Accounting-practice diligence request list is a controlled working document that identifies evidence a purchaser needs to evaluate an acquisition. Each request should state its purpose, period, required detail, permitted disclosure method, and reviewer so the resulting file answers decisions rather than merely accumulating documents.
How should a buyer scope the request list?
Scope it to the actual services, entities, transaction structure, funding, and operating plan. Request enough evidence to test material assumptions, then refine the list when findings reveal additional questions.
Start with the practice buyer hub and define the proposed perimeter. A client-book purchase and an entity acquisition can need different documents. Attest, payroll, tax, and advisory engagements create different operating and professional questions.
The archived Journal of Accountancy accounting-practice due diligence discussion describes practical diligence considerations. It supports a broad evidence review, but the buyer should use current records and qualified advisers to decide the scope and significance of this transaction’s findings.
Assign a lead reviewer and specialists for financial, legal, tax, professional, personnel, and technology matters. State which requests are necessary for an initial price assessment and which must be resolved before final commitment. Keep later additions tied to a reason.
What is the numbered buyer request document?
Use the following list as a working request schedule. For each item, add the responsible seller contact, review owner, requested period, due date, disclosure stage, evidence location, and any follow-up question.
- Transaction perimeter and ownership. Request entity and owner information, proposed included and excluded services and assets, governing agreements, and authority to enter the proposed transaction.
- Historical financial reconciliation. Request relevant statements, tax returns, ledgers, billings, and collections with period and accounting-basis explanations and support for material differences.
- Adjustment and owner-role support. Request proposed earnings adjustments, underlying records, seller duties, hours, and required credentials. Identify work and costs that a successor must replace.
- Client revenue analysis. Request an appropriately permitted roster or aggregate analysis covering services, fees, collections, related groups, concentration, unusual projects, and known engagement changes.
- Engagement and work status. Request material agreement terms, scope, renewal and termination provisions, open work, deposits, receivables, and upcoming deadlines through a reviewed disclosure process.
- Workforce and capacity. Request roles, compensation, benefits, workload, key dependencies, contractor arrangements, and proposed retention or replacement needs with appropriate confidentiality controls.
- Debt and contractual obligations. Request loans, security interests, guarantees, leases, software agreements, material vendor commitments, transfer restrictions, and unresolved consent requirements.
- Professional and provider requirements. Request relevant individual and firm credentials, practice authority, filing-provider arrangements, applicable review records, and identified transfer or new-entity questions.
- Claims and service problems. Request appropriately disclosable claims history, notices, complaints, errors, corrective actions, and available insurance information. Distinguish allegations from established facts.
- Technology and security. Request systems inventory, access controls, data locations, backup procedures, vendor relationships, incident history, and the plan for safely transferring required records and permissions.
- Transition and operating plan. Request proposed seller assistance, client introductions, staff handoff, system changes, billing cutover, open-matter responsibilities, and unresolved implementation dependencies.
- Financial and closing conditions. Request evidence needed to reconcile consideration, financing, debt treatment, reserves, allocation assumptions, approvals, and the proposed conditions for an executable closing.
The lender document checklist separates lender evidence from the buyer’s broader investment review. A lender’s approval does not itself answer every service, staffing, or client-continuity question.
How should the buyer prevent unnecessary confidential disclosure?
Define the purpose and permitted method before requesting sensitive detail. An NDA does not automatically establish the legal or professional basis for every client-record disclosure.
The IRS Section 7216 information center explains restrictions and relevant rules concerning tax return information. Qualified advisers should determine applicable exceptions, consent requirements, and other obligations for the proposed diligence use and recipients.
Where feasible, begin with aggregate or appropriately redacted analysis. Request identified detail only when the decision requires it and the process is approved. Record recipients and limit access to the reviewers who need the information.
Avoid asking the seller to email unrestricted raw data to every participant. Set a controlled location, version process, and question channel. Explain requests without demanding unreviewed disclosures or collecting irrelevant information.
What evidence should change an underwriting assumption?
Evidence should change assumptions when it explains a material difference in earnings, workload, obligations, or transferability. A missing file should initially produce an unresolved finding, not an automatic accusation or invented loss.
For illustration, assume a seller schedule shows $1,200,000 billings while bank-supported collections are $1,050,000 for the same stated period. The $150,000 difference needs reconciliation. It could involve receivable timing, write-downs, deposits, reporting boundaries, or another cause; the request list should seek records that distinguish them.
If review establishes $90,000 outstanding collectible receivables and $60,000 documented credits included in billed amounts, those facts explain the difference only under the actual reporting definitions. They do not automatically mean the buyer will acquire the receivables or collect $1,140,000 recurring annual fees.
Keep the financial effect of each finding separate from the evidence status. A proposed $40,000 replacement cost requires a role and cost basis. Unsupported assumptions should remain labeled until sufficient evidence supports their inclusion in the model.
How should completed requests and findings be recorded?
Record evidence status separately from the decision it supports. A request can be fully answered while revealing a serious problem; an incomplete response can leave a question open without proving the underlying business is defective.
| Field | What to record | Why it matters |
|---|---|---|
| Request identifier | One stable reference and scope | Prevents conflicting or duplicated asks |
| Evidence status | Pending, received, reviewed, follow-up | Shows what has actually been examined |
| Finding | Verified fact and remaining uncertainty | Separates evidence from interpretation |
| Financial effect | Supported amount or labeled scenario | Connects the issue to underwriting |
| Operating effect | Staffing, timing, service, or transfer implication | Identifies implementation needs |
| Resolution | Further evidence, corrective work, term, or condition | Defines the next action |
| Decision owner | Named reviewer and approval date | Creates accountability for conclusions |
Use the core due diligence guide to interpret the broader review. This working list should document the evidence and approvals supporting the final decision.
What technology evidence should the buyer examine directly?
Examine operational records and procedures alongside the software list. Owning a subscription does not prove the buyer can access, migrate, secure, or restore the acquired practice’s data.
IRS Publication 4557, Safeguarding Taxpayer Data addresses protecting taxpayer information. Its guidance supports questions about security practices and responsibilities; the buyer still needs evidence of how the actual firm operates and which obligations apply to the proposed transition.
Request authorized demonstrations or documented tests of backup restoration, user administration, and export capability where appropriate. Identify the person who maintains the system, required vendor support, license-transfer questions, and limitations on providing records to the proposed new entity.
Distinguish a disclosed incident, an untested control, and a verified vulnerability. Each needs its own evaluation and response. Do not infer that absence of a reported incident proves effective security, or that a documented policy proves staff follow it.
How should the request process remain manageable?
Keep requests specific, prioritize material decisions, and use an organized follow-up process. Excessive undirected requests can slow a transaction while leaving its central assumptions unresolved.
For each follow-up, cite the original evidence, explain the uncertainty, and state the needed clarification. Consolidate independent reviewer questions before sending them through the agreed channel. Track new document versions so reviewers do not compare different periods unintentionally.
The first-year operating plan provides a destination for operational findings. A review that discovers a staffing gap should update the budget, schedule, and responsible person rather than simply add another page to the diligence file.
When is diligence sufficiently complete for a decision?
It is sufficiently complete when material assumptions have evidence, unresolved issues have understood consequences, and required conditions are specific and reviewable. Completion is a decision standard rather than a percentage of uploaded files.
Prepare a finding summary that explains what supports the proposed purchase, what changed from the initial case, and what must still occur. Reconcile price, financing, operating cash, seller assistance, and staffing with the revised facts.
A buyer may accept an understood risk or condition the purchase on further action. Record that choice and the adviser input supporting it. Do not allow a long request list or a lender timetable to substitute for a clear investment and implementation decision.
A few common questions
What else should you know?
Should the buyer request every client record immediately?
No. Start with the information needed for the current decision and a reviewed disclosure process. Aggregate or redacted evidence may answer initial questions. Identified records need an appropriate basis, recipients, and controls. An NDA does not by itself authorize every use or disclosure of confidential tax return information.
Does a missing document prove a financial problem?
No. It establishes an evidence gap that needs follow-up. State what is uncertain, which records could resolve it, and why it matters. If evidence later confirms a problem, document the fact and supported effect separately. Avoid converting unanswered requests into invented losses or accusations about the seller.
What makes a request list useful beyond collecting files?
Each request should identify a decision, review owner, relevant period, detail needed, and completion criterion. Track findings, financial and operating effects, and resolution actions. The list becomes useful when evidence changes underwriting or implementation decisions rather than merely showing how many documents have been uploaded into a data room.
Can lender approval replace the buyer’s diligence?
No. Lender review serves its own program and credit requirements. The buyer also needs an investment and operating assessment of client work, staffing, professional responsibilities, systems, and transition. Reconcile both evidence processes, but do not assume financing approval guarantees acquisition quality, reliable service delivery, or the expected ownership return.
Which sources support this guide?
Primary rules and guidance support the factual statements in this article. The worked examples and decision frameworks are original educational analysis.
- Do’s and don’ts of due diligence — Journal of Accountancy
- Section 7216 information center — Internal Revenue Service
- Publication 4557: Safeguarding Taxpayer Data — Internal Revenue Service