Balance Sheet Legal Agreements - Duncan MacPherson

Balance Sheet Legal Agreements

Balance Sheet Legal documents

Assets

1. Customer Contracts – Review for revenue recognition and A/R support

2. Supplier Contracts – For inventory valuation and inventory financing

3. Insurance Policies – Especially those with cash surrender or refund value

4. Maintenance & Warranty Agreements – Corroborate asset enhancement or useful life assumptions

5. Lease Agreements – Support for right-of-use assets under IFRS/ASPE

6. Loan Receivable Agreements – For related party and third-party loans

7. Capital Asset Purchase Agreements – Verify title and acquisition terms

8. Rollover Documentation – ITA Section 85(Canada) or IRC 351 election support

9. Subsidiary Legal Filings – Validate equity investment value

10. Holdback Receivables – For partially paid asset or service arrangements

11. Leasehold Improvement Approvals – Landlord consents, lease clauses

12. Land Title or IP Ownership – Confirm legal title for recorded assets

Uncommon or Emerging Asset Categories (pay special attention to audit risk)

1. Crypto Holdings – Custodial documentation and valuation basis

2. Carbon Credits – Registry documents and marketability assessment

3. Internally Developed IP – Capitalization memos and patent filings

4. Licensing Rights – Terms of exclusivity or revocability

5. Data Sets/Algorithms – Evidence of acquisition or original authorship

6. Customer Lists (PPA) – Terms in purchase agreements and valuation backup

7. Deferred R&D Costs – Developer contracts and deferral rationale

8. Royalty Streams – Legal agreements and cash flow expectations

9. Prepaid Royalties – Validate deferral schedule and cancellation rights

10. Franchise Rights – Verify with FDDs and franchise contracts

11. Digital Asset Rights – Blockchain and SaaS documentation

12. REC or PPA Contracts – Utility contracts, transfer rights

13. Brand/IP Monetization – Talent contracts and value attribution

14. Future Service Rights – Upfront receipts with contractual obligations

Liability Legal Documents

1. Bank Loan Agreements – Review terms, covenants, and maturities

2. Mortgage Agreements – Ensure accurate split between current/non-current

3. Lease Obligations – Right-of-use and discount rate verification

4. Bond/Note Agreements – Cross-check interest terms and maturity schedule

5. Intercompany Debt – Ensure documentation supports arm’s length treatment

6. Holdback Payables – Review for timing of recognition and contingencies

7. Deferred R&D Costs – Developer contracts and deferral rationale

8. Litigation Reserve Documents – Correspondence and legal opinions

9. Environmental Liabilities – Notices of liability or restoration agreements

10. Warranty Terms – Internal and external documentation justifying reserve

Uncommon or Emerging Liability Categories

1. Embedded Derivatives – Review hybrid instruments for bifurcation triggers

2. Reinsurance or Actuarial Contracts – Especially for insurers or captives

3. Crypto Payables – Smart contract obligations and volatility impact

4. ARO Agreements – Ensure timing and valuation reflect legal requirements

5. Earnout/Contingent Consideration – Verify performance metrics and payout terms

6. Guarantees and Covenants – Third-party and intercompany guarantees

7. Pension/Benefit Plan Trusts – Actuarial reports and funding agreements

8. Deferred Comp Plans – Match vesting with accounting recognition

9. Structured Settlements – Timing of liability and related cash flows

10. Royalty Obligations – Long-term IP payments and minimum guarantees

Shareholder Equity Legal documents

1. Shareholder Agreements – Support for control assertions and restrictions

2. Articles of Incorporation / Amendments – Confirm authorized and issued capital

3. Board Resolutions – Verify equity transactions, dividends, and repurchases

4. Subscription Agreements – Private placements and valuation basis

5. Share Certificates / Ledgers – Confirm share issuance and ownership history

6. Dividend Resolutions – Authorization and timing of distributions

7. Buy/Sell Provisions – For share redemptions or partner exits

8. ESOP or Stock Plans – Plan documents and cap table alignment

9. Structured Settlements – Timing of liability and related cash flows

10. Shareholder Agreements – Evaluate for override rights and deadlock resolution

Uncommon or Emerging Equity Categories (scrutinize for substance over form)

