(a)

Purpose and scope of due diligence
Generally up to 1 mark for each description of the purpose of due diligence and up to 1 mark for each
point of comparison with an audit.
Purpose:
– Gathering information to reduce risk of investment decisions
– Verification on management representations
– Identification and valuation of assets and liabilities
– Identification of operational concerns and synergies
– Assistance with acquisition planning
Scope:
– Range of sources used
– Level of assurance/type of engagement
– Types of procedure performed
– Forward looking v mainly historical
– No controls testing
Maximum marks 6