The purpose and nature of due diligence

In this lesson

1. 0:00 Advanced Audit and Assurance due diligence
2. 0:30 Purpose and nature of due diligence
3. 1:01 Understanding financial and operational position
4. 2:55 Legal matters and compliance risks
5. 3:39 Industry positioning and human resources

About this lesson

This knowledge is essential for Advanced Audit and Assurance, where you'll need to understand how to gather and verify information that protects buyers from costly surprises and helps them make sound commercial decisions. Due diligence goes far beyond reviewing financial statements. You'll discover how to assess whether claimed market advantages, customer relationships, and intellectual property actually exist and hold real value. The lesson covers critical investigation areas: financial health and cash flow, unrecognised intangibles, contingent liabilities and legal disputes, operational systems and integration costs, industry positioning, tax compliance, and key personnel. Understanding these dimensions ensures you can identify genuine business strengths and potential risks that could affect the acquisition's success. This is practical, real-world work that directly supports your Advanced Audit and Assurance studies. You'll see how auditors and accountants act as trusted advisors during one of the most significant decisions a business makes, gathering evidence to corroborate claims and uncover issues that might otherwise remain hidden until after the purchase is complete.

Duration: 5m