I have heard of them catching errors in addition, and a colleague on an FI course many years ago had to fly additional hours prior to issue of the rating because he had a significant number of P1(u/s) hours that they were not happy with.
A colleague who used to work in the CAA told me of a rating being denied because one of the chaps working in the licencing department realised the aircraft in the log book was in a hangar on jacks when it was supposed to be flying according to the log book accompanying the application.