We complete around 610 field examinations a year. The exceptions we write cluster far more tightly than you would expect: three failure modes account for roughly seven in ten material findings.
The first is consignment. Third-party logistics operators and distributors routinely book customer-owned goods into the same perpetual ledger as their own, and the reconciliation only breaks when somebody counts. We have seen this move a purchase price by eight figures twice in the last two years.
The second is equipment that exists on a fixed-asset register and nowhere else. Multi-site manufacturers are the worst offenders, largely because tools move between plants without the register following them. A physical location audit is cheap and almost nobody commissions one.
The third is concentration inside a receivables book that looks healthy on aging alone. Ninety-day aging tells you about collection; it tells you nothing about what happens if the top three accounts renegotiate terms together.
None of these are sophisticated frauds. They are bookkeeping conventions that were reasonable when they started and were never revisited. The fix is attendance: somebody in the building, counting.
None of these are sophisticated frauds. They are conventions nobody revisited.
This note reflects transactions completed by the group and is published for information only. It is not an appraisal, a valuation opinion or an offer of credit.