The company has failed, as many closely held businesses do, to keep careful records.
Until now XYZ had not had an outside accountant. Consequently, most of the company’s
financial history is to be found in various loan applications and tax returns over the years.
In anticipation of doing an audit when the company goes public, Adkins has been reviewing
all of the past records that are available. Adkins review of the company’s books has
revealed various “soft spots” in the records as well as potentially undervalued assets.