??#3 Major SOX Flags with Fortune 500 Mergers & Acquisitions????
Jeffrey L. Hoekstra
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By Jeffrey L. Hoekstra
#1. Inadequate Due Diligence ?? Inadequate due diligence is a significant SOX red flag during Fortune 500 mergers and acquisitions. The sheer complexity of financial and operational data can lead to overlooked liabilities, causing substantial post-merger financial restatements.
Good Example: When Microsoft acquired LinkedIn, they engaged top-tier auditors to conduct thorough due diligence. This effort uncovered all potential liabilities and ensured transparent financial reporting, avoiding post-merger financial surprises. Bad Example: During the acquisition of Hewlett-Packard by Autonomy, insufficient due diligence missed significant accounting improprieties, resulting in financial restatements and a severe loss of investor confidence.