LEGAL AUDIT (Definition, importance and applications)



In the corporate business environment, the legal planning of a Legal Audit within an organization or a company is not yet sensitized, we are usually accustomed to the first intervention of a public entity or institution with an inspection, inspection or verification for newly proceed to perform the actions and corrections that should have been made in due course.

However, from our legal perspective as business advisors we recommend every entrepreneur or entrepreneur to consider in their annual operational planning, a Legal Audit at the end of a management in order to verify the compliance of the Company to all current legal regulations and with the purpose to avoid and prevent possible contingencies in the labor aspect, corporate-corporate governance, tax that may cause economic damage to the Company.

What is a Legal Audit?

The legal audit is the method by which the review of all processes and documents related to the Corporate-Corporate, Labor, Tax, Social Security, Intellectual Property and detection of vulnerable activities is carried out, from the date the company was established until the moment it was requested.
It is also an essential tool in mergers and company acquisition operations.

The Legal Audit is a means of “PREVENTION” for Companies and their Partners and / or Shareholders, so that they do not incur contraventions, penalties and / or fines.

What is the purpose of a Legal Audit?

The objective of the legal audit is the identification and detection of contingencies and / or legal risks that could threaten the stability and development of your company, serving as a guide or basis in the regularization, prevention, conservation and protection of your assets.

What are the advantages of a legal audit?

Through a Legal Audit the partners and / or shareholders will obtain, in the short and medium term, various advantages of the areas reviewed, among which the following stand out:

  • Legal security
  • Total knowledge of your company
  • Certainty in the operations and acts celebrated by the company
  • Heritage Protection


Mercantile-Corporate Area

  • Review of Civil, Commercial Contracts
  • Review of the Company Constitution and its modifications
  • Review of the Social Capital of the Company, Legal Reserve
  • Review of mandatory Corporate Books
  • Bail Bonds Review of Directors and Director

Área Laboral-Seguridad Social

  • Labor Area-Social Security
  • Certificate of Mandatory Registration of ROE Employers
  • Labor Contracts endorsed by the Ministry of Labor (of national and foreign employees)
  • Family Assignment Form (Pre, Post Natal)
  • Birth Subsidy
  • Affidavit of submission of payroll and reimbursement of wage increase and payroll signed by workers
  • Wage Increase Agreement endorsed by the Ministry of Labor
  • AVC Employer Social Security Affiliation Record
  • Social Security Contribution Form
  • Employee Enrollment Form to AFPs
  • Monthly Contributions Form to the AFPs
  • Affidavit of Presentation of monthly payrolls of wages and accidents at work
  • Affidavit of Payment of Utility Premiums
  • Aguinaldo Return, approved by the Ministry of Labor
  • Settlement Record endorsed by the Ministry of Labor
  • Administrative Resolution Approval of the Assistance Control System
  • Work Accident Book
  • Overtime book
  • Subcontracted Companies Registry

Tax Area

  • Review of Affidavits – Value Added Tax – (VAT) Tax Transactions (IT) Business Income Tax (IUE).
  • Book Shipping Purchases – Sales through the virtual office of the National Tax Service SIN.

Accounting area

  • Review Proof of Presentation of Financial Statements to the National Tax Service
  • Detailed Inventory Report
  • Accounting Ledgers
  • Daily Accounting Books
  • Auxiliary Account Statement and Bank Reconciliations
  • Accounting Record, Proof of Exit, Income, Transfer documented
  • Detailed report of fixed assets
  • Professional Accreditation in charge of accounting in the Company
  • External Audit Report to the Financial Statements.

Intellectual property

  • Trademark registration, underwater (distinctive signs)
  • Invention Patents


The realization of the legal audit involves an intense work in the headquarters of the company. The lawyers responsible for its preparation request all the necessary documentation and information, meet with those responsible for each area and carry out an immersion in the reality of the company, in order to prepare the corresponding opinion that assesses the situation of society in all its legal aspects and, above all, what measures should be taken to improve, as far as possible, this situation. It is what is known as Data room.

In this way, social administrators can make the appropriate decisions to normalize the irregular situations of their society and, also, to better optimize the management systems of their company.

The x-ray that is obtained through the legal audit should not be understood as a static image, but should be subject to periodic reviews and updates, so that the company is always up to date with regard to all legal issues that may affect on its way.

In this way, in addition, its administrators will adequately comply with their legal obligations, avoiding the risks of eventual responsibilities, since Legal Representatives, partners and shareholders have a legal duty to diligently inform themselves about the progress of their company.

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