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Internal Auditors as Business Advisors in Assessing Debtors' Business

Internal auditors can assist management in providing insight on debt restructuring appeals.

Will revolving lines be enough to bridge companies through the crisis? How are borrowers positioned right now?

Internal auditors have been asking how they can add more value to management. What should they do? How to contribute more?

In this current situation, internal auditors can play a role as business advisors nowadays by helping management performing due diligence to assess debtors' business (and risks) for post-pandemic world as part of providing management recommendation on whether the restructuring appeal is viable or not.

In performing due diligence, there are many aspects to include, and its not only about numbers in the financial statements. The analysis and assessment made should go beyond financial figures, and it need to include business analysis of the debtors.


Do assessment on the potentials of debtors' industries. Do analysis on the potential of the industry. Will the industry thrive in the pandemic or post-pandemic or will it sink.


Understand where is the position of debtors in their ecosystem. Is the debtor a leader in their ecosystem or have potentials to be a leader.


Do debtors have plan to bounce back? In asking for a debt restructuring, debtors should have a sound plan to support their assumption in repayment plan. Assess the plan. Is it realistic to support the assumptions?


What projects do they have to support their restructuring plan and what are the resources capabilities to deliver those projects? Are those resources available or need to be acquired - these resources goes beyond funding, it include the people and technology - that needed to run the projects. Is there a social and cultural condition inside the debtors' organization that could impede the projects completion?

When all aspects have been assessed, recommendation can then be provided to management as a result of overall analysis, on whether restructuring the debt will be fruitful, or will only be a waste.


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