide an assurance that the underlying Assets are accurate, reliable, and represent the true financial condition of the Company.  ARIZ Examiners, thus perform their examination activities with agility. They stay up-to-date with new technologies so they can evaluate risks more efficiently. We have a have a deep understanding of the various industry verticals in North America & UK. We understand the impact of policy changes that our clients may face. We confidently guide our clients through professional advice and opinion on how to mitigate risks and help avoid disasters in the future.
With our Due Diligence Audit, we do an investigation or examination of any potential investment or product or establishment or even any individual to reconfirm the relevant facts by reviewing all the financial records and by examining any other information deemed material. The Due Diligence Audit ensures that the reasonable care and diligence one should undertake before deciding on greater financial importance is affected efficiently. The Due Diligence examination can be carried out before making an individual investment decision, Mergers and acquisitions, any significant corporate financial strategy, or before concluding the terms and conditions for your Buyer or Seller.
We provide independent fraud and forensic services to organizations with exposure to business disputes and allegations of fraudulent activities and financial misconduct. Our experts combine deep industry experience with fraud and forensic accounting expertise to mitigate the risks, costs, and effects of fraud, abuse, and corruption.
Through the Risk Management Audit, We identify and prioritize the risks followed by coordinated and economical application of the resources to reduce, check, and control the likelihood and impact of adverse events or to maximize the awareness of opportunities. Risks can originate from various sources: e.g., uncertainty in financial markets, threats from project failures, legal liabilities, credit risk, natural disasters, accidents, as well as from uncertain or unpredictable events. Methods, definitions, and goals vary widely according to whether the risk management method is in the context of project management, security, engineering, industrial processes, financial portfolios, actuarial assessments, or public health and safety.
A forensic audit is an investigation of financial statement records and company operations conducted by professional forensic auditors to detect fraud and find evidence that can be used in a court of law. A forensic audit is done in cases where embezzlement, financial crime, or fraud has happened, and someone is required to be prosecuted. The forensic audit is performed to find out the modus operandi behind the fraud, the perpetrator, and the amount of fraud, and to gather evidence that can be produced before the court of law.

Business Advisory

We are a business advisory firm that helps you get your business off the ground effortlessly. Our turnkey advisory services for business setup and expansion in North America help you structure the present and plan the future by providing you with the tools and resources to achieve your goals.

Our team of experts will work with you to develop a business plan that is tailor-made to your needs and aspirations, and give you the confidence to invest in your future as a business owner.

In corporate finance, mergers and acquisitions are transactions in which the ownership of companies, other business organizations, or their operating units are transferred or consolidated with other entities. We have specialized expertise, broad resources, and intellectual capital to provide integrated financial services and solutions for managing mergers & acquisitions.
A business consultant is a professional who provides professional or expert advice in a particular area such as security, management, accountancy, law, human resources, marketing, financial control, exit planning or any of many other specialized business fields. We have provided special consultancy services about receivable management, financial management, and profitability of a product, sector or branch.
Financial feasibility means the ability of a project to achieve sufficient income, credit, and cash flow to financially sustain a project over a long-term period and meet all debt obligations. Our financial feasibility experts evaluate all of the important factors while examining the scene. We gain a deep understanding of financial indicators and industry trends. We produce thorough studies on how a firm may be expected to perform in the prevailing and forecasted economic climate based on these assessments. Also, our professionals have extensive expertise in building excellent business plans and performing thorough feasibility study reports.

How We Work

Collateral Examinations

  • New Business Survey Field Examinations
  • Takedown Field Examinations
  • Traditional Asset-Based Collateral Field Examinations
  • Limited Scope Collateral Field Examinations
  • Recurring Collateral Field Examinations
  • Floor plan Field Examinations

Analysis & Monitoring

  • Investment Analysis
  • Quality of Earnings Reviews
  • Workout Assistance
  • Collateral / Integrity Monitoring

Control & Compliance Testing

  • Internal Auditing
  • Sarbanes-Oxley Compliance
  • Bill 198 Compliance
  • Forensic Accounting

