15. Financial_Capability_Review_Form.docx

Financial Capability Review Form Note: The Financial Capability Review Form provides an overview of items to consider when performing financial capability reviews. The financial capability of an organization is not a precise determination since it relies on the reviewer’s subjective evaluation. Steps 1 through 4 should be performed for all reviews. Steps 5 through 7 are to be performed if any adverse issues are disclosed in steps 1 through 4. Step 8 should always be performed.

Organization Name: Date of Review:

Step 1: Obtain Financial Statements

Note: The reviewer does not need to obtain all the financial statements listed above for every review. More thorough reviews may require more than one financial period. At a minimum, the financial statements should be reviewed for the most recent fiscal year end. In addition, the most recent month end should be reviewed if more than 6 months have passed since the fiscal year ended.

Step 2: Calculate Current Ratio

Current Ratio = Current Assets / Current Liabilities

Previous Fiscal Year End

Note: A Current Ratio above 1:1 is generally seen as acceptable as it indicates there is one dollar of current assets available for every dollar of liabilities due within the next year.

Step 3: Review Business Status

If Audited Financial Statements (obtained in step 1) check the Opinion and Notes sections to see if the auditors cited a Going Concern issue (i.e. there is substantial doubt that the organization has sufficient capital resources to stay in business in the current year).

If Unaudited Financial Statements (obtained in step 1) ask the organization if it has ever considered filing for bankruptcy protection during the past 3 years or is currently considering filing for bankruptcy protection.

Step 4: Determine if the Organization has Outstanding Lawsuits

Note: When reviewing Audited Financial Statements, the Notes section should disclose all outstanding lawsuits and have a brief statement regarding their impact. When reviewing unaudited Financial Statements it’s recommended to ask the Organization if there are any outstanding lawsuits pending. Another tool is to perform an Internet search on the Organization. This can reveal any lawsuits being reported in newspapers as well as other significant information.

Step 5: Status of Line of Credit

|_| Yes, the Organization has a Line of Credit of , and the amount currently outstanding (owed) is zero.

|_| Yes, The Organization has a Line of Credit of , and the amount currently outstanding is $ .

|_| No, the Organization does not have a Line of Credit.

Note: The reviewer should consider these factors to be favorable: 1) if the organization has an established line of credit and 2) if the organization has a significant unused balance.

Step 6: Income / Loss Analysis

Previous Fiscal Year End

|_| |_| Does the Organization have a steady revenue base (Yes, if the Organization’s revenues are increasing each year or remaining consistent)?

Note: It is common for development stage companies to incur significant losses in the early years of the organization.

Step 7: Determine if Organization has plans to raise additional capital.

Note: The reviewer should perform Step 7 if there are any doubts about the organization’s financial capacity and stability.

Step 8: Document your Conclusion

|_| Yes, I believe the Organization is Financially Capable to perform the contract / grant because Current assets are enough to cover the current liabilities of the firm.

|_| No, I do not believe the Organization is Financially Capable to perform the contract / grant because