Objective

Legal audit is carried out with varied objectives depending on the needs of the company, but in general the purpose of a legal audit is to determine the condition of the company and the level of security of the company, especially in terms of legal risk aspects that will endanger the company's assets. So, a legal audit can openly assess whether the company is legally healthy or even problematic. Legal audits are necessary for the following purposes:

  1. Companies that will conduct an Initial Public Offering (IPO);
  2. Companies that will carry out acquisitions, mergers, consolidations;
  3. Companies that will carry out syndicated credit transactions;
  4. The company will be sold.

Principles

Legal audit has 4 (four) principles, namely:

  1. Willingness to be examined;
  2. Maximum openness;
  3. Confidentiality that will only be known by the examiner and the party being examined until the obligation/need to disclose the information;
  4. Responsibility for the results of the legal audit by the party being examined.

Mechanism

To date, legal audit has become a necessity for companies in the decision-making process for corporate transactions or actions.

  • For this reason, the first step that needs to be taken in a legal audit is to discuss with the relevant company parties to find out the company's plans and objectives. Whether in the context of acquisition, merger, issuance or other purposes.;
  • The next step is that legal consultants need to explore who the company party is being handled. It can also be done by signing a confidentiality agreement to protect the company from leaks of confidential information that could harm the company itself;
  • The next step is to form a consultant work team (Due Diligence Team) that will conduct a legal audit and determine the chairman and members of the team, the time required and the purpose of the audit;
  • Preparation of the due diligence request list contains a list of what documents are needed for the implementation of the legal audit;
  • Implementation of the audit program, including collecting, analyzing, and interpreting company documents and other information needed;
  • The Due Diligence Team examines and verifies company documents to be subsequently made in the form of a report legal audit accompanied by a legal opinion on the company.

Seeing the rise of problems in a company today, legal consultants and companies should be required to strengthen the legal basis and legal knowledge in order to work more professionally. In addition, it is necessary to pay attention to the factors that influence these problems, so as to help the work of legal consultants by providing the necessary data in a timely manner and presenting audit reports on time.