How Does VDR Simplify an Acquisition Financing Documentation Audit?

Every head of the organization wants any inspection to be short-lived and completed as soon as possible. But this does not apply to the audit, since a thorough and scrupulous study of a large number of documents and information is required.

Why is an Acquisition Financing Documentation Audit of Financial Statements Necessary?

The audit of the acquisition financing documentation was carried out on the basis of the requirements of regulators of professional stock market participants, shareholders, foreign investors, or domestic creditors. Other business entities did not show interest in conducting audits, which is due to the long-term practice when the main emphasis in tax and financial reporting submitted to the tax authorities was shifted towards preventing significant amounts of penalties for various kinds of violations.

An audit of the acquisition financing documentation with virtual data room is necessary because it combines the principles of economy, efficiency, and effectiveness can be defined as follows:

  • The principle of the economy means minimizing resource costs. The resources used must be provided on time, in the right volume, of the right quality, and at the best price.
  • The principle of efficiency means getting the most out of the resources available. It refers to the relationship between the resources involved and the results, in terms of volume, quality, and timeliness.
  • The principle of effectiveness refers to the achievement of goals and desired results.

The standards of audit of the acquisition financing documentation were compared on three main factors: first, a focus on change management, since mergers and acquisitions primarily imply business transformation; second, focus on creating business value, because one of the primary goals and reasons for the combination is to achieve synergy and create value; and lastly, the standard structure/model of program management, this factor is decisive, since the success of developing a methodology for managing the integration program.

Why and How Acquisition Financing Documentation Audits Are Conducted?

An audit of the acquisition financing documentation with virtual data room providers provides a basis for analyzing the financial and economic activities of a business, which allows you to identify the strengths and weaknesses of the latter, make informed decisions, and prevent administrative penalties. An audit can be compared to a medical examination or technical diagnostics of a car. A mature leader fully understands the need for audits and, as a rule, does not postpone them on the back burner.

The audit of the acquisition financing documentation with virtual data room is intended to confirm or deny that any users of the financial information contained in the statements will be able, on its basis, to draw correct conclusions about the results of economic activities, financial and property status of the company and make informed decisions based on these conclusions. The main purpose of the audit is to verify the reliability of the reporting, and the main condition for its conduct is the independence of the auditor. 

This use of VDR is due to the fact that there are objective and subjective limitations that affect the likelihood and possibility of identifying significant distortions of financial information in the reporting: testing, the use of sampling methods, imperfection of accounting and internal control in the audited organization, presentation of evidence in the form of arguments in support of the conclusion, lack of comprehensive answers. Therefore, the task of the audit is to provide reasonable confidence in the accuracy, and reliability of the statements in the process of collecting the necessary and sufficient evidence underlying the audit conclusion.

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