Consulting & AdvisoryFree
Quickly Review a New Client's Financials
Every number source in one register, a trend built on a nominated primary per period, and a quantitative bridge from each competing figure to it.
River reads every file with numbers in it and returns a source register: each file with the periods it covers, the basis it appears to use, how much work stood behind it, and what it disagrees with. Then it builds the normalized trend from one nominated primary per period, and bridges every competing figure back to it in named steps carrying an amount and a source. Any residual stays on the sheet as its own row rather than being absorbed into a step.
Search this and you get a routine. Read the income statement, then the balance sheet, then the cash flow statement, compute five ratios, start with today's bank balance. Every version of it presumes somebody has handed you one clean number. A consultant gets four disagreeing copies of the same year, no cash flow statement, no trial balance, and a board pack whose opening balance sheet does not match the close of the year before it.
Built for the consultant with no finance background, the fractional operator inheriting a set of books, and the diligence lead reading management accounts nobody has audited. Run it in week one, after the reading order for an unindexed data room has told you which files hold numbers at all. It is the financial half of what a first week of engagement intake produces, and the rows nobody can explain become the first kickoff questions.
The bridge has a published standard
The reconciliation has a formal name and a published rule. Regulation G governs any company that publishes an adjusted figure, and it does not let the figure stand alone. The comparable measure has to be presented alongside it, and so has a reconciliation of the differences, by schedule or other clearly understandable method, and quantitative for every historical measure. The rule then adds that the measure and everything accompanying it together must not mislead. That is a bridge, and it is the shape this deliverable takes.
Your client already files a bridge of exactly that kind, once a year. Schedule M-1 on a corporate return reconciles income per books with income per return, difference by difference, and above ten million dollars of total assets it becomes the considerably longer Schedule M-3. Schedule L is titled Balance Sheets per Books, and the Form 1120 instructions say it should agree with the corporation's books and records. It carries a beginning-of-year column beside the end-of-year one, so one filing holds two balance sheet dates.
Two checks then cost you five minutes each. The Form 1065 instructions require total assets at the beginning of the current year, column (b) of Schedule L line 14, to equal total assets at the close of the prior year in column (d). Continuity is a filing gate there rather than good practice. And basis cannot drift: Publication 538 requires approval to change an accounting method, which makes a filed return the one document in the folder holding a single basis across years.
How it works
Send the files
Board packs, models, ledger exports, signed accounts, the filed return, whatever arrived in the folder.
Name the question
What you need the numbers to answer, so the trend gets built at the right grain.
Read the bridges
Every competing figure walked back to the primary in named steps, with the residual visible.
Take the questions
One list for finance, each naming a line, a period, two figures, and the test.
What you get
- A source register naming every file's periods, apparent basis, and what it disagrees with
- One nominated primary per period, chosen on what stood behind the number rather than recency
- A quantitative bridge from every competing figure to the primary, step by named step
- Cash steps separated from presentation steps, because only one kind is ever a finding
- Any residual left on the sheet as its own row instead of absorbed into a step
- The continuity and equity roll-forward checks on every period, with the amount of each break
- Questions for finance naming the line, the period, both figures, and what settles it
Common questions
What does it need from me?
Every file with numbers in it, in whatever form arrived: board pack PDFs, a model spreadsheet, a ledger export, signed year-end accounts, scans. Then what you need the numbers to answer, which decides the grain the trend gets built at. A filed tax return is the single most useful thing you can add, and most consultants never ask for one.
I do not have a finance background. Is that a problem?
No. Every difference arrives as a bridge rather than a ratio you have to interpret, with the amount and source of each step, and each step labelled cash, presentation or coverage. Only a cash step changes what the business actually earned, so the labels tell you which differences belong in a finding.
There is no trial balance. Can it still work?
Yes, and that is the normal case. The trend is built from whatever periods the files actually cover, with the primary source named per period and the coverage gaps stated. An eleven-month ledger export is reported as eleven months rather than annualised into a number that looks like a year and is not one.
Why not just use the most recent version?
Because the most recent file is often the least reliable one. A model last saved before the year closed holds forecast months inside a column headed actual, whatever the filename says. Recency decides nothing. The primary is nominated on what stood behind the number, and every other figure gets bridged to it, so nothing is discarded and nothing is asserted.
Does it fix the client's books?
No, and that is the point. Orientation names the differences and hands them to whoever owns the ledger. Where the engagement really is to rebuild the accounting, a normalized trial balance across the periods is the different job, and so is the client's own monthly close once you get that far.
What if the client will not give me a tax return?
Ask anyway, and record the refusal. A filed return carries a balance sheet per books with two year-end columns and a reconciliation of book income to return income, so it settles more questions per page than anything else in the folder. Where it stays out of reach, the register says which questions remain open because of that.
Where does this fit in the engagement?
Week one, alongside the rest of engagement intake. The numbers arrive in the same pile as everything else, so index the folder first and orient in the financials second. Where a previous firm already analysed these accounts, their recommendation register tells you which of their figures still reproduce. Anything missing here becomes a row on the scope boundary register before it becomes a finding.
Quickly Review a New Client's Financials
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