Blog · Published 2026-10-18
QoE testing: what reviewers check, and what a buyer can check first.
QoE testing is the set of procedures a reviewer runs to see whether a seller's reported earnings are supported. AAFCPAs, summarizing the SBA guidance, lists reconciling tax and financial records, reviewing key earnings adjustments, evaluating revenue sources and analyzing cash activity. A buyer can run a first version of the document-based tests before paying for the engagement.
The tests, and what a buyer can check first
The procedures in the first column are the ones named in the AAFCPAs summary of the SBA requirement. The other columns are our description of how each works on a small deal; the scope of a real engagement is agreed with the provider, so treat this as a map, not a scope of work.
| Procedure (as AAFCPAs lists it) | What the reviewer does | What a buyer can check first |
|---|---|---|
| Reconciling tax and financial records | Compares the same figures across tax returns, financial statements and the seller's presentation, and explains differences. | Find revenue and EBITDA everywhere they appear and compare them. In the sample brief, trailing twelve month revenue is $6.21M in the CIM and $5.95M on the tax return. |
| Reviewing key earnings adjustments | Takes each add-back, asks for support and decides whether it would continue under a new owner. | List every add-back with its amount and page, and mark which have no support in the documents. |
| Evaluating revenue sources | Looks at where revenue comes from: customers, contracts, recurring versus one-time. | Compare what the CIM says about concentration and recurring revenue with its own customer table and definitions. |
| Analyzing cash activity | Tests whether reported profit shows up as cash. | Ask for the bank statements and statements of cash flow your reviewer will need. This step needs documents a first read of the CIM does not cover. |
Why a buyer runs a first pass
A reviewer bills for time. If the CIM, the statements and the tax return disagree, someone has to find that out and the cheapest moment is before the engagement letter. A buyer who arrives with the differences already listed, and the unsupported add-backs already marked, gives the reviewer a shorter starting point.
Deal OS runs the first two of those tests on the documents: the tie-out across documents, and the add-back list with a first rating of each (likely, questionable or unlikely to survive a buyer's review). It does not touch cash activity or bank records, and it does not replace the independent report; see quality of earnings software for what it covers.
What the first pass will not tell you
- Whether an add-back is true. It can show the add-back has no support in the documents; only evidence from outside them, such as ledgers and invoices, settles it.
- Whether cash matches profit.
- What a lender will accept. The lender engages the independent provider and makes the credit decision.
Worked example from the sample brief
The first two tests applied to the sample brief (a synthetic deal), quoted from it:
- Reconciling records. Trailing twelve month revenue is $6.21M on page 6 of the CIM and $5.95M as gross receipts on the tax return. The brief shows the $260K gap, labelled a mismatch, and says to reconcile it before applying any multiple.
- Reviewing adjustments. The brief lists owner compensation above market ($210,000, likely), owner personal vehicle and travel ($40,000, likely), legal settlement ($65,000, questionable) and projected run-rate from new contracts ($25,000, unlikely). It shows the seller's adjusted EBITDA of $1.42M, less $90,000 of add-backs that may not survive a sale, giving $1.33M.
The example is Sentinel Fire & Safety, Inc., a synthetic company built to show the product. Nothing in it describes a real business, and the same output shape applies to a real data room. See the whole thing at /sample-brief.
See it on a deal.
Open a real brief on a synthetic deal without an account, or check how a single deal is priced.
