Perform an audit of the company to be resumed

Verified 17 July 2023 - Directorate for Legal and Administrative Information (Prime Minister)

The diagnostic and evaluation phase allowed you to take stock of the company's situation and to probe its strengths and weaknesses. If you've written a letter of intent demonstrating your interest in the company, you must conduct a company audit to ensure the reliability of the information provided by the transferor.

Trade-in auditing (or acquisition audit) is an expertise carried out by one or more professionals.

It is a prerequisite for any resumption of company.

Performing an audit allows you to measure:

  • Potential discrepancy between the information provided by the transferor and the actual value of the company
  • Company compliance legal, social, accounting, fiscal and even environmental
  • Risks linked to the company's activity which justify the application of safeguards

At the end of the audit, the auditors provide you with a report that summarizes the company's strengths, their concerns and the solutions to be considered.

Concretely, the objective of the trade-in audit is to acquire a clear, detailed and reliable view of the company for to establish a solid basis for negotiation.

The audit should not be confused with diagnosis of company.

  • Diagnosis aims to gather the information and perform a first level of analysis necessary to make a decision on whether or not to continue the recovery project.
  • Auditing is a more in-depth analysis to check that there is no discrepancy between the diagnosis and the reality of the company.

The cost of the audit, most often at your expense, varies according to the following:

  • Number of audits ordered : legal, accounting, fiscal, social, etc.
  • Level of expertise of auditors : accountants, auditors, lawyers, notaries
  • Elements defined in the mission letter : purpose of engagement, scope of engagement, duration, auditor responsibility, audit confidentiality, etc.

Usually, the hourly rate of a board also varies depending on the size of the office requested.

To have a comprehensive view of the company, conducting an acquisition audit includes several legal, accounting, tax and social audits.

1. Legal audit

The legal audit is to ensure that company compliance all its legal obligations.

The legal professional (lawyer, notary) in charge of the legal audit may carry out the following tasks:

  • Analyze open contracts (lease, suppliers, customers, insurance): do the contracts comply with the applicable law? Do they contain penal clauses and exclusivity clauses? Are they likely to be terminated soon?
  • List rights and obligations : What are the company's patents, trademarks or miscellaneous properties? Is it licensed? Did she consent to any collateral on his property (pledge, pledge, mortgage)?
  • Monitor compliance : Does the company operate in compliance with health, customs, environmental and city planning regulations?
  • Check open litigation : is the company the subject of one or more legal actions? Has she ever been convicted and why?

2. Accounting and financial audit

The accounting and financial audit shall consist in review accounting documents and data (balance sheets, income statements, working capital requirements, cash flow, etc.) to measure the company's financial condition.

The main task of the accounting officer or auditor responsible for this audit is to identify the following:

  • L'active corresponds to all the rights and property owned by the company. The auditor shall verify the presence of the assets shown in the accounting balance sheet.
    You can see fixed assets intended to serve the company in a sustainable manner (goodwill, leasing rights, equity, furniture, equipment) and current assets which is mobilizable in the short term (claims, stocks, cash).
  • The indebted corresponds to the total indebtedness of the company to of the partners (capital injections, advances on current account) and in respect of third parties (loans, payables, tax debts, staff salaries).

3. Fiscal audit

The fiscal audit consists of auditing the compliance by the company with its tax obligations (declarations, payments, etc.) and to anticipate the risks associated with a tax audit.

The tax lawyer in charge of the audit determines the various taxes to which the company is subject: income tax (IR) or business tax (IS), VAT, social security contributions, territorial economic contribution, participation in salaries, etc.

At the end of this audit, the specialist can suggest possible tax optimizations that would allow the company to reduce the amount of its tax.

4. Social audit

Social auditing consists of verifying the regularity of employment contracts and to ensure that all employees' rights have been respected (payment of wages, paid leave, respect of breaks, etc.).

The audit lawyer, who is usually specialized in labor law, is also asked to consider the following:

  • Compliance with collective agreements and company agreements
  • Subscription of pension or insurance contracts for employees (death, invalidity, sickness)
  • Human resources policy (recruitment, training, skills management)
  • Compliance with health and safety requirements
  • Accidents at work and disputes pending before labor courts.

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The public service accompanying companies

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