Short answer: Compilations and financial statement reviews work from the books. If a transaction was never recorded, or was misclassified, there is nothing for the accountant to find. QoEAgent’s proof of cash process starts from the bank statements, which means it catches discrepancies that are invisible from the other direction.
This is why the SBA quality of earnings requirement specifies a cash proof rather than a compilation.
The Direction of Work Is the Whole Issue
A compilation takes the numbers the business owner provides and presents them in a standard format. A review goes a step further, with analytical procedures and inquiry, but it still starts from the reported financials. Neither process begins by pulling bank statements and working forward.
Proof of cash reverses the direction. You start with every deposit and disbursement in the bank record and reconcile them to what the books show. Items that exist in the bank and not in the books, or the other way around, surface immediately. The process does not depend on the owner recording the transaction correctly; it depends on the bank record, which neither the owner nor their accountant controls.
The Category of Error This Catches
A clean illustration of the pattern: a business was remitting sales tax quarterly, but the remittances were classified as reductions in cost of goods sold rather than as payments of a liability. Revenue appeared inflated. Costs appeared understated. Neither the owner nor their CPA had flagged it, and the CPA’s review gave the financials a clean pass because the books were internally consistent. Proof of cash caught it because the cash was leaving the bank on a schedule that did not match what cost of goods sold would predict.
This is not a rare failure mode. It is a structural limitation of any process that begins with the reported financials rather than the bank record. Unrecorded transactions, misclassified remittances, revolving credit drawn and repaid, and sales tax errors are easy to miss in a review and hard to miss in a proof of cash.
Why This Matters for SBA Lenders
For SBA acquisitions with a purchase price of $3 million or more, SOP 50 10 8.1 requires a quality of earnings report that includes a Cash Proof, effective October 1, 2026. The SOP says the Cash Proof is “designed to identify discrepancies in income and undisclosed expenses,” which is exactly the category of error above. A compilation or review does not include one. Our SOP 50 10 8.1 guide covers the full requirement.
QoEAgent’s AI-assisted proof of cash for SBA lenders runs this process for the trailing twelve months and the last two fiscal years, as the SOP requires. For how the lender requirement differs from M&A work, see Lender QoE Is Not M&A QoE. If you are scoping SBA QoE work and want to understand what the process looks like end to end, we are glad to walk through it.