# Identify Issues In Borrower Financial Statements > Reviews a borrower’s periodic reporting package against the applicable credit documentation and produces an issues memo with corrected covenant calculations and next-step analysis. - Skill: `finchipaiorg/identify-issues-in-borrower-financial-statements` (Agent Skill) - Install (CLI): `npx skillmds@latest add finchipaiorg/identify-issues-in-borrower-financial-statements` - Raw SKILL.md: https://api.skillmd.com/api/skills/finchipaiorg/identify-issues-in-borrower-financial-statements/raw - Safety review: pending - Works with: Claude Code, Claude.ai, OpenAI Codex - Category: Docs & Writing - Author: FinchipAIOrg (https://skillmd.com/u/finchipaiorg) - Updated: 2026-09-22 - Page: https://skillmd.com/skills/finchipaiorg/identify-issues-in-borrower-financial-statements --- # Skill: Borrower Financial Statements Issues Memo — Compliance Certificate Verification ## 2. Failure modes the skill is correcting - Accepting reported financial metrics without independently summing, reconciling, and sanity-checking stated components against the underlying statements and schedules - Treating management-prepared compliance calculations as complete without testing addback caps, exclusions, definitions, and period-specific limitations - Missing instrument-level risk from subordinated debt, seller financing, or other borrowings that may trigger cross-default, acceleration, or reporting consequences under the credit package - Failing to restate corrected covenant metrics after finding an error, which leaves compliance status unresolved - Collapsing distinct reporting dates, covenant tests, or debt instruments into one pass instead of analyzing each separately - Stopping at description of the issue without stating the applicable threshold, interacting document, and downstream consequence - Omitting a clear severity ranking and practical next step for each issue ## 3. Legal frameworks / domain conventions that apply - Start with the controlling credit-document definitions, compliance certificate mechanics, and any schedule or exhibit that governs covenant calculations; use those definitions rather than informal accounting labels - EBITDA verification: test whether each stated component sums to the reported subtotal, then restate EBITDA after correcting arithmetic errors or excluded items - Addback and adjustment limits: verify restructuring, integration, and similar addbacks against any per-period, annual, basket, or aggregate cap in the credit documents - Total debt and funded debt: confirm that all relevant debt categories are captured, including notes, purchase-money debt, seller financing, and any other indebtedness that falls within the defined basket - Leverage and coverage ratios: recompute each covenant ratio using corrected inputs and compare the result to the applicable test level or minimum headroom requirement - Minimum EBITDA or similar financial maintenance covenant: test corrected results against any standalone minimum performance covenant, not just leverage or coverage ratios - Cross-default and event-of-default analysis: identify whether a separate instrument contains its own default trigger, missed-payment event, or acceleration right that could implicate the credit agreement’s cross-default provision - Period-specific reporting obligations: if the package covers multiple periods or tests, analyze each period separately and avoid relying on a single representative calculation - Controlling authority: cite the specific credit-agreement section, schedule, exhibit, or defined term supporting each conclusion; if the source set references another governing instrument, cite it as the source documents frame it ## 4. Analytical scaffolds 1. Scope the reporting package - Identify each reporting period, covenant test date, and debt instrument in scope - If only one period or one instrument is implicated, say so explicitly and explain why 2. Verify the reported numbers - Recalculate every reported subtotal from its stated components - Reconcile reported figures to the financial statements and supporting schedules - Flag any internal inconsistency, omission, or apparent misclassification 3. Test addbacks and exclusions - Compare each adjustment to the applicable contractual definition and cap - Separate permitted addbacks from disallowed excess amounts - Restate EBITDA or other adjusted metrics after corrections 4. Recompute debt and fixed charges - Verify funded debt inclusions and exclusions against the debt schedule and the balance sheet - Recompute any fixed charges or related inputs needed for covenant testing 5. Recalculate covenant compliance - Rebuild leverage, coverage, and any minimum performance tests using corrected inputs - Compare the corrected result to the covenant threshold and note any headroom or shortfall 6. Assess cross-default and related-transaction risk - Review subordinated, seller-financing, or acquisition-related instruments for independent defaults - Determine whether the source documents’ cross-default language is implicated 7. Close each issue fully - State the reported figure, corrected figure, controlling source provision, compliance impact, severity, and recommended next step - Quantify the issue against the relevant threshold, connect it to the interacting document or definition, and state the client consequence 8. Prioritize response - Rank issues by severity and urgency, with the most compliance-sensitive items first ## 5. Vertical / structural / temporal relationships - Treat the credit agreement, compliance certificate, financial statements, and debt schedules as interlocking documents; a number in one may depend on a definition or cap in another - Distinguish between quarterly, year-to-date, trailing, and point-in-time measurements; do not mix periods without a stated contractual basis - Where one correction cascades into another calculation, update the downstream metric after each upstream correction - If more than one covenant, instrument, or period is present, enumerate them before analysis and then analyze each separately - Preserve the sequence: reported figure → corrected figure → covenant impact → default analysis → recommended response ## 6. Output structure conventions - Produce an issues memo organized by issue, not by document - Begin with a short methodology or scope note identifying the materials reviewed and any assumptions - Include a severity legend at the top using a uniform ordinal scale such as Critical / High / Medium / Low, and apply it to every issue - For each issue, include: - issue title - reported figure or position - corrected figure or position - controlling credit-document citation - cross-reference to any interacting definition, schedule, or related instrument - compliance impact or downstream consequence - severity - recommended next step - Include a concise summary table comparing reported metrics, corrected metrics, and applicable covenant thresholds or tests - If multiple periods or instruments are in scope, provide a separate row for each - End with a clearly labeled Recommended Actions block that assigns each action to a responsible role and ties it to a deadline or urgency anchor from the source documents or the reporting cycle - Use plain, decision-ready language; avoid conclusory default statements unless tied to a cited contractual basis