The ability to perform effective “due diligence” exercises for existing audit clients is increasingly important in today's competitive environment and can help to strengthen relationships between the auditor and his client. This course will examine all aspects of the due diligence exercise from the viewpoint of auditors acting as reporting accountants assisting private company clients in their consideration of potential targets for acquisition. It is not intended to cover business valuation techniques.

Partners and staff at all levels who are involved or are likely to become involved in special work providing private company clients with reports on the financial status of other private companies or small businesses which are the targets for potential acquisitions.

• Acceptance procedures
• Letters of Instruction
• Planning the work
• planning meetings
• liaison with acquiree's auditors
• Information gathering
• Cash flow information
  • presentation
  • identifying profit smoothing techniques
• Historical financial information
  • accounting policies
  • review procedures
  • verification procedures
• Prospective financial information
  • forecasts and projections
• appreciating what can and what cannot be done
• Working papers
• Writing the report
• Management representations
• Delivery of the report
• Review of commercial agreements
• The importance of the covering letter
• The potential impact of the APB's new 'SIR' statements will be considered