Financial due diligence is aimed at analysing individual items within the target company’s financial statements. It is carried out to identify any risks caused by incorrect accounting or misstatements in the balance sheet, such as overvalued assets and undervalued or undisclosed liabilities. Tax due diligence focuses on tax risks, such as tax compliance and the correct application of tax laws.
The scope of due diligence is optional in terms of the areas of focus. The review can concentrate on the basic aspects that are of interest to the client, or an in-depth review can be undertaken. Everything depends on the client’s specific needs. At the same time, a materiality threshold is determined in advance which can differ for various risk areas, all depending on the conditions agreed in advance.