Due Diligence (DD) (from English – due diligence) – compilation procedure of fair view about investment object including investment risks evaluation, independent evaluation of investment object, comprehensive study of company’s activity, comprehensive verification of its financial status and market situation. It is usually conducted before business purchase, execution of a transaction on incorporation (joining), agreement signing or cooperation with the given company.
In Financial analysis the following has been implemented:
- Company’s financial reporting analysis;
- Evaluation of company’s internal control system;
- Flow of documents evaluation. Sampling analysis of quality and completeness of documents which approve the company’s revenues and costs;
- Capital assets analysis (structure, depreciation policy, impairment indicators);
- Objects status analysis of construction in process;
- Analysis of company’s financial investment (structure, deadline, documented confirmation);
- Receivables and payables analysis («age-related analysis», structure);
- Analysis of credit agreements and liabilities: credit providers membership, outside funds volume, the conditions of loans and credit lines engaging, intended use;
- Analysis of estimated liability: membership, arguments, final pay;
- Analysis of contingent liability (fixed penalty; interest for late payment; warrantee issued in providing debts of third parties; claims to company; pledges and other proprietary encumbrances of company’s properties);
- Analysis of fullness and authenticity of assets records and liabilities reflected in the company’s balance sheet;
- Transaction overview with related parties;
- Accounting overview including typical and atypical operations in accounting;
- Overview of approved financial accounting policy and tax accounting policy and also of any internal documents regulating procedures of the company’s records;
- Identification, general conclusion and if applicable digital expression of all essential tax risks, unrecognized and (or) potential tax liabilities available with company. Evaluation of tax benefits which are out of use of company. Checking results analysis of tax and other controlling units.
- Other issues which can arise due to peculiarities of company’s activity.
According to financial analysis results customer is provided by report.