The QofE auditor says our AI-driven overhead savings are too recent to annualize. How do we defend this run-rate adjustment?

Question

Tyler Smith · Accepted Answer

Buy-side Quality of Earnings auditors are notoriously conservative when it comes to run-rate adjustments. If you recently implemented custom AI workflows that cut your administrative overhead by thirty percent, the auditor will argue that these savings have not been proven over a full twelve-month period, refusing to include them in your Adjusted EBITDA. To win this argument, you must move the discussion from theoretical accounting to hard operational facts.

Pull the weekly Scorecard data from your leadership meetings. Show the auditors the exact date the AI integrations went live and the corresponding drop in labor costs or outsourced services. Present a clear, run-rate bridge that annualizes these verified, realized savings.

For example, if you saved ten thousand dollars a month for the last three months, you have concrete proof of a one hundred and twenty thousand dollar annualized EBITDA adjustment. Do not let them dismiss this as speculative future growth. By showing that these cost savings are already fully realized, locked in by your systemized operating procedures, and monitored weekly by your leadership team, you can successfully defend the run-rate adjustment and secure the higher valuation multiple your operational efficiency deserves.