Investigations & Support

  • Corporate Investigations
  • Background Investigations
  • Litigation Support
  • Network Security

Additional Services

  • Borrowing Certificate Training for the Borrower
  • Borrowing Certificate Tracking and Reconciliation
  • Accounts Receivable Aging Analysis and Ineligible Calculation
  • Ineligible Calculation Instructions for the Borrower
  • Written and Telephone Accounts Receivable Confirmation Services
  • Tracking and Scheduling of Recurring Examinations
  • Equipment verification
  • Observation of Physical Inventory
  • Other collateral valuation
  • Financial reporting capabilities
  • EPA issues
  • Balance sheet analyses
  • Data Sort / Extraction Services
  • Review, test and evaluate all financial, receivable,
  • inventory, costing, management systems and controls
  • Identify, investigate, and reconcile physical inventory shrinkage
  • Review and test the adequacy of systems to support insurance claims
  • Cost reduction and performance review
  • Accounting & Tax Services

Asset-Based Collateral Examinations can be tailored to your specific needs.

Accounts Receivable

  • Trend Analysis
  • System controls & documentation process
  • Questionnaires
  • Roll forward / Statistics
  • Turnover & Dilution
  • Reconciliations
  • Aging Spreads
  • Concentrations
  • Invoice / Ship Test
  • Credit Policies
  • Past Due / Delinquency Analysis
  • Confirmation Analysis
  • Credit File Review
  • Ineligibles
  • Credit Memo Review
  • Cash Application Testing
  • Review of open unshipped orders
  • Chargeback analysis
  • Credit insurance analysis

Inventory

  • Components
  • Procedures & Questionnaire
  • Test Counts
  • Cost Test
  • Inventory Turnover
  • Reconciliations
  • Gross Profit Test
  • Slow Moving Analysis
  • Lower of Cost or Market Analysis
  • Ineligibles
  • Gross Profit Roll forward

Accounts Payable

  • Trend Analysis
  • Turnover
  • Purchase Analysis
  • Reconciliations
  • Roll forward / Statistics
  • Concentrations
  • Spreads
  • Accrual Analysis
  • Past Due Analysis
  • Invoice Test

Cash/Taxes/Other

  • Proof of Cash
  • Cash Receipts Analysis
  • Cash Disbursements Analysis
  • Cash Account Analysis
  • Bank Reconciliation
  • Outstanding / Held cheques analysis
  • Notes Payable
  • Insurance Review
  • Payroll and Real Estate Taxes

Objectives of ARIZ Audit / Exam

A successful risk management strategy is dependent on the information gathered about a borrower. ARIZ’s first objective is to provide lenders with the knowledge needed to ensure a prudent and successful risk management plan.

ARIZ employs technology with human intelligence. ARIZ provides an in‐depth analysis of the collateral supporting a loan as well as the overall health and condition of a borrower’s business. With over 25 years’ experience in ABL exams, ARIZ can quickly and accurately identify areas of concern as well as factors that may mitigate those concerns.

Collateral audit / examinations performed by ARIZ provide the following:

  • Analytical review of key areas such as Accounts Receivable, Inventory, Cash and Accounts Payable . ARIZ examinations include:
    • Year to year comparisons and trend analysis of key performance metrics
    • Explanations for fluctuations noted in any of the key performance metrics.
  • Substantive testing to verify:
    • Authenticity, existence, and valuation of balances reported.
    • Existence of internal controls and proper procedures.
    • Management explanations for performance and/or examination results.
  • Calculated Borrowing Availability that includes:
    • Suggested reserve or ineligible amounts to mitigate potential problem areas noted during the exam.

ARIZ specializes in protecting lenders by designing and implementing audit programs that:

  • Identify collateral risk lenders may not be aware of
  • Identify favorable and unfavorable trends in a borrower’s financial and/or collateral performance.
  • Provide relationship managers with strategic information not readily available from other sources.

Asset-Based Collateral Audits / Examinations can be tailored to your specific needs.

