Quality of earningsComplete report example

Read the report a deal team receives.

Every company, figure, source, and adjustment below is fictional. The example shows a management baseline, open review items, supporting source records, and explicit reviewer adjustments. It is not an independent quality-of-earnings opinion.

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Baseline quality of earnings

Alder Industrial

Project Alder · Acquisition Diligence · USD

Approved review
July 8, 2026

A source-linked management view of baseline EBITDA, explicit adjustments, accounting integrity, proof-of-cash coverage, and unresolved exceptions.

Management baseline EBITDA$1,250,000Reviewer supplied
Reviewed adjustments+$55,0002 source-linked items
Adjusted management EBITDA$1,305,000Approved calculation
Evidence coverage93%Integrity · mapping · cash
Management decision summary

A usable baseline—with defined diligence still open.

The approved management bridge is reproducible from the cited workpaper. It is ready for focused diligence, not for reliance as an independent accounting opinion.

Current positionProceed with targeted review

$1,305,000 is the approved management view after 2 explicit adjustments. The report makes no prediction about transaction value.

Next diligence actions
  1. Resolve 2 open exceptions.
  2. Investigate ledger cash activity without an exact bank match.
  3. Validate every material adjustment and accounting conclusion through the appointed diligence team.
EBITDA bridge

Every adjustment remains visible.

No adjustment is inferred by a model. The reviewer supplies the amount, rationale, and exact source rows.

Baseline$1,250,0001 source reference
01 · Nonrecurring+$75,000Nonrecurring facility transition
02 · Run Rate-$20,000Run-rate service cost
Adjusted$1,305,000Approved management view
01
Nonrecurring facility transition

Management identified a one-time transition expense and cited the exact supporting ledger rows for buyer review.

+$75,0001 cited rows
02
Run-rate service cost

Management included the current recurring service run rate so the bridge does not overstate adjusted earnings.

-$20,0002 cited rows
Reviewer-approved management adjustment scheduleExact tie-out

Management adjustments remain separate from the source-reported statements. They are not journal entries.

Schedule itemCategorySource rowsAmount
Management baseline EBITDAReviewer supplied4$1,250,000
Nonrecurring facility transitionManagement identified a one-time transition expense and cited the exact supporting ledger rows for buyer review.Nonrecurring1+$75,000
Run-rate service costManagement included the current recurring service run rate so the bridge does not overstate adjusted earnings.Run Rate2-$20,000
Adjusted management EBITDAApproved management viewTied$1,305,000

The schedule ties the reviewer-supplied baseline plus explicit approved adjustments to adjusted management EBITDA with a $0 difference. It does not modify source data or assert an accounting conclusion.

Evidence integrity

What reconciles—and what still needs review.

All values below come from the approved workpaper for this review.

Trial-balance integrity2 / 2periods balance
Account mapping100%0 accounts unresolved
Proof of cash80%4 exact matches
Open exceptions2Review queue
Source-reported financial statement ledger8 classified account-period lines

Presentation uses exact trial-balance debits and credits plus explicit reviewer categories. Source-reported statements remain unchanged.

StatementEntityPeriod endAccountClassificationNormal balancePresented amountSource rows
Balance sheetalder-industrial2026-05-311000CashCashDebit$1,200,0002
Balance sheetalder-industrial2026-05-311100Accounts receivableAssetDebit$800,0003
Income statementalder-industrial2026-05-314000RevenueRevenueCredit$2,500,0005
Income statementalder-industrial2026-05-316000Operating expensesExpenseDebit$500,0004
Balance sheetalder-industrial2026-06-301000CashCashDebit$1,350,0006
Balance sheetalder-industrial2026-06-301100Accounts receivableAssetDebit$850,0007
Income statementalder-industrial2026-06-304000RevenueRevenueCredit$2,800,0009
Income statementalder-industrial2026-06-306000Operating expensesExpenseDebit$600,0008
Entity / periodRevenueExpensesStatement netAssetsLiabilities + equityBalance-sheet differenceTrial-balance difference
alder-industrial2026-05-31$2,500,000$500,000$2,000,000$2,000,000$0$2,000,000$0
alder-industrial2026-06-30$2,800,000$600,000$2,200,000$2,200,000$0$2,200,000$0

A nonzero balance-sheet difference means the supplied classified balance-sheet accounts do not form a complete presentation. It remains visible for reviewer resolution; the system does not plug or infer the difference. 0 source lines remain unclassified.

