10 Checklists of Preliminary Information for the Due Diligence

Once you perform the Due Diligence Services for your potential customers, you need to get a better and deep understanding of your customers. The predetermine checklists are one of the most methods that most professional accountants who perform Financial Due Diligence typically have.

Here are the ten checklists that will help you to gather enough information to perform the pre-analytical procedure for your Financial Due Diligence.

Check them now,

1) Entity Organizational Structure:

The organization of the entity being reviewed is an important starting place for you to understand better what the entity is all about. These documents will list down the summary structure of the entity operation, and sometimes it lists down by department. The key personnel that you might need to contact is there.

For deep understanding, you need to obtain the group structures of the entity so that you can get ideas of how many subsidiaries are under the entity’s control or which company that the entity is currently under.

2) Information Memorandum:

So the Information Memorandum is a legal document that most of the entity requires to form the company.

This document tells you the company’s legal name, official bank accounts, nature of the business, products, and services that the entity is legally allowed to offer, a list of the parent’s companies and shareholders, number of shares, and its book values. Make sure you have this in your Checklists.

3) Incorporation documents

The second item in your checklists is to incorporate documents.  Incorporate Documents of the group company is one of the most important. Sometimes it was called the Article of incorporation.

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4) Summary of Key Products and Services

The second item in your checklists is Key Products and Services.

Obtain a summary of all types of products and services that the entity is offered. Such a summary could be obtained from the annual reports or related management reports.

5) Summary of Major Accounting System and Policies

Another item in your checklists is Major Accounting System and Policy. Obtain or inquiry about the current accounting system, accounting policies, and other manuals that use in the entity.

This information is quite important for you to perform the pre-analytical procedure of your client, and help you to get a better risks assessment.

6) Summary of Planning and Budgeting System

An annual business plan and budget plan for the past year, current years, and next few years should be obtained. If possible, obtain the analysis between budget and actual that prepared by management.

7) Summary of the Key Financial Management Personnel

Maybe you could get this information from the organizational chart, but if you don’t have then you should obtain the summary organization chart for the finance department especially the role and responsibilities of the key personnel in the Finance Department. Since you perform Financial Due Diligence, such information should have in your checklists.

8) Board Meeting Minutes

If you want to know about the significant event that happened in the company, then Board meeting minutes could help you.

9) MIS Reports and Budgets

Management Information System is one of the most important systems used by top management to control the operation of the company.

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Such a system let them access many kinds of information in a different department.

10) Interim and Audited Financial Statements

Obtain the last few years’ audited Financial Statements and audit reports along with the current interim Financial Reports for your analysis.

I hope these Checklists will help your Finance Due Diligence more easily.