Corroboration in due diligence: separating findings from allegations

The most common defect in due diligence reporting is the silent promotion of an allegation into a finding. A single news item, repeated across outlets that copied the same wire story, is still a single source. A corroborated finding rests on at least two independent sources, or one authoritative primary record: a court filing, a regulator’s notice, a registry entry. Draft 1C-STD-005 proposes that every reported item carry one of three labels: corroborated (independent or primary support), disclosed but uncorroborated (a real allegation that could not be independently supported within scope), or unresolved (an indicator that could not be run to ground in the engagement timeframe). The label travels with the item into the report, so a relying party can weigh each item for what it is. Reports that suppress uncorroborated allegations hide risk; reports that present them as findings manufacture it. The discipline is in the label.

Related: the consultation on draft 1C-STD-005 is open.