1. SAFE Agreements – Timing of equity conversion and recognition

2. Convertible Notes – Terms impacting debt/equity classification

3. Crowdfunding Issuances – Verify exemption status and investor documentation

4. Phantom Equity – Internal agreements and accounting policy memos

5. Preferred Share Rights – Voting, redemption, and liquidation preferences

6. Treasury Stock Resales – Authorization and gain/loss recognition

7. Equity-linked Comp (RSUs/PSUs) – Expense recognition and service periods

8. Digital Equity – Legal rights embedded in blockchain or token contracts

9. Joint Venture Equity – Cross-shareholding terms and impairment triggers

10. Equity-for-Services – Valuation methodology and fair value assignment

Income Statement Legal Documents

Revenue-Related Documents

1. Sales & Service Agreements – Contracts with customers for products or services delivered

2. Purchase Orders / Invoices – Legal confirmation of sales transactions

3. Subscription & Licensing Agreements – Software-as-a-Service, IP licensing, franchise fees

4. Royalty Agreements – Documents covering ongoing income from intellectual property

5. Distribution Agreements – Contracts with wholesalers, distributors, or agents

6. Government Grant / Subsidy Agreements – Legal basis for recognizing grant income

7. Export / Import Contracts – Cross-border sales agreements tied to revenue rec7.ognition

8. Deferred Revenue Documentation – Terms for prepaid services (e.g., annual subscriptions)

Expense-Related Documents

1. Supplier & Vendor Contracts – Purchase agreements for goods, raw materials, or services

2. Lease Agreements – Office, warehouse, or equipment leases (ties to rent expense)

3. Employment Contracts – Salary, bonuses, benefits (backing payroll expenses)

4. Independent Contractor / Consulting Agreements – For service providers not on payroll

5. Utility Service Agreements – Electricity, water, telecom, internet contracts

6. Insurance Policies – Covering general liability, property, professional liability, etc.

7. Advertising & Marketing Contracts – Media buys, agency retainers, sponsorship agreements

8. R&D Collaboration Agreements – Joint development, cost-sharing for research expenses

9. Loan Agreements (Interest Expense) – Legal basis for interest expense on debt

10. Tax Filings & CRA Assessments – Legal authority for income tax expense recognition

Cross-Cutting / Compliance

1. Transfer Pricing Documentation – For intercompany revenue and expense allocation

2. Service Level Agreements (SLAs) – Quality and performance standards for outsourced functions

3. Expense Reimbursement Policies – Internal legal framework for T&E (travel & entertainment)

4. Government Regulatory Filings – Environmental, health, and safety compliance that drives expense recognition

Cash Flow Statement Legal Documents

Operating Cash Flow

1. Customer contracts & collections policies – enforceability of receivables

2. Supplier/vendor agreements – payment terms and obligations

3. Employment & payroll contracts – timing of wage and benefit cash flows

4. Litigation settlements & legal claims – court orders affecting cash payouts

5. Tax filings & CRA assessments – cash timing of remittances/refunds

Investing Cash Flow

1. Purchase & sale agreements for property, plant & equipment (PPE) – cash inflows/outflows for acquisitions and disposals

2. M&A agreements (share purchase, asset purchase) – cash transactions from acquisitions/dispositions

3. IP acquisition/licensing contracts – upfront payments for intangible assets

4. Joint venture & partnership agreements – capital contributions or distributions

5. Loan receivable agreements – repayment schedules for advances made

Financing Cash Flow

1. Loan agreements & credit facilities – principal drawdowns and repayments

2. Bond indentures & debt issuance documents – proceeds and repayment obligations

3. Equity subscription/shareholder agreements – capital contributions and share issuances

4. Dividend declarations & board resolutions – legal authority for dividend payments

5. Share buyback agreements – repurchase commitments

6. Government financing programs – CEBA loans, subsidies with repayment terms