Acca aaa s21 Notes

September 2021 to June 2022 exams
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3. Information to be reviewed
A due diligence review will be concerned with the target's assets and liabilities - not all of which will 
be reflected in the financial statements (eg intangible assets that cannot be recognised) - and future 
prospects. The range of information that may be reviewed is generally very broad:
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Budgets.
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Information about senior employees and their contracts of employment.
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Liabilities that have arisen since the issue of the most recent financial statements.
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Pending litigation.
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Prospects for the business.
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New products in the pipeline.
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Industry outlook.
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Non-current asset information not revealed by the financial statements (eg age of assets and 
replacement plans).
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Lease contracts.
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Significant contracts, progress, renewal dates, performance, transferability, termination (eg on 
change of business ownership)
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Correspondence with major customers.
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Proof of payment of corporation tax, employees PAYE, VAT etc.
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Accident book.
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Board minutes.
A review might also need to consider issues that might be critical to a successful takeover, for 
example:
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Whether the target company's culture 'clashes' with the buyer's.
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The extent to which the target's systems are compatible with the buyers.
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Specific operational matters (eg manufacturing processes or inventory control).
September 2021 to June 2022 exams
Watch free ACCA AAA lectures 
136

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Chapter 30