As a Practising Company Secretary, you have been assigned to carry out legal due diligence on the financial aspects of a company. Prepare a checklist on the different aspects to be considered in this regard.

Legal due diligence of financial aspects includes thorough reading of the balance sheet to identify the financial obligations of the company, penalties paid for violations of laws in the past etc. The following are the different aspects in this regard to check while conducting legal due diligence: Financial Statements for the last five years Auditors Qualifications if any Recent unaudited financial statements Details of various financial reports published under listed agreement Capital Budgets and projections Details of fixed and variable expenses Internal Audit Report if any Strategic plans Details of internal control procedures Unrecorded liabilities Commitments, contingencies Accounting policies Relationship between profit and operating cash flows Reliance on debt funds and usage of debt Debt repayment and potential debt trap Working capital lock up.