Question

Southeast Ag Supply Company is looking into a merger with another Ag supply company in a neighboring territory. Southeast’s Internal Auditor has hired a forensic accounting firm to investigate the merger candidate. In relation to this scenario, write responses to the following questions:

What types of investigations should the forensic accounting firm conduct?

What types of outside assistance might help the forensic accounting firm conduct a thorough investigation?

Answer 1

Answer 1

The investigation of the competitor’s financial statements might be conducted by the forensic accountant for possible fraud. He might need to evaluate value of assets offered in consideration by the firm to be merged.

Answer 2

The forensic accountant might require to provide estimated values of firm to be merged and also the values of assets that merged firm proposes to offer in consideration for the merger. For the purpose of valuing these assets, the specialized appraisers might be hired by the forensic accountant to estimate the value of specific assets.