The results of an effective core potential ab initio and Density Functional Theory (DFT) quantum mechanical study of the rhodium- and iodide- catalysed Monsanto acetic acid cycle are presented. The geometries and energetics of the intermediates and transition states have been determined for the key steps of the cycle. The potential influence of variables such as solvent and ligands, and the controlling electronic structure features have been examined. Theoretical data for the analogous iridium system are also reported. The lowest energy transition state determined at the restricted Hartree-Fock (RHF) level for the oxidative addition Of C1131 to CiS-[M(CO)2121- (M=Rh, Ir) is a "linear" structure, involving classical SN2 back- side attack by the transition metal. Secondary a-Deuterium kinetic isotope effects calculated for this mechanism are in excellent agreement with experiment. Both electron correlation and an electrostatic medium have a significant influence on the nucleophilic substitution reaction energetics. Second-order Moller-Plesset theory (MP2) calculations, with the effect of solvent included, using the self-consistent reaction field (SCRF) model, predict activation barriers in good agreement with experiment. The overall oxidative addition process is found to be exothermic at the MP2 level for both metal systems, but more so for iridium. The transition state and intrinsic reaction co-ordinate (IRC) calculated for migratory insertion in [CH3M(CO)2131- (M=Rh, Ir), indicate that the reaction proceeds via a concerted movement of CH3 and CO groups toward each other. In the rhodium system this reaction is predicted to take place with a low activation barrier and lead to exothermic formation of a five co-ordinate acyl complex in agreement with experiment. By contrast, migratory insertion in the iridium system has a high barrier and is endothermic. Analyses suggest that the difference in reactivity of rhodium and iridium complexes can be correlated to the greater strength of metal-carbon bonds for the heavier transition metal. DFT calculations of the strongly bound ground state complexes yield geometrical structures and carbonyl vibrational frequencies which are comparable, or superior, to those obtained at the RHF and MP2 levels in the same Gaussian basis. However, calculations of the transition states and reaction co-ordinates have not been successful. It is proposed that the currently used functionals are not suitable for the calculation of transition states when weak interactions become important.