1.How are the firm’s operational and key risk factors captured in their financial statements? Income statement will reveal obvious ones, but remember to look at places that are less obvious such as the footnotes 
2.Income Statement Analysis 
 Trends, changes: 
 Is there potential for misstated revenues? 
 Is there potential for misstated expenses? 
 Analysis of revenue recognition, potential for returns, recalls 
 Analysis of expenses, % of sales, depreciation/amortization/deferral assumptions 
 Analysis of “non-recurring and cut-from-pro-forma expenses 
3.Balance Sheet Analysis 
This neglected financial statement doesn’t get the press as much. 
 Are there any overstated assets? 
 Are there any understated liabilities? 
 Receivables (relative to sales, allowance, trends) 
 Inventory (relative to sales, gross margins, methods, trends) 
 Long term assets 
 Financial obligations 
4.Proposed Adjustments if any (show in an exhibit the calculations for the adjustments.)