The standard services under this function are as follows:

A well performed collateral examination will provide the following:

Analytical review of key areas that includes:

 

    • A/R Rollforward / Statistics: give the lender an indication of how well this asset is performing and if that performance is improving or deteriorating.
      • Percent collected (Dilution)
      • Time to collect (A/R T/O)
      • Sales/Credits/Cash receipts
    • A/R Summaries / Spread Comparison: give the lender an indication of deteriorating performance, the existence of extended dating and the impact of seasonality on the A/R aging.
      • A/R balances by aging category
      • Aging balance by invoice date and or due date
      • Trend Analysis
      • Year to year comparison
    • A/R Concentration: are analyzed to determine who is being sold to, terms offered, and the credit profile of customers. Results can indicate poor credit controls, slow paying customers, quality control issues, disputed balances.
      • Comparison of major customers
      • Calculation of “Concentration Risk”
      • Identification of changes in A/R levels among major customers.

Substantive testing to verify Authenticity, existence, and valuation of balances reported. Existence of internal controls and proper procedures.

 

    • Shipping Test: Results can indicate poor internal controls, pre-billing, disputed balances, extended terms.
      • Vouching items listed in aging to original invoices, shipping documentation and customer orders.
      • Verifying all items through POD, subsequent payment, phone verification or other documentation.
    • Credit Memo Analysis: Results can indicate excessive CM lag, quality control or billing issues, and “double financing”
      • Vouching items selected to underlying documentation.
      • Determining the lag for each item selected.
      • Determine impact on dilution.
    • Past Due Analysis: Results can indicate existence of notes receivable in the AR, at risk customers, charge-backs, disputed balances, retainage.
      • Vouching items paid to remittance advices to ensure proper application.
      • Discussions with management as to the status of items selected.
      • Verification of collection efforts made.
    • Movement/Cash Application Test.
    • Reconciliations of reported collateral to sub ledger, general ledger, and balance sheet.

Calculation of Borrowing Availability that includes:

 

    • Suggested reserves or ineligible balances to mitigate all potential risk items noted during the exam. Reserves or ineligible recommendations are made for all transactions or balances which are deemed to be above average risk.
      • Past Dues
      • Credit Balance in Prior
      • Contras
      • Cross Aged A/R
      • Foreign A/R
      • Government A/R
      • Deductions / Chargebacks
      • Intercompany A/R
      • Credit Risk
      • Concentration Risk
      • Prebilling
      • C/M Lag
      • A/R G/L Reconciliation
      • Accrued Rebates
      • Customer Deposits

All eligible collateral, ineligible and reserve amounts suggested and reserve amounts, suggested and current advance rates, overall limits and sub-limits, and all loan balances.

 

 

A well performed collateral examination will provide the following:

  • Analytical review of key areas that includes:

 

    • Inventory Summaries: are analyzed to determine how the categories behave over time. Results can indicate a deteriorating performance, the impact of seasonality on inventory or an improper mix of inventory components.
      • Inventory balances by category
      • Trend analysis of categories/totals
      • Year to year comparisons
    • Inventory Statistics: Results of this procedure gives the lender an indication of how well this asset is performing and if that performance is improving or deteriorating.
      • Comparison of reported activity to Detail and or G/L totals
      • Verification of perpetual and or G/L balances
      • Year to year comparisons and trend analysis of key metrics including GP% and Inventory turnover.
  • The substantive testing portion of the Inventory audit consists of the following procedures:

 

