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- ?Lv 61 decade agoFavorite Answer
Due diligence is a term used for a number of concepts involving either the performance of an investigation of a business or person, or the performance of an act with a certain standard of care.
In audit scope, the major reason to carry out due diligence arises from which a potential acquirer evaluates a target company or its asset. The major assets and stock and so on should also be reviewed.
In such case, you need to review the audit reports, the management accounting reports, the accounting system to analyze the financial condition and performanc.It is very important as the results will be the basis of the forecast and the valuation.
There should be a legal team to check the company, outstanding legal case, compliance with the law, any certificates, the ownership of any shares, trademarks and brands and so on.
Just a brief summary for reference
The human resource and organizaiton structure should also be reviewed as it affects the value of acquired business.