Borrowing Base Audits

The DRUM Borrowing Base Audit verifies that the inventory is physically present, identifiable and can be accurately cross-referenced against the Borrowing Base Facility Reports. Additionally, it also includes analysis and confirmation of both eligible inventory and liquidation value. 

Our team has worked closely with a selection of banks to develop this fully integrated Borrowing Base Audit making it the first service of its kind.

Key Components

Site Overview & Survey
Suitability of the site to handle the specific type of goods, security of the site, and Inventory and Management procedures
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Physical Inventory Check
A physical inspection and audit of the inventory and cross-referencing the results to the Borrowing Base Facility Report as presented by the borrower
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Analysis of Borrowing Base Facility Report
Testing the eligibility of counterparties (buyers and sellers), receivables, payables, and inventory assets, along with reviewing the cash collateral and commodity hedging accounts, to ensure alignment with the approved facility criteria
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Collateral Valuation
Value at default, specific to each storage facility, this forms part of the contingency plans in the event the borrower defaults
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We Combine

Traditional Borrowing Base Audits often suffer from disjointed operations with little to no liaison between the Inspectors responsible for the physical verification and the Auditors responsible for the financial audit and analysis of the Borrowing Base Facility Reports.

In contrast, DRUM’s Inspectors and Auditors jointly bring extensive experience in audits, fraud investigations and physical commodity operations, and work in tandem throughout the entire audit. 

Here are some of the distinct benefits of the combined approach of the DRUM Borrowing Base Audits:

Timing

On-site inventory assets inspections are coordinated to takes place on the report date (or soon thereafter and reconciled to that specific date).

Persistence

Reports are never filed until the borrower has satisfactorily reconciled any anomalies encountered​.

Focus

DRUM’s Auditors – experts in asset-based lending, work directly with DRUM’s Inspectors to ensure they always enter sites with particular attention points and targets related to the Borrowing Base Facility Report as of the relevant reporting date.

Allignment

All inventory documentation from the date of inspection is retained and cross-checked against the Borrowing Base Facility Report’s supporting materials, ensuring consistency and clear alignment between the physical and the declared.

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