A due diligence audit involves the assessment of an organization, in order to determine its financial performance. It helps one to gain a greater understanding of the business earning capabilities, the competency of the management, the prospective customers, and suppliers, as well as their financial position.
In general, a due diligence investigation is used by an individual or firm that is willing to do any business with a company. The overall objective of a due diligence audit to help the client in evaluating the history, performance, ability, and goodwill of the organization.
Types of Due Diligence
1. Financial Due Diligence
Financial due diligence is a review of historical data, including trade results, cash flow and balance sheet of a company to know its financial position. It also includes a review of forecast performance and funding requirements.
2. Commercial Due Diligence
Commercial due diligence is conducted to examine various commercial factors, including market conditions, competitor analysis, product or service assessment, and any other commercial data the user wishes to investigate.
3. Operational Due Diligence
Operational due diligence considers the review of non-financial matters of a business, which may include insurance and risk assessment, HR activities, review of systems and processes, evaluation of management team.
4. Legal Due Diligence
Legal due diligence includes the investigation of any legal risk associated with the rights and obligation of the target company. The issues may involve intellectual property, employment disputes, and property ownership.
Business Due Diligence Process
A business due diligence process, by and large, comprises the following the 5 steps:
1. Term of Engagement
In this step, the company and the client decide on the business terms and objectives of conducting the due diligence. The non-disclosure agreement is also signed.
2. Operational Due Diligence
In this stage, operational data and information are collected, evaluated and documented.
3. Financial Due Diligence
The financial statements of the organization are gathered, examined and documented for the remainder of the process.
4. Legal Due Diligence
Legal due diligence is conducted to review and document the legal and regulatory information of the entity.
Once the due diligence process is complete, the end result is shared with the client or buyer.
Key Benefits of Due Diligence Audit
- A due diligence report acts as a risk assessment tool for an organization
- It helps to discover any hidden information about the company
- It improves a company’s reputation
JAXA Due Diligence Services in Dubai, UAE
We provide the following due diligence services to our clients:
- Recognizing and quantifying deal-specific risks of the entity
- Helping to identify hidden costs, contingencies, and commitments of the company
- Finding the issues which are likely to affect the purchase price or contract conditions
JAXA is a financial consultancy firm in Dubai, offering a wide range of services including accounting, auditing, software consultancy, and management. We have been providing the best audit services in Dubai and the rest of the UAE. At JAXA, we assist our clients to perform all type of due diligence in order to maximize the value from a proposed transaction.
For any due diligence services in Dubai, contact us – we’d be glad to help.
How long does due diligence in Dubai take?
A due diligence shouldn’t take more than 60 days.
What is SIG format?
SIG stands for Standardized Information Gathering questionnaires, which contains the list of questions for conducting due diligence. It is an industry-vetted list of questions.