Question

4. Understanding the facts/background of a transaction: Caesars Entertainment is in negotiations to purchase a new hotel. You are an analyst in the accounting policy department and are in the first step of the research process (understanding the facts/background of the transaction). Identify three resources you could consult to gather additional background/precedent for this issue.

Answer 1

As an analyst who is at forefront of background reaseach of the Target company I will look for these following 3 additonal things :

1. Structure of the Target company : In a globalized and interconnected world it is often the case that a company is a subsidiary of another company which is registered in foreign country or the company has many subsidiaries inside as well as outside the country. If the target company is sum total of many group companies and some the group companies are foreign companies in that case it is worthwhile to know the accounting and consolidation processes adopted by the reporting company and what are the steps taken and controls placed within the entity for such complex transction processing.

2. Consistency in following Accounting Policies : It is absolutely necessary to know the track record of the target company in following consistently the accounting policies itadopted. Consistency in this respect reflects the ethics of the reporting team as well as top mangement.

3. Adherence to changing Accounting and Regulatory Processes : In this rapidly changing world corporations adopt various technological aspects to compliance as well as reporting day to day transactions. To cope with that regulators very often comes with tweked regulatory responses. it is the companies perogative to regularly update its systems and processes.