10 Step Due Diligence Checklist for Choosing a Virtual Data Room Solution

To achieve the main goal of Due Diligence – verifying the reliability of the formation of financial (accounting) statements, and identifying company risks and hidden shortcomings, you should use special software. For example, in the virtual data room, you can easily conduct due Diligence in 10 steps.

How to get the most out of a statutory audit

Mandatory Due Diligence is an independent audit of the financial and economic activities of the organization. Purpose: to confirm the reliability and completeness of the reflection of data in the accounting (financial) statements, the absence of risks of bankruptcy and violation of the rights of creditors. Tax accounting indicators are subject to verification only for the presence of significant errors that can affect the reliability of financial statements. To get the most out of the mandatory procedure, additional options should be included in terms of reference for Due Diligence, such as an in-depth tax audit.

Choosing a company to conduct due Diligence

Conducting due Diligence is best entrusted to a third-party company that will be impartial. After that, you can choose it according to the recommendations of friends or on your own. Usually, large enterprises already have well-established connections, and they know exactly where to turn.

Preparatory (preliminary) stage

At this stage, the auditor meets the client. The consulting company must receive the most complete and truthful information about the activities of a potential customer.

First, this is necessary to assess the possibility of fulfilling the order (availability of qualified personnel in the company or involvement from outside) and calculate the time and material costs for the audit.

Planning

In order to conduct a quality audit of the client promptly, it is necessary to draw up a well-thought-out plan for the upcoming work.

Due Diligence planning is a time-consuming process that can take up to 20% of the total time spent on verification.

Selecting a virtual data room

It is best to conduct Due Diligence in a virtual data room – this will save everyone from paperwork and avoid theft of documents. It is best to choose VDR based on reviews and reviews, as well as based on your needs.

Conducting due Diligence

Conducting Due Diligence includes collecting, evaluating, and analyzing audit evidence relating to the activities of the audited company. Due Diligence is carried out based on federal and developed internal audit standards, which contain procedures and auditing methods.

Analytics

In search of the reasons for discrepancies, synthetic accounting indicators are compared with “analytics” – with statements, with primary documents. In the presence of gross violations, primary documents are checked continuously. In addition, they pay attention to the legality of operations, to the design of the “primary” – the form, signatures, seals, etc.

Final Stage

To establish the reliability of reporting in all material respects, auditors calculate the quantitative value of the materiality level according to the financial statements of the audited company.

Reporting

The final stage of Due Diligence is preparing a report and issuing an opinion expressing an opinion on the state of affairs of the audited entity.

Closing the virtual data room

At the end of the event, you close the virtual data room, having previously decided the fate of all documentation. You can upload the data or delete it.

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