WarrantyClaimExpert

Completion Accounts Review & Expert Determination Support

Analyse disputed completion accounts items and support party submissions through ICAEW expert determination.

Completion accounts disputes arise when buyer and seller cannot agree on the financial position at completion. The purchase price is adjusted based on working capital, net debt, or net assets compared to an agreed target.

Most SPAs provide for ICAEW expert determination when parties cannot agree. The forensic accountant supports one party through the determination process by analysing disputed items and preparing written submissions.

The agreed accounting basis in the SPA is the relevant test, not general GAAP compliance in the abstract. The expert assesses whether each item was prepared consistently with the target company's accounting policies as applied in the reference accounts.

Methodology

  • Apply agreed accounting basis from SPA
  • Identify and analyse disputed line items
  • Assess policy consistency with reference accounts
  • Prepare written submissions for determiner

Frequently Asked Questions

What is the "agreed accounting basis" in completion accounts?
The agreed accounting basis is the accounting framework specified in the SPA, typically "in accordance with the accounting policies of the target company as applied in the reference accounts." The expert tests each disputed item against those specific policies.
What items are most commonly disputed in completion accounts?
Working capital definitions, revenue recognition timing, provision adequacy, IFRS 16 lease capitalisation, deferred revenue calculations, and net debt definitions are the most frequent sources of disagreement.
How does ICAEW expert determination work?
When parties cannot agree, the ICAEW appoints an independent accountant as expert determiner. Each party submits written representations on disputed items. The determiner reviews both positions and issues a binding determination.
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