Thank you for your question to Ask the Expert. The AP Network does not have a checklist specifically for an acquisition but in TAPN’s tools, in the Shared Services Forms and Checklists there is a questionnaire for integration of business unit/decentralized AP operations into shared services that may prove helpful. There are similarities, and these checklists may prove helpful; see the index here.
You’ll want to get a profile assessment of the AP operation you are acquiring, and this Shared Services Questionnaire may be helpful in this regard.
The Accounts Payable Process Implementation Checklist may also be useful as a starting point to modify to your purpose.
If you need due diligence items, see below.
• Copy of all tax authority notices—federal, state, and local
• Copy of the last three years escheatment returns
• Copy of financial records for the charge-off and escheatment of property subject to escheat laws
• List and describe any liability or obligation not disclosed in your company's accounts payable reports, whether fixed or contingent
• Copy of the A/P aging report by vendor with invoice detail
• Copy of all reconciliations between the A/P subledger system reports and the general ledger system
• Copies of vendor payment terms and contracts (may be responsibility of your legal department for the contracts)
• Copy of discount report and the vendors offering a discount
• Status and communication of any federal, state or local tax examinations
• Copy of the accounts payable policy manual
• Organizational chart including names, titles, and responsibilities
• Accounting systems used in the A/P process, including sub-systems such as imaging and workflow software
• Copy of any monthly, quarterly or annual management reports from the A/P department
• Copy of the A/P departments budget and future forecasts
• List of any vendors whose terms are COD
• List of the top 10 vendors in terms of purchase volume
• List of single source vendors for any critical materials or services needed for the company's operations
• Copy of any reports issued by the outside accountants reporting on the A/P operations
• Copy of the P-card policy manual (if the company uses P-cards)
—List of all P-card holders – name, title, position
• Copy of the internal control manual that relates to the A/P functions
The general purpose of your due diligence is to assess the following:
• How is the organization staffed
• How effective is their internal control environment (adequate separation of duties, management oversight...)
• What efficiencies does your organization bring to the combination—technology to enhance productivity which might also lead to removing staff redundancy
• What are the integration issues with the target companies A/P system vs. your system
• Based on the volume of business done with common vendors are there opportunities to achieve cost savings from better bargaining power with the combined organizations
• Identify integration issues that will address – staffing, equipment, systems...
Here are a few more thoughts: Typically you would follow the existing policies and procedures of the acquired company until you can implement your policies and procedures through the acquisition. Communicating the practices that you want the acquired company to use should be done in writing and also in person preferably so that everyone is on the "same page."
Often the due diligence process seeks out documentation of existing policies and procedures of the acquired company. See if you can obtain a copy. Of course, actual practices may diverge from written policy. Hopefully there are some staff available from the acquired company who can provide insight into actual practices.
You will also want to make sure there is a communication process with the vendors about the acquisition. Give them written notification and any other information that will be helpful in bringing them under your company's vendor management policies.
Existing and incoming invoices can be processed per the approval processes in place until you can fully integrate the acquired company into your processes.