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Accounting Due Diligence Checklist For Acquisition

Name: Accounting Due Diligence Checklist For Acquisition
Brand: US Legal Forms
Rating: 4.8 (224 reviews)

Category:

Corporations - Due Diligence

State:

Multi-State

Control #:

US-DD04033B

Format:

Instant download

Description

This due diligence checklist outlines the companys financial and accounting information and materials.

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4.8

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FAQ

The Acquisition Purchase Accounting ProcessIdentify a business combination.Identify the acquirer.Measure the cost of the transaction.Allocate the cost of a business combination to the identifiable net assets acquired and goodwill.Account for goodwill.

A tax due diligence requirements checklist includes property taxes, tax assets, audits, returns and any overseas activities. Target companies should provide extensive documentation on their tax history to prove their legality, legitimacy, and viability.

Due diligence checklistLook at past annual and quarterly financial information, including:Review sales and gross profits by product.Look up the rates of return by product.Look at the accounts receivable.Get a breakdown of the business's inventory.Make a breakdown of real estate and equipment.More items...?

Organization and Good Standing of CompanyThe Articles of Incorporation and any amendments.A list of company bylaws and amendments.A list of company assumed names.A list of all states or countries where the company does business, has employees, or owns/leases an asset.Annual reports for the last three years.More items...

Across most industries, a comprehensive due diligence report should include the company's financial data, information about business operations and procurement, and a market analysis. It may also include data about employees and payroll, taxes, intellectual property and the board of directors.

Interesting Questions

To assess the accuracy of financial statements, an acquirer can review supporting documentation such as bank statements, invoices, receipts, and contracts. They can also perform a reconciliation of key accounts, analyze historical financial trends, confirm the existence and valuation of assets and liabilities, and engage in discussions with the target company's accounting personnel.

Pending litigation and contingent liabilities can have a significant impact on the acquisition process. The acquirer should identify and assess any ongoing legal disputes, potential regulatory fines, warranty claims, or other contingent liabilities that could result in future financial obligations. This evaluation helps in accurately valuing the target company and determining potential risks.

Some potential red flags during accounting due diligence include discrepancies in financial records, incomplete or missing documentation, unexplained fluctuations in financial results, undisclosed liabilities or related party transactions, inadequate internal controls, instances of fraud or misrepresentation, and non-compliance with accounting and regulatory standards.

The findings from accounting due diligence should be used to assess the financial health and risks associated with acquiring the target company. They help in negotiating the purchase price, determining the need for any post-acquisition adjustments or indemnification, planning future integration strategies, and understanding the potential impact on the acquirer's financial statements and disclosures.

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1. Review and verify all financial information. Assist in developing responses to Buyer requests, if any, for more detailed financials. 6.Carefully review seller's financial statements. 7. What is Due Diligence?

Accounting Due Diligence Checklist For Acquisition

Description

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Interesting Questions

What is an accounting due diligence checklist for acquisition in Multi-State?

Why is an accounting due diligence checklist important?

What are some key areas covered in an accounting due diligence checklist?

How can an acquirer assess the accuracy of financial statements during due diligence?

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What are some potential red flags during accounting due diligence?

How should the findings from accounting due diligence be used?

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