Objective of financial and tax audit in the event of business sale:
Due diligence is a precondition for any business sale. Due diligence means unbiased appraisal of investee that includes unbiased appraisal of company’s financial condition; assessment of its potential tax risks and check of company’s financial statement reliability as of the date of making the transaction.
Situations when due diligence is applied:
Normally, due diligence is required before business acquisition transaction, merger transaction, encouragement of investment, entering into lump-sum contract or starting of long-term cooperation with a company.
A business buyer is interested in due diligence because he should clearly understand what business he is going to buy and which risks associated with such business he will bear. A business seller is also interested in preliminary check of his company before making the transaction. Significant risks or errors in financial statements identified in the course of transaction process may jeopardize transaction itself and cause additional losses to seller.
Scope of work:
• Tax audit for the period of one year before transaction and for the last three years of company’s operation. This particular period may be covered by fiscal inspection; therefore, the risks of additional tax charges, penalties and fines are high.
• Audit of accounting statement reliability before transaction. The audit of accounting statement reliability will allow you to understand to which extent the data regarding company’s assets and liabilities are factually correct.
• Analysis of company’s business. The purpose of such analysis is to determine the actual economic performance indicators of company, it financial position and business solvency, stability, profitability, dependence on credit and other financial resources and business improvement potential. In the course of business analysis a number of key indicators representing company’s financial position are figured from different perspectives.
The business analysis allows performing of unbiased appraisal of company’s performance results and further developing of well-grounded business operation plans. .
Detailed report containing description of the work performed, the analytical tables, the conclusions and the action-oriented recommendations based on tax audit and business analysis results.