The increased activity in the transactions market during the recent years has increased the focus on getting full value from divestitures. Inan attempt for sellers to control the sale´s process, vendor due diligence is increasingly becoming an integral part of the divestiture process. In orden for VDD to be of value and deliver on the objective, it is imperative that the buyer can rely fully on the VDD report. This sets some requirements for the accountant and his ability to be independent and objective. However, the nature of VDD, having a seller engage an accountant to perform due diligence that is later passed on to a buyer with a duty of care, poses an uncertainty as to if and how this particular type of engagement is governed by the State Authorized Public Accountant´s act. Further, the State Authorized Accountant´s act has been changed as 1 July 2008 replacing the former dated 30 April 2003 which has caused a change as to how VDD is governed. It is not unambiguous how VDD is to be viewed under the current legislation; however, it is clear that the accountant at a minimum has to follow IFAC´s code of ethics for professional accountants meaning (i) integrity, (ii) objectivity, (iii) professional competence and due care, (iv) confidentiality and (v) professional behavior. Additionally, VDD could be considered to be governed by certain rules of the State Authorized Public Accountant´s act. These include a requirement to be covered by insurance and the ability for the purchaser to report the accountant to the Accounting Practices Board. The requirements these places on the accountant is considered a value driver for the purchaser relying on a VDD report as he will have more confidence that the accountant shows due care and necessary skepticism when analyzing and reporting on the information provided by management and is independent to an extent that he can and will behave and report objectively. Whether the additional requirements from the State Authorized Public Accountant´s act that VDD potentially falls would have a positive or negative impact on the value delivered to the purchaser, has to be subjct of further investigation. The main parameter would have to be an analysis of the effects and consequences from the few extra rules under the State Authorized Public Accountant´s act compared with the effects and consequences of the accountant being governed by the specific rules that govern professional services in general.
|Educations||MSc in Auditing, (Graduate Programme) Final Thesis|
|Number of pages||79|