Due diligence audit versus statutory audit: impact on financial performance and position of the company. Evidence from Cameroon

Ing. Yusinyu Ngakfumbe Leslie

Master's thesis

Abstract:

The main objective of the thesis “Due diligence audit versus statutory audit: impact on financial performance and position of the company. Evidence from Cameroon” On the basis of investigation of the impact of statutory audit and due diligence audit on the financial position and performance of the chosen company from Cameroon to identify major advantages and disadvantages, similarities and differences between both types of audits and to make a set of related recommendations for companies from Cameroon. The theoretical framework explains the different audit types both internal and external audits and the role of audit in determining whether the company’s financial statement presents a true and fair view in all material respects. Also, the theoretical part focuses on due diligence audit as a special type of audit. The second part of the theory gives an overview of the statutory audit and due diligence audit procedures applied to the three chosen reporting cycles which are the sales and collection cycle, fixed asset cycle and payroll cycle. Also, The practical part covers the description of the chosen company, the methodology and data used, an overview of financial computations based on specific audit assumptions and sampling under the different types of audits being investigated and the comparison of outcomes under both statutory and due diligence audits on the company‘s financial position and performance. The results show how a better due diligence audit uncovers more material misstatement during an M&A as opposed to the classical statutory audit.

Abstract:

The main objective of the thesis “Due diligence audit versus statutory audit: impact on financial performance and position of the company. Evidence from Cameroon” On the basis of investigation of the impact of statutory audit and due diligence audit on the financial position and performance of the chosen company from Cameroon to identify major advantages and disadvantages, similarities and differences between both types of audits and to make a set of related recommendations for companies from Cameroon. The theoretical framework explains the different audit types both internal and external audits and the role of audit in determining whether the company’s financial statement presents a true and fair view in all material respects. Also, the theoretical part focuses on due diligence audit as a special type of audit. The second part of the theory gives an overview of the statutory audit and due diligence audit procedures applied to the three chosen reporting cycles which are the sales and collection cycle, fixed asset cycle and payroll cycle. Also, The practical part covers the description of the chosen company, the methodology and data used, an overview of financial computations based on specific audit assumptions and sampling under the different types of audits being investigated and the comparison of outcomes under both statutory and due diligence audits on the company‘s financial position and performance. The results show how a better due diligence audit uncovers more material misstatement during an M&A as opposed to the classical statutory audit.

Keywords

Statutory audit, due diligence audit, external audit, internal audit, business reporting cycles, corporate governance

Language used: English

Date on which the thesis was submitted / produced: 15. 5. 2023

Thesis defence

• Date of defence: 21. 6. 2023
• Supervisor: Ing. Oleksandra Lemeshko
• Reader: Ing. Bc. Jana Hvozdenská, Ph.D.

Masaryk University

Faculty of Economics and Administration

Master programme / field:
Finance / Finance