What kind of work can a forensic accountant do in divorce cases? Tracy Coenen talks about the work of a CPA, including calculating income, evaluating financial disclosures, valuing assets, and completing a lifestyle analysis.
The second edition of Lifestyle Analysis in Divorce Cases: Investigating Spending and Finding Hidden Income and Assets has more than 25% new material. I’ve updated the book for tax law changes, I have added material that clarifies topics covered the first time around, and there is brand new material.
One of the new parts of the book relates to the direct examination of financial expert witnesses, especially during depositions. The deposition is the time for the attorney to dig into the background and qualifications of the forensic accountant. It is also the time to ask probing questions about the work done, the the choices made with respect to the financial analysis, and the opinions expressed in the report (or maybe opinions they have but didn’t enumerate in the report).
I have a Direct Examination Checklist in the book that I think attorneys will find invaluable. I can’t replicate the entire list of questions here, but I’m going to give you some snippets of the list of general lines of questioning that you can use with a financial expert witness:
Background and qualifications
- Educational background—Include both formal education and continuing professional education.
- Credentials obtained—When were they obtained? How?
- Credentials not obtained—Why not? Is the expert not qualified for them or did the expert simply choose to not get them?
Nearly every lawsuit has a financial component to it. In many cases, the issues surrounding the numbers have high stakes. Cases involving securities fraud, money laundering, tax fraud, investment fraud, and Ponzi schemes rely on an accurate tabulation and evaluation of the numbers. To take the numbers as provided by the other side at face value would be a huge mistake.
In fact, there is almost always a story behind the numbers. A case may very well be won or lost based on the ability to find out the story that is often hidden from view. How, then, can a party best get to the truth?
In the below video, Tracy Coenen talks about three common methods that are used to calculate lost profits in commercial litigation: the before and after approach, the yardstick approach, and hypothetical profits. In general, these methods are aimed at determining the profits a company would have realized if the incident giving rise to the litigation … Read more Lost Profits Calculations in Litigation
I believe that an expert witness has the opportunity to make or break a case. We all know that there are few chances to fix a bad opinion when you go to court. There is one chance to express the correct opinion and support it fully. A faulty opinion, or one with little reliable support, can doom a case.
Some attorneys have their preferred experts, while others get referrals from colleagues. Each attorney works with an expert witness in the way that she or he is comfortable. However, it never hurts to hear about it from the other side. This is my perspective on best utilizing your expert witness to her or his full value.
Attorney Miles Mason talks about qualifying someone as an expert witness. How does he demonstrate an accountant’s training, experience, and credentials so that the court will permit him or her to testify as an expert?
Expert witnesses are required to use reliable principles and methods in forming their expert opinions per the Federal Rules of Evidence. In this video, Tracy Coenen talks about Rule 702 how it applies to damage calculations done by expert witnesses.
The calculation of damages necessarily requires estimates and assumptions. Something has happened, and a company or individual is claiming that there are lost profits because of it. We can never know with complete certainty what revenue or profits would have been if that incident or action had not taken place. Mathematical precision is not possible. Thus, the expert must make certain estimates in order to calculate damages.
Financial expert witnesses are the key to helping judges understand complex financial issues. It is imperative that the judge understand accounting and finance scenarios if you are to succeed in court. Tracy Coenen and Miles Mason discuss how your expert witness can help judges understand.
If a court case doesn’t settle, the trial is obviously the most important part of the case. As an expert witness, you want to think about the possibility of trial throughout your work.