    • Inventory Test Count: Results can indicate poor internal controls, problem inventory, overstatement of inventory quantities, bill and hold inventory and excess or obsolete inventory.
      • Physically verifying the existence of inventory reported.
      • Identifying conditions of inventory and storage facility.
      • Testing the validity of activity posted to the perpetual.
    • Inventory Cost / Price Test: to determine if the reported carrying costs are accurate and/or approximate the market or replacement costs.
      • Tracing carrying costs to recent vendor invoices or market costs.
      • Identifying components that comprise the total cost of an item.
      • Identifying old/excess product.
      • Determining methods used to value inventory items.
    • GP Test: to determine if the reported gross profit is accurate and to identify individual items or classes of inventory that may be driving the gross profit up or down.
      • Comparing the calculated gross profit to interim and FYE income statement.
      • Identifying items sold at a loss or materially below normal margins.
      • Determining reasons for variances.
    • Reconciliations of reported collateral to sub ledger, general ledger and balance sheet.
    • Inventory Ineligibles: Reserves or ineligible recommendations are made for all transactions or balances which are deemed to be above average risk.
      • Slow Moving
      • Obsolete
      • Excess
      • Outside Contractors
      • Public Warehouses
      • Bill and Hold
      • Consigned Inventory
      • Contra
      • Perpetual ‐ G/L Rec.
      • Test Count Variances
      • Cost test variances
      • Supplies
      • Packaging
      • Private Label

A well performed collateral examination will provide the following:

  • Analytical review of key areas that includes:

 

    • A/P Statistics: are prepared to give the lender an indication of how well the AP is managed and if the performance is improving or deteriorating.
        • Purchase comparisons and trend analysis (prior period and sales level).
        • Cash Disbursement comparisons and trend analysis.
        • Turnover comparisons and trend analysis.

       

    • A/P Spread Comparisons: to determine how the A/P ages. Results of this procedure can indicate a deteriorating performance, the existence of extended dating and the impact of seasonality on the aging.
      • A/P balances by aging category
      • Trend analysis of aging category
      • Year to year comparisons.
    • A/P Concentrations: are analyzed to determine who are the major suppliers, terms offered, and products purchased. Results can quality control issues, limited supplier resources, vendor pressure, and disputed balances.
      • Identification of major vendors.
      • Identification of “concentration risk”
      • Identification of changes in A/P levels among major vendors.
  • The substantive testing portion of the A/P audit consists of the following procedures:

 

    • A/P Test: The A/P test is completed to determine if prescribed controls are being followed and to ensure that the A/P is comprised of invoices that represent bona fide purchases.
      • Verification of invoice amounts.
      • Verification of invoice date/due date
      • Verification of vendor balances.
    • Sub ledger to general Ledger and general ledger to balance sheet reconciliations.

A well performed collateral examination will provide the following:

  • Analytical review of key areas that includes:

 

    • Cash Receipts ‐ Analysis of Deposits: The analysis of cash is completed to reconcile the gross credit reconcile the gross credit to A/R to the actual amount deposited. Results can indicate poor internal controls, dilution that occurs at the time of cash application, diverted cash/
      • Reconciling reduction of A/R to net cash received.
      • Identifying components of cash dilution.
      • Identifying components of non‐A/R cash.
      • Identifying cash not forwarded to lender (full dominion accounts).

    • Cash Disbursements ‐ Analysis of payments made are analyzed to determine how and what the client uses its cash for. Results of this procedure can identify intercompany arrangements, payments to owners, payments to affiliated companies, or skipped monthly payments (such as rent on a warehouse).
      • Disbursement trends.
      • Identification of reasons for disbursements.
      • Identification of unusual or high dollar disbursements.

    • Analysis of Bank Deposits: are analyzed to ensure that all sources of cash are appropriate. Results of this procedure can identify diverted customer payments, fixed asset disposals, receipt of insurance proceeds.
      • Identification of all sources of cash
      • Identification of A/R or other cash not deposited properly.

    • Analysis of Cancelled Checks: is completed to ensure that disbursements are proper and for business purposes. Results can indicate improper payments, unusual payments, and held checks. It can also be used to verify specific payments.
      • Tracing payments to underlying documentation including the cancelled check, the vendor invoice, and receiving documentation.
      • Comparing the invoice due date to the check date.
      • Identifying major disbursements.
      • Identifying unusual disbursements.

    • Bank Reconciliation / Proof of Cash: The bank reconciliation review is completed to ensure that the company’s bank reconciliations are complete and timely. Results can indicate unapplied cash, poor internal controls, held checks.
      • Analyzing the company s company’s bank reconciliations and understanding reconciling items.
      • Agreeing cash balances, cash receipts and disbursements to bank statements.