The Situation

Acquisitions can be tricky, even in the best circumstances. When a private equity firm purchased multiple subsidiaries from a global manufacturing company headquartered in the UK, it knew there would be differences in accounting procedures and systems to reconcile with US standards and its own companywide practices. Each of the 16 entities purchased operated under UK accounting principles and were on individual accounting systems. In order to fully integrate the new subsidiaries, the acquiring firm needed three years of audits for the each of the carved-out entities.

The Solution

To complete the audit, the company engaged a Big 4 accounting firm for its international reach; it also wanted a Big 4 firm on board if the company should pursue a future IPO. Upon the recommendation of the Big 4 firm, the company brought in KS&Co to provide guidance and assistance with various aspects of the audit readiness process, including:

• the application of purchase accounting for the acquisition;

• the ASC 740 Tax Provision for both the current year audit and prior two years of carve-out audits;

• the assembly of books and records for the carved-out entities in order for the historical periods to be audited; and,

• financial reporting for all three periods.

The Outcome

KS&Co completed the projects on the timeline required by the company’s Big 4 auditor. The results were of the quality expected by the Big 4 firm and allowed them to proceed through their audit process. The acquisition of the 16 subsidiaries was successfully completed. The private equity firm continues to use a Big 4 firm for auditing services and continues to use KS&Co for ongoing GAAP technical advice, ASC 740 tax provision services, and assistance with certain tax return preparation assignments.