Research Topic: Best practices in post-acquisition audits for small and mid-size corporations in the United States.
Research Motivation: The motivation for this research topic – the best practices in post-acquisition audits – stems from several places. First, the likelihood that a publicly-traded company will merge with, be taken over by, or take over another company (or companies) is great, especially in light of the current economic recovery in the Western nations. This necessitates the standardization of practices between and among the companies which cannot take place until internal auditing has taken place. Second, ensuring that there is an established set of criteria upon which to evaluate the financial health of an organization is crucial to the future success and financial stability of a company. Also, there is a gap in the existing literature. Surprisingly, there has been little formal research reported on this topic, and what information there is that is available does not yield a list of practical applicability for companies or their internal auditors to utilize throughout this important process.
Research Questions: What are the most important post-acquisition, internal audit actions an acquiring company can take to ensure the financial health of both the current company and the acquired company?
Hypotheses: The most important post-acquisition, internal audit actions that an acquiring company can take to ensure the financial health of both the current company and the acquired company are A, B, and C. The variables A, B, and C will not be able to be determined until the research has been completed and an analysis of that research has been performed. It is likely that some portion of the research will yield a standardized set of actions or tasks that an internal auditor or internal auditing process can follow. It is also likely that relationship building will be involved as one of the variables, as will the use of benchmarking to compare like data and to protect against non-standardized results.
Research Methodology: In the broadest sense of choosing a research methodology, choosing between qualitative and quantitative research yields very different results. For this specific research, the most logical category is qualitative research. Conducting interviews with internal auditors who have gone through acquisitions in the past or who are going through current acquisitions. To effectively accomplish this, a sample will need to be identified, interview questions will need to be developed (including demographic questions and closed questions, then the more important open-ended questions), training on administering of the interview questions needs to be completed, test the questions to ensure that they will yield the desired information and data, and then the interviews themselves will need to be completed, transcribed, and analyzed.
The analysis of the gathered data should be comprehensive and methodical. First, the text of the interviews (or tapes of the recordings of the interviews if they were recorded) needs to be read. Then, the quality and quantity of the data needs to be assured. A review of the purpose of gathering the information needs to be completed, and each question then needs a focused amount of attention. From there, the information needs to be categorized, and themes or patterns should be identified as should relationship patterns between and amongst the data. Categorized information should be weighted, and finally, an insightful interpretation as to what the A, B, and C variables are should be identified.