Tax and finance due diligence


We examined the customer's branches in West Siberia and Central Russia for completeness of reporting, compliance with tax legislation and internal control procedures as part of our tax and financial due diligence.
Moreover, we completed a mandatory audit of employee workplace safety and proposed new employment contracts that covered hazardous working environments and provided appropriate additional allowances and benefits to employees.


The challengeThe solutionThe result

The challenge

The customer, an international group of companies, was planning to sell its Western Siberian and Central Russian businesses. The group hired SCHNEIDER GROUP to conduct multidimensional tax and financial due diligence on the businesses in preparation for their sale. For two days, a team of SCHNEIDER GROUP professionals met with the company's management, while another team compiled an analysis of the tax and accounting data available.

The solution

The audit covered the assessment of:

  • Completeness of returns submitted
  • Compliance with tax laws
  • Compliance with in-house control procedures
Our experts devised a plan to minimise and manage risks uncovered in the first audit as part of the proposed sale of the company.
Because both branches were located in chemical plants with limited access, we proposed safety audits of employees' workplace routines. To mitigate the potential risks of the results discovered during the audit, our experts suggested that extra employment contracts be signed, taking into consideration hazardous working circumstances and ensuring that employees receive suitable additional compensation and benefits.

The company's legal address had changed since its official incorporation. We recommended that the customer update their registered office information to reflect their true location in order to prevent being penalised for deliberately supplying false information.

Besides conducting a comprehensive financial analysis, we also conducted some spot checks, including a detailed examination of tax returns, in-house controls and the financial risks of the branches’ suppliers and customers. This audit revealed the company's reliance on a few customers, for whom one branch rather than two in a given region would have sufficed.

SCHNEIDER GROUP generally advises that annual reconciliations with tax authorities, suppliers, customers and the bank's control division provide reasonable assurance that the information presented is accurate and up-to-date for users of financial statements. Accordingly, we recommended that such reconciliations should be carried out and documented through the use of statements. After this, they analysed the reputational risks of the General Director, including involvement in any lawsuits, property rights or liabilities, or any criminal or administrative liabilities.

The result

Any inconsistencies discovered, along with the assessment of their risks for the upcoming sale and recommendations for improvements, were documented in the report. The study presented a fair assessment of the significant risks, sales achievements and efficacy of the in-house control system based on multiple sources of information, including legal due diligence.

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