Microfinance Institutions (MFIs) operate with risks that investors need to be concerned about. Unfortunately, external audits, ratings, evaluations, and even supervision too often fail to identify the primary risk – inaccurate representation of portfolio quality. These due diligence guidelines are designed to help an analyst evaluate, with statistical precision, the accuracy of accounting and performance reports about the portfolio, as well as an MFI’s compliance with its own portfolio management policies. The document guides the analyst through three increasingly robust levels of appraisal. This allows the analyst to adapt the exercise to a wide range or uses and requirements about levels of confidence. In the third level, the use of statistical sampling to validate conclusions from conventional appraisal techniques in the prior levels generates uniquely robust results that should satisfy the most demanding commercial investor or regulator.