Question 1

What is a Quality of Costs audit?

Accepted Answer

An independent, flat-fee review of a target's cost structure and supply chain — the operational counterpart to a Quality of Earnings report. A QoE confirms the earnings are real; a Quality of Costs audit tells you whether they'll survive the supply chain.

Question 2

Who is a Quality of Costs (QoC) Audit for?

Accepted Answer

Lenders of manufacturing, industrial, and distribution businesses (SBA-sized and lower-middle-market), the group's acquiring them, and sellers who want to get ahead of buyer diligence when planning a sale.

Question 3

How is it different from a QoE?

Accepted Answer

A QoE is backward-looking and accounting-based — it validates the reported numbers. A Quality of Costs audit is forward-looking and operational — it tests whether the operation that produces those numbers can keep producing them. They're complementary.

Question 4

How do I get started with APS?

Accepted Answer

Book a short, free scoping call. We'll ask a few questions about the deal and tell you whether a Quality of Costs audit fits — and what it would cover.

Question 5

What exactly do you deliver?

Accepted Answer

A formal report covering 5 core modules. Supplier & Supply-Chain Concentration

Top suppliers by spend, critical suppliers, single/sole sources, alternate qualification timelines, contract status, geographic concentration and geopolitical exposure.
Inventory Quality

Excess and obsolete inventory, safety-stock logic, lead-time coverage, inventory accuracy and cycle-count discipline.
Product & Component Continuity

BOM analysis, lifecycle/EOL exposure, substitution difficulty, tooling ownership, customer-approved-source restrictions and redesign/certification exposure.
Procurement Maturity

PO coverage, contract coverage, sourcing process, payment terms, competitive bidding, price-change controls, supplier scorecards, ERP/MRP usage, segregation of duties and key-person dependency.
Operational Earnings-at-Risk

Translation of operational findings into EBITDA/cash flow exposure.

Question 6

Do you value the business or interpret contracts?

Accepted Answer

No. We don't assign valuations, opine on what a contract requires or whether it's enforceable, or attest to the financials. We flag operational risk and share with the acquirer and/or lender.

Question 7

How fast is it, and can it be financed?

Accepted Answer

Five business days once we have the information required from Seller. It's built to be a financeable closing cost — funded from loan proceeds like the appraisal or the environmental report — so it adds diligence without adding out-of-pocket cost to the borrower. Ask your lender for clarity on whether the cost is financeable.

Question 8

Do you also do Procurement Consulting?

Accepted Answer

Absolutely, but separately. After you own the business, our performance-based procurement work turns the cost opportunities into recurring EBITDA subject to a separate engagement letter. This is a separate product tailored at driving the improvements outlined in the QoC.

FREQUENTLY ASKED QUESTIONS