EBITDA stands for:

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Earnings Before Interest Taxes Depreciation and Amortization or EBITDA is a term used to evaluate a company’s performance both operating and financial. It is calculated by taking income minus operating expenses (not including the mentioned Interest, Taxes, Depreciation, and Amortization as these are not operating expenses). EBITDA helps to determine how well the company uses its resources to generate profits. EBITDA is often used to determine a company’s value and creditworthiness. 

Tasks to be completed by LeeAnne CFO for an EBITDA verification: 

• 2 to 3% of the transactions from the review period are randomly selected for each general ledger account and then compared to the supporting documentation for the transaction.

• Month over month Profit and Loss statements are reviewed for reasonable consistency for the period under review. 

• A comprehensive review of all transactions on the Profit and Loss statement are reviewed for consistency of income and expense allocation by vendor for the period under review. 

• Production and collection reports are compared with general ledger reports and Profit & Loss reports to verify revenue for the period under review and variance percentage is reported.  

• Payroll periods are randomly selected for each business or business segment by comparing payroll register and liability reports to the entries in the general ledger verifying accurate reporting in the general ledger. 

• Bank and Credit Card statements are randomly selected from each account for the review period and then verified with the general ledger.

 • Previous years' tax returns for each business are compared to financial statements to verify accuracy. Various expenses are compared from financial reports with the tax returns, and Income on tax returns is compared to financial statements. 

A summary of findings report is provided reporting on the above actions giving an option whether there are material misstatements and on the reason-ability of the income and expense totals presented.

To start a Verification project, LeeAnne CFO will require the following documents:

1. The most recent federal tax returns for each business. 

2. Bank and credit card statements for each month of the period under review. 

3. Loan statements for the period under review. 

4. Payroll records for the period under review via excel format or PDF including payroll journal, liability report and check register from the payroll processing company or access to the payroll processing company system to download reports.

5. Production, deposit, and collection reports from production software for the period under review if applicable. 

6. List of any special requirements or forms needed to be considered for the project. 

7. Organizational chart of practices, management company and/or organizations.

 8. Access to, accountant copy or back of accounting system as of the closing date of the review period. This would eliminate the need for the below item: 

          a. Financial Statements for the period under review (Balance Sheet and P&L Statements) via excel format, financials should be sent via month over month view 

          b. Detailed report of any owner withdrawals or investments into the company for the period under review 

         c. Detailed General Ledger report for the period under review. 

         d. Bank & credit card reconciliation reports for each of the statements provided above.