Discussion On The Application Of CPA Financial Due Diligence In The Acquisition Of Real Estate Projects

Since 2017,the number of real estate project acquisitions has increased significantly,and it has continued to be popular in 2018.The main reason is that the acquirer acquires land resources and realizes economies of scale.The acquired party revitalizes cash flow,divests non-performing assets,and realizes business transformation.Compared with the “Century Transaction” of Wanda,R&F and Sunac in2017,there is no such “large-scale” transaction in the real estate M&A market in 2018,and there is no case of change in the control of large and medium-sized real estate enterprises.However,cases involving equity transfer of real estate companies occurred frequently in 2018,especially in the second half of the year.In 2018,the real estate industry was affected by the government’s regulatory policies.The financing and sales were limited to a certain extent.The industry’s capital situation was tight,and the trend of increasing industry concentration has not changed.Some medium-sized real estate companies have surpassed the momentum and expanded their scale through mergers and acquisitions.As a result,the number of mergers and acquisitions has increased.Huachuang Securities pointed out that in 2019,real estate enterprises will increase substantially in terms of financing,land acquisition,and sales concentration.This makes the living environment of small real estate enterprises narrower and more disadvantageous,and the frequency of acquisition of real estate projects will be more frequent.The real estate industry has outstanding characteristics,strong policy,and relatively complicated business process.However,the accounting process and content are relatively simple.In the acquisition process,due to information asymmetry,there is a large acquisition risk.Investors need to pass the acquired company.Investigate the asset,operation,finance and other aspects to understand the real operating conditions of the acquired company and the risk of continuing operations,in order to better formulate the acquisition and integration plan and successfully complete the acquisition.Therefore,due diligence is an indispensable part of the real estate project acquisition business,and financial due diligence is an important part of due diligence.CPA has the financial and auditing expertise to help the acquirer identify quickly and accurately.The risk and investment value of the target company.Since CPAs perform financial due diligence is a very practical work,and the theoretical and practical research on the acquisition of financial due diligence on real estate projects at home and abroad is not rich enough.Therefore,this paper is aimed at this special industry in theory and practice.On the basis of the combination,the process,method and major risks of the acquisition of financial due diligence in real estate projects will be analyzed,which will provide guidance for CPAs to conduct financial due diligence in the real estate field.This paper starts from the perspective of the CPA entrusted by the purchaser,and combines my experience in reorganization of mergers and acquisitions audits and real estate companies to study how to conduct financial due diligence on real estate companies.First of all,this paper introduces the overall research background and significance,summarizes and summarizes the relevant literature,and clarifies the research ideas,methods and framework of the full text;secondly,the concepts,principles,main activities related to real estate project acquisition and financial due diligence and The theoretical basis is elaborated,and the theoretical basis and basis for the full text are provided.Then,the case of J company’s acquisition of H company is introduced.According to the three processes of investigation--the investigation preparation,investigation implementation and analysis and judgment,the financial due diligence is analyzed in turn.The main key points of each stage of real estate project acquisition,determine the problems that should be paid attention to at each stage and the corresponding countermeasures,conduct an in-depth analysis of the overall process of real estate project acquisition financial due diligence,and explain the discovery during the implementation of H company financial due diligence process.Problems and risk analysis,such as untimely recognition of revenue,non-compliance of cost accounting,existence of off-balance-sheet assets,and the risks that may arise from these problems;finally,summarizing case conclusions based on case analysis process and implementing effective financial due diligence review The authenticity and attention of financial data In the big risk field,reduce the acquisition risk and pay attention to the non-financial information to find the target enterprise value.Based on the conclusion of the case,the paper concludes that the CPA financial due diligence case enlightenment and improve the application of CPA in the financial due diligence of the real estate project acquisition business.Real estate project acquisition itself is a high-risk project,and any negligence in any link may lead to the failure of the acquisition.Successful financial due diligence can effectively help the acquirer to avoid risks and increase the success rate of the acquisition.This paper mainly uses the case analysis method,supplemented by the literature review method,and takes "J company to acquire H company" as the material.Through careful analysis,anatomy,summarization,theory and practice,it finally draws conclusions and shows that it is implemented in financial due diligence work.In the process,the CPA should be guided by the needs of investors,use financial due diligence methods to review financial data,pay attention to the logical relationship between data and non-financial information search analysis,and objectively and comprehensively analyze the investment value of the target company.Through the analysis and research on the case of acquiring H company,this paper hopes to help CPAs to better implement financial due diligence in real estate project acquisition business,provide more useful information for project investors,and reduce the difficulty of implementing financial due diligence in real estate projects.Improve the efficiency of financial due diligence and increase the success rate of acquisitions.