Account-period workpaper ledger4 of 4 mapped

Debit, credit, net-debit, source-row, and mapping facts retained from each approved trial-balance period.

EntityPeriod endAccountReviewer categoryDebitsCreditsNet debitSource rows
alder-industrial2026-05-311000CashCash$1,200,000$0$1,200,0002
alder-industrial2026-05-311100Accounts receivableAsset$800,000$0$800,0003
alder-industrial2026-05-314000RevenueRevenue$0$2,500,000-$2,500,0005
alder-industrial2026-05-316000Operating expensesExpense$500,000$0$500,0004
alder-industrial2026-06-301000CashCash$1,350,000$0$1,350,0006
alder-industrial2026-06-301100Accounts receivableAsset$850,000$0$850,0007
alder-industrial2026-06-304000RevenueRevenue$0$2,800,000-$2,800,0009
alder-industrial2026-06-306000Operating expensesExpense$600,000$0$600,0008

Complete account-period ledger shown. Categories are reviewer supplied. Net debit is exact debit minus credit. This table does not assert a GAAP presentation.

Proof-of-cash tie-out$130,000 matched net

Exact matches require the same entity, date, and amount. Ambiguous or unmatched activity remains an exception.

Eligible ledger rows
5
Bank rows
5
Exact matched pairs
4
Ambiguous groups
0
Unmatched ledger
1
Unmatched bank
1
Trial-balance period ledger2 of 2 periods balance

Debit, credit, and difference totals are reconstructed from exact imported trial-balance rows.

EntityPeriod endDebitsCreditsDifferenceResult
alder-industrial2026-05-31$2,500,000$2,500,000$0Balanced
alder-industrial2026-06-30$2,800,000$2,800,000$0Balanced
Diligence coverage

What this baseline answers—and what it does not.

Missing scope is shown explicitly so the report cannot be mistaken for a full quality-of-earnings engagement.

Diligence areaCurrent evidenceStatus
Management EBITDA bridgeBaseline, reviewed adjustments, rationale, and cited source rowsIncluded
Accounting integrityTrial-balance equality and account-mapping coverageIncluded
Proof of cashExact cash-ledger and bank-statement matches from supplied sourcesIncluded
Revenue quality and customer cohortsRequires contract, invoice, customer, churn, and cohort dataNot evaluated
Net working capitalRequires normalized monthly balance-sheet history and deal definitionsNot evaluated
Customer concentrationRequires customer-level revenue and retention evidenceNot evaluated
Debt-like, tax, legal, and off-balance-sheet itemsRequires specialist review and additional source evidenceNot evaluated
Exception register

Items that can change the conclusion.

2 open
Ledger Cash Entry Unmatched

The mapped cash-ledger row has no unique exact bank match.

alder-industrial · 2026-06-26 · General Ledger · row 6
Review
Bank Entry Unmatched

The bank row has no unique exact mapped cash-ledger match.

alder-industrial · 2026-06-28 · Bank Statement · row 6
Review
Source and approval trail

The report can be reproduced and challenged.

Exact sources
4
Source rows
23
Review record
Approved and retained privately
Reviewer role
Finance reviewer

Recorded attestations

Exact source versions and cited rows were examined.

Every adjustment is explicit and source-linked.

Source, mapping, and workpaper limitations were acknowledged.

No audit, assurance, or independent QoE opinion is claimed.

SourceTypeRowsReview status
source-account-mappingAccount Mapping4Included
source-bank-activityBank Statement5Included
source-general-ledgerGeneral Ledger6Included
source-trial-balanceTrial Balance8Included

Management quality-of-earnings baseline. This source-linked decision-support report is not an audit, assurance engagement, valuation, legal or accounting advice, audited financial statement, or independent quality-of-earnings opinion.

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