Is it necessary for an acquiring company to know ab out the effective internal control in place at the acquired company? Or it does not matter. Why?
Internal control is the process used to obtain assurance as to where there is operational effectiveness and efficiency , reliable financial reporting , compliance with laws , policies and regulations . As a broad concept internal control involves everything that controls the risk of the organisation.
Thus it is necessary for the acquiring company to know whether there is an effective internal control at the acquired company otherwise the acquired company's financial statements may not be reliable and may contain fraud in it , which would result into loss to the acquiring company as it might have paid higher amount for acquization.
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Is it necessary for an acquiring company to know ab out the effective internal control in...
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