Emotions run high for all parties within marriage dissolution engagements. While the requirement of each party to completely and accurately disclose his or her assets and earnings is straight forward, often allegations of inaccuracy or non-disclosure are raised. Further allegations are raised if a business is involved, creating the need to support or refute any of the raised allegations.
Forensic accountants can add value to these matters by providing unbiased objectivity with regard to both party’s financial disclosures. The goal of these engagements is to ensure as complete and accurate financial disclosure as possible by both parties.
Our experience working with attorneys specializing in family law includes reconstructing bank and investment accounts to identify non-disclosed, diverted or otherwise squandered amounts and balances; reviewing business records for non-business related expenses (personal use of business funds); reviewing financial records to identify non-disclosed sources of income; identifying undisclosed real or personal property; and reviewing filed tax returns.
The word “forensic” simply means… “of, relating to, or used in courts of law or public debate or argument.” Forensic accounting is the specialty practice area of accounting that describes engagements which result from real or anticipated litigation, and encompasses both litigation support and investigative accounting.
Forensic accounting has many contexts. It could involve reconstructing records accidentally or intentionally destroyed; investigating accounting records including tracing transactions to supporting source documents; requesting known financial documents; coordinating requests for replacement documentation; and analyzing financial results and balances for completeness and reasonableness.
Our forensic accounting skills have been used within many different areas, including civil litigation matters (partner disputes, breach of contracts, tenant disputes), corporate investigations, marriage dissolutions, due diligence engagements and insolvency/bankruptcy matters.
We also provide pro-active forensic accounting services typically to closely-held companies and organizations to evaluate their accounting records and results, with the goal of identifying any potential problems or issues within the transactions. While not able to provide absolute assurance that no fraud exists, these engagements help companies and organizations before a problem materializes by providing an objective outside review by accountants specializing in the field of fraud. The outside review also acts as a deterrent which strengthens the organization’s internal control environment.
The word “fraud” has several meanings and relates to many types of allegations and investigations. Employee fraud relates to thefts and embezzlements through employment; financial statement fraud refers to companies misrepresenting their position and results within their published financial statements; bank fraud relates to customers defrauding financial institutions (in many ways); and fiduciary fraud relates to theft or embezzlement by someone in a position of trust over someone else’s assets, to name a few.
There also exists a difference between “alleged” fraud versus actual fraud, and many investigations are predicated on the need to support or refute an allegation of some type of fraud.
The key to any investigation, whether alleged or known to be actual, is to remain “objective.” We seek to identify every explanation possible to protect against reaching the wrong conclusion, the consequences of which are almost always irreversible.
In our experience many cases involving allegations of fraud concluded that no evidence of such fraud existed, and identified the real explanation for the identified problem or issue.
Our experience includes the following contexts for fraud investigations:
- Financial institutions – lending customer issues
- Medical and dental practices – billing issues
- Employee thefts and embezzlements
- Civil matters – partner’s use of funds
- Probate matters – fiduciary’s use of funds
- Marital dissolution matters – spouse’s use and/or disclosure of funds
The use of forensic accountants within litigation matters has been growing. More and more attorneys have come to realize the value forensic accountants can add to a case, delivering specialized accounting expertise in a number of areas.
From record requests through expert testimony, forensic accountants can prove invaluable in assisting counsel by obtaining adequate financial records, reviewing provided records for completeness and reasonableness, reconstructing records and accounts as needed, preparing support for interrogatories and depositions, performing calculations and providing expert witness services. Specific areas of expertise include bankruptcies, business valuations and various types of claims calculations.
Our firm specializes in fraud, employee embezzlement and financial crimes. We can assist with evaluating internal controls within organizations, as well as fraud prevention.
In addition, we have experience working with attorneys providing litigation support within several contexts and venues, including civil litigation, matrimonial matters and probate matters. In many cases our skills were used to assist counsel in drafting document requests, and no further involvement was needed. We have testified as experts in our field in state and federal court.
Prior case examples include partner and member disputes, employment issues, breach of contracts, tenant/landlord disputes, trespass and constructive interference matters.
Economic Loss Reports
We provide litigation support for personal injury, wrongful death, wrongful termination, depositions, and court testimony. We have over ten years of experience serving the legal community with economic reports prepared for attorneys and have qualified as an expert in State and Federal Court.
The three forms of forensic accounting practice—litigation support consulting, expert witness testimony, and auditing alleged incidents of fraud—require finding, analyzing, interpreting, and presenting accounting, statistical, financial, and economic data. The expertise and ability to articulate a position is an indispensable quality of an expert witness. An inquisitive and investigative mindset is necessary to identify errors in calculations of financial data.
The importance of proper valuation of economic loss is to ensure that owners of destroyed or lost commercial properties receive fair compensation. To compute economic loss, an expert should consider other factors, such as inflation, proper discount rates, productivity gains, and job promotions. Including fringe benefits, such as profit-sharing, employer Social Security contributions, group insurance, and vested pension rights, can also help counter opposing counsel’s “what if” questions.
A forensic expert constructs a profile of past and present economic facts from which to begin projections of value lost in future years. This entails developing statistical data based on reliable tabulations of such averages as life expectancy tables, earnings of individuals in the same age group, earnings according to education level and occupation, consumer price index (local or national), productivity index, or other well-defined statistics from government or well-known private sources.