...competitors, community, well the economy.

The high rate of M&A failures indicates that often organizations underestimate the importance of risk management in M&A decision-making. The internal audit function can improve the quality of risk management throughout the M&A process by conducting due diligence and providing expertise in business process integration. With investors, regulators, and the media placing companies under greater scrutiny, internal auditors need to be prepared to take on a more prominent role in the risk management processes connected with M&As. Performing an integral role in M&A integration can enhance internal auditing's image as a value provider within the organization and prevent possible negative impacts throughout the M&A process.

STRATEGY DEVELOPMENT

Internal auditing should seek to become involved as early as possible in the M&A process. To contribute effectively and add value at the strategy development stage, there are several best practices that auditors should follow, including:

* Receiving communication about deals and nonrecurring events. It is important that top management communicate to internal auditing all necessary information about nonrecurring events, such as possible M&As. For example, monthly or quarterly reports from management meetings can help internal auditors be proactive.

* Auditing the risk management process. A risk based approach by internal auditing during M&A projects focuses on identifying risks and helping organizations determine what events or circumstances could cause an obstacle to meeting...

NOTE: All illustrations and photos have been removed from this article.




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