Category Archives: Expert Witness

26 Feb

Forensic Accounting Certifications

Lately I’ve been thinking about professional certifications. A financial expert on the opposite side of a case came to the table with 10 certifications listed on his curriculum vitae (CV). And I had to wonder what was the purpose of that?

There was lots of overlap. Three of the certifications were of the “CPA” variety. Three of them were related to forensic accounting. A couple of them were related to bankruptcy consulting. And a couple other miscellaneous ones were thrown in for good measure.

This gentleman has been in the industry for a long time, so he certainly has established a reputation by this point. When an accountant is younger and less experienced, certifications might help him or her look like a stronger witness. But as you mature in the field, multiple certifications just seem like a waste of money.

There are so many certifications out there these days. Running membership organizations is big business. Some of these organizations exist only to turn a profit. They come up with a cleverly named certificate that sounds fancy, charge a fee to get it, charge annual fees to renew, and charge for “necessary” continuing education. Read More →

27 Dec

Finding the Best Expert Witness

More than ever, competent and dynamic expert witnesses are critical to winning legal cases. Even if a case doesn’t go to trial, a credible expert can be the key to settling the case for your client. 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.

Finding the Right Expert
The most critical part of working with an expert witness is finding the right one. Naturally, the selection of an expert involves the evaluation of education and credentials. The examination of an expert’s credentials is a particularly critical process. Read More →

26 Nov

Consulting Versus Testifying in Divorce Cases

A financial professional can fill two distinct roles in family law cases. He or she can be a consultant who provides analysis and opinions privately to the attorney and client. The consulting expert’s work and conclusions are not intended to be presented in court, and are intended to be of an advisory nature. The other role is that of a testifying expert, alternately called an expert witness.  The testifying expert must be disclosed in the event that the case goes to trial.

The services of a consulting expert may include:

  • Explaining financial topics to the attorney and client
  • Providing opinions and advice on financial matters, including the value of assets and liabilities, the taxability of settlement scenarios, and the strengths and weaknesses of the financial portion of the case
  • Helping to develop a litigation strategy
  • Devising a strategy for presenting financial issues to the court
  • Evaluating a testifying expert’s work as a “second set of eyes,” which may help identify weaknesses or opportunities in the testifying expert’s work
  • Scrutinizing the work of a financial neutral appointed in the divorce

Read More →

04 Sep

The Forensic Accountant as Consultant

Forensic accountants are often retained in litigation as expert witnesses, with the intention that they will provide expert opinions and testimony on behalf of the client. Although retention as a consultant is less common, it is an important option to consider. Sometimes, the work of the consultant can be even more important than the work of the testifying expert. The consultant may be able to dig deeper into sensitive issues because there is no fear of testimony or of disclosing the consultant’s work.

Maintaining privilege
One of the biggest benefits to retaining a consultant is the fact that the consultant’s communications and work product enjoy privilege. Because the consultant is essentially an extension of the law firm, the identity of the consultant, the scope of work, the evidence examined, and the results of the work need not be disclosed to opposing counsel. (Note that documents examined by the consultant may very well need to be disclosed as part of the discovery process, but the consultant’s work or impressions of the documents should not be disclosed.) Read More →

30 Aug

Qualifying as an Expert Witness

You are only an expert if the judge says you’re an expert. No matter how many times you may have testified in court as an expert witness, each time you must prove all over again that you’re qualified to provide expert testimony.

In this video, Tracy Coenen talks about how she presents herself to the court as a forensic accountant so that she will be qualified to provide expert testimony. It is a combination of education, credentials, and experience.

27 Jun

Taxes: Guilty Until Proven Innocent

Taