Due Diligence

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Audit in Kiev, the value of the financial status of the company, the valuation of the organization, the valuation of the company, the valuation of financial status.

Audit in Kiev, the value of the financial status of the company, the valuation of the organization, the valuation of the company, the valuation of financial statusCOLARES Law Company provides services of comprehensive audit of enterprises (Due Diligence).

Comprehensive audit (Due diligence) – is an analysis of all the risks of the company (group of companies), including financial, tax, legal and human resources, and assessment of the value of the company (group of companies) and its financial status.

When conducting Due Diligence, specialists of COLARES Law Company examine:

1.  Financial Audit (Financial Due Diligence, audit of financial statements) is an independent audit, which involves the examination of the financial risks of the company (or group of companies), the valuation of the company and the client’s financial status:

  • EBITDA, net income and net assets;
  • Accuracy of the balance sheet;
  • Income and expenses, the accuracy of disclosures;
  • Indices of turnover and profitability;
  • Fixed assets, commodity stocks, tangible assets;
  • Financial investments, accounts receivable;
  • Transactions with related parties;
  • Accounts payable on loans, credits;
  • Off-the book payments;
  • Assets recognition of the organization, etc.

2.  Legal Audit (Legal Due Diligence) – is an independent legal examination, which includes an analysis of all the legal risks of the company (group of companies).

2.1. Legal audit of corporate management:

  • Legal status of the company;
  • Incorporation documents of the company;
  • Main documents that define the corporate management of the company;
  • A list of the major powers of attorney;
  • Copies of the minutes of the meetings of the Supervisory Board, shareholders meetings, all working groups and committees;

2.2. Legal audit of the shares and the shareholders of the Company:

  • Major dealing in stocks of the company and information on the company’s owner;
  • The list of shareholders;
  • The agreements of shareholders;
  • Property and non-property rights of the company.

2.3. Legal audit (Due Diligence) of the regulatory aspects of the company:

  • Licenses, certificates and permits;

2.4. Legal audit (Due Diligence) of major contracts, agreements and other transactions:

  • Contracts with major suppliers / customers;
  • Analysis of lease agreements of premises and other assets: the pricing mechanism, the volume, types, duration, the possibility of termination or renegotiation of the contract;
  • Loans, guarantees, different types of commitments and bills.

2.5. Legal audit (Due Diligence) of the documentation confirmed the property rights of the company:

  • The right to property and other assets of the company;
  • Shares and other securities that are held by the company;
  • Other significant tangible and intangible assets of the company;
  • Intellectual property;
  • Pledge agreements, mortgages and other assets liabilities of the company.

2.6. Legal Due diligence in the area of labour relations:

  • Collective bargaining agreement and other agreements between the Company and the staff.

2.7. Legal audit of lawsuits and other claims:

  • Legal actions against the Company;
  • Main existing lawsuits or claims;
  • Major unmet legal action or claims.

3.  Tax Audit (Tax Due Diligence) is an independent audit, which involves the analysis and evaluation of tax risks of the company (or group of companies), and which is conducted to determine the errors of calculation and payment of taxes and other obligations to the budgets of various levels in the process of tax accounting and tax reporting:

  • The structure and dynamics of the major tax liabilities;
  • The actual tax liabilities of the company (group of companies);
  • Optimization of income and expenses;
  • Accuracy of calculation and timely tax liabilities payment;
  • Major tax risks;
  • Legitimacy of the use of tax benefits;
  • Off-the book liabilities;
  • Calculation of potential additional tax liabilities, fines and penalties on identified tax risks;
  • Checking the accuracy of tax returns and tax payments.

4.  Carrying direct cost – audit which is conducted in order to determine financial performance of business in the absence or unreliability of the primary accounting.

5.  Analysis of HR risks (HR Due Diligence) – audit of the age-specific and professional staff, the actual payroll, etc.

As a result of the audit, we provide the following documents:

  • The auditor’s report on the tax and financial audit for the selected period, including the accuracy of the accounting and tax accounting, all identified financial and tax risks (overstatement of income, cost reduction, understatement of expenses, unaccounted tax liabilities, unrecorded assets pledged, the presence of nominal assets, negative net assets, assessment of actual financial results and the deviations from the originally reported results).
  • Conclusion on the conduct of due diligence, including information on the validity of the documentation, as well as the possibility of legal risks of property loss, the grounds for claims by third parties and other potential legal problems, incompetence of intellectual property, justification of the degree of business legitimacy, incompetence of business property rights, the risk of claims for early repayment of the loan, non-compliance of the procedure of a legal entity creation, the impossibility of collecting debts on cash, incompetence of property use, identification of risk elimination and its materiality, recommendations on risk elimination, money assessment of the identified legal risks.
  • Proposals to address the identified problems.
  • Identification of the actual market value of the company (group of companies).

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