Ipsen Due Diligence examines financial statements such as income and expense statements looking for significant changes and fraudulent misrepresentations.   Investors before closing want to know all they can about the property which can be found by conducting the proper:

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• Financial Due Diligence

• Physical Due Diligence, and

• Legal Due Diligence.

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Third Party Due diligence services begin with assisting lenders and developers with site visits (local or international) for both construction and commercial projects, the examination of property taxes paid, zoning, title search, demographics, rent rolls, estoppels, income projections, utility invoices, legal claims, potential conflicts of interest, internal controls and the examination of vendor invoicing which may signal unpaid obligations or suspicions of fraud. 

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Those wanting an unbiased opinion may also want to know:

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• Is a potential partner or lender legit or a scammer?

• Is the investment property located close to major thoroughfares, airports, banks, medical facilities, and shopping?

• What are the demographics, crime rates, and zoning of the area?

• Does the property if remote have access to needed utilities and water? 

• Is local transportation available?  At what price? 

• What is the status of the local government? What role if any will they have in advancing your project?

• Is the buyer offering an amount far above market price?

• Has the lender asked for exorbitant upfront fees?

• Are there multiple loan applications on the property?

• Are there suspicions of buyer or seller misrepresentation?

• Are false appraisals or inflated prices suspected?

• Is a fraudulent transfer of title suspected?

• As a lender, do you suspect wrongdoing by builders or others?

• Are there "Red Flags" or suspicions of money laundering?

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Regarding Syndications, REITs, and Feeder Funds, is there evidence or suspicions of fraud?

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• Is a potential partner or lender legit or a scammer?

• Is there possible 'Bad Actor' involvement?

• Are background checks part of your due diligence?  They should be.

• Are financial reports being provided?

• Are they timely and accurate?

• Are disbursements accurate and occurring on-time?

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What I Look for in Construction Projects

 

Cost overruns, false applications for payment, problematic change orders, embezzlement, evidence of builder bailouts, inflated material costs, internal controls, vendor fraud, work beyond the agreed upon scope, improper wage rates and equipment billing, theft, diversion or removal of equipment and misrepresentations by subcontractors, unlicensed contractors, non-permitted work, non-payment to subs and/or material suppliers, and material or equipment switches.
 

​Jerry Ipsen has conducted due diligence, internal audits, financial examinations, written internal controls and has authored "Financial Due Diligence for Commercial Real Estate: Proven Methods to Detect and Prevent Fraud."

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3 - Day Audit Looking for Suspicious Vendors

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Ipsen Due Diligence offers a 3-day audit using forensic accounting methods that’s affordable and focused on identifying suspicious vendors. After that, it’s up to you to decide the direction you want to take. You can improve your vendor profiles, cut some loose, calculate your losses if any, demand repayment, take the responsible party to court, or maybe let some employees go in the process. It’s your decision. At a minimum, you’ll know if the accounting department is doing their job or is at the root of the problem.

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Fraud Prevention Program – 2 hour Site Visit   

Every month

 

The Construction Financial Management Association (CFMA) among others recommend a good fraud prevention program.  Ipsen Due Diligence has prepared such a program that is geared towards general contractors, construction managers, lenders, and project owners interested in the prevention of fraud. 

 

The 2-hour visit includes:

 

• Site inspection,

• Safety walk-through,

• Talks with employees, subcontractors, and material suppliers discussing what's expected of them when it comes to billing, material substitution, accurate reporting of hours, equipment usage as well as the prevention of theft. 

 

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Those in charge of the project will know the strengths and weaknesses of the internal controls put in place and if project managers and subs are adhering to the owner’s/general contractor desires.  Those subject to a detailed fraud examination will likely cooperate and make good on balances owed or go away.  Owners or General Contractors will receive a detailed report citing strong points, deficiencies, and recommendations. 

 

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Oversight / Periodic Review

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Companies in need of oversight can retain services from Ipsen Due Diligence on a fixed fee basis.  This means that we will visit your company office for the day.  While there, your bank records, payroll, material purchase records and payables will be examined.  The visit can be either scheduled beforehand or on a surprise basis. Hopefully, there will be no surprises.  If there are problems, rest assured they will be promptly addressed.

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