Frequently Asked Questions
Do I need a forensic accountant or valuations expert?
Certified public accountants who provide litigation support services are often generically referred to as “forensic accountants.” They are normally used as consultants and/or experts in business litigation and divorce litigation matters involving accounting and financially related issues.
What makes forensic accountants different is their experience and training in dealing with complex financial issues and arriving at objective and defensible opinions based on their examination and analysis of evidence. Often, the forensic accountant assists counsel with the discovery process in obtaining documents and other information that can be used in forming an opinion.
When serving as an expert witness in court or in an arbitration setting, the forensic accountant needs to be able to explain complex financial issues in understandable terms to the trier of fact. When testifying, the forensic accountant must not only be objective and credible but be perceived as such.
If matters involve such issues as funds or other assets having been hidden or otherwise diverted, or income not having been reported or expenses having been inflated, then the forensic accountant uses methodologies in the attempt to uncover such misappropriations. Additionally, when funds or other assets have been co-mingled, the forensic accountant uses certain procedures to identify and attribute the funds or other assets to the parties to which they belong.
A forensic accountant who performs business valuations, and particularly a forensic accountant who is credentialed and experienced in performing valuations, sometimes uses a diminution of business value as a means for determining damages. Business valuations in matters not involving litigation are often needed in divorce proceedings for purpose of determining property division, for the purchase or sale of a business or business interest, or for gifting or estate tax purposes.
How can a forensic accountant help my case?
During the discovery process, the forensic accountant can assist with preparing requests for production, interrogatories, deposition questions for an opposing expert and for an opposing litigant. Also, the forensic accountant can offer consulting services that can assist counsel and the client as to whether filing a lawsuit is indicated or whether attempting to settle a dispute might be the favorable course of action.
Often, before a decision is made to litigate a matter, the forensic accountant can assist counsel and the client with strategy in determining the nature and extent of the claims or allegations, or even whether it appears that litigation should be pursued.
In many, if not most, instances the forensic accountant should be engaged in a matter or potential matter as soon as possible to avoid the possibility of having to change the manner in which the matter should be approached or even the possibility after the time period to make any changes has elapsed. Also, the forensic accountant must have sufficient time to review and analyze the data and be able to make requests for additional documentation and other information in order to formulate opinions, particularly when a report must be submitted by a specific date.
What qualities should I look for when selecting a forensic accountant?
There are a number of qualities you should look for when selecting a forensic accountant to work with on your case. The following summarizes some of the factors to consider in selecting a forensic accountant or valuation consultant on a legal matter:
- Experience — How many years of practical accounting experience and of providing expert services do they have?
- Education — What are their credentials and do they have any professional designations? Does maintaining their credentials and designations require them to have certain numbers of hours for continuing education courses?
- Articles and presentations — Have they written articles or given presentations to professional groups and to others relating to their area of practice?
- Ability to communicate — Will they be able to clearly explain complex accounting and financially related concepts and in a manner in which the trier of fact, and particularly a jury, can understand?
- Impartiality — Are they objective? Have they been retained as an expert in matters for both to plaintiffs and defendants? Do you believe that they will be committed to your case without appearing to be biased?
- Credibility — Will they appear to be honest and believable in court? How do you believe that they will be perceived by a judge or jury?
- Support — During the course of formulating and presenting your case, do you believe that they will offer meaningful advice and support?
- Confidentiality — Do they understand the importance of the attorney-client relationship? Do they have experience being judicious when handling highly sensitive documents and other information?