Frequently Asked Questions

Do I need a forensic accountant or business valuation 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 with the purpose of arriving at objective and defensible opinions based on their examination and analysis of evidence.  Quite 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 or income having been concealed, diverted, or otherwise  misappropriated, 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 business litigation matters are often needed in divorce proceedings for the purpose of determining property division, or when a business or an interest in a business is to be purchased or sold,  gifted,  or reported for estate tax purposes.

How can a forensic accountant help my case?

When assisting counsel during the discovery process, forensic accountants normally provide counsel with lists of documents they need included in requests for production and interrogatories, and often give counsel deposition questions to be asked of an opposing expert and sometimes for a  litigant.  When an attorney and their client are deciding whether or not to pursue litigation of a matter, the forensic accountant might be engaged to offer consulting services by analyzing various documents and other relevant  financial information that can assist counsel and the client to assess the potential strength of a case, or lack thereof.

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 strategy in litigating the case or even the possibility after the time period has elapsed, such as discovery cutoff, to make any changes or obtain additional information.  Additionally, when the forensic accountant is first contacted by an attorney or client of the attorney, if the allotted time period for the forensic accountant is in sufficient to review and analyze the documents and other information, or there is no time for obtaining any other documents or information that would be necessary, then it would be highly unlikely that either a report or eventual testimony will contain conclusions or opinions that are meaningfully or supportable.  Accordingly, then the attorney and client will need to litigate the case without an expert or possibly drop the case, assuming the case can be dropped.  Certainly, in a situation like this, either the attorney has done a disservice to the client by contacting the forensic accountant “at the last minute” or the litigant apparently waited too long before retaining counsel, which in turn, caused the forensic accountant to be contacted too late.

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 when selecting a forensic accountant or business 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 areas of practice or nature of their business?
• Ability to communicate — Will they be able to clearly explain complex accounting and financially related concepts 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 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?