The procedures used in a due diligence exercise are aimed to help the client understand and evaluate the risks and opportunities inherent in purchase/sale operations, During the performance of the exercise, all the factors that could have an impact upon the valuation of the transaction are brought to light. Audital uses the following procedures with the objective discovering these factors:

• the confirmation, through the use of audit techniques, of the existence of the assets and the completeness of the liabilities to be included in the transaction;
• the identification of eventual unrecorded liablitites;
• the rationalisation of historic results to establish parameters for the computations of income and expense items and so determine the effective profitability of the business;
• the evaluation of the basic hypotheses, used to determine the future prospects of the business, and their rational application in forecasts made for its future results;
• the identification of the business “value drivers” and the other critical aspects, which could impact upon the value of the business;
• the examination of the contemplated general obligations, the guarantees in existence, the general warranties supplied by the seller and the fiscal liabilities; and
• the formalisation of the general structure of the agreement and the fiscal aspects of the operation.