How to uncover hidden liabilities in financial statements
Abstract: When applying for loans, borrowers may try to appear more attractive to lenders by failing to disclose unfavorable financial information. But lenders have the responsibility to look further than financial statements to ensure they have everything they need to make a sound lending decision. This article explains how lenders can search for undisclosed liabilities and risks. It notes the importance of working with an accounting professional and the borrower’s management team to find and resolve any issues before the risks of a loan outweigh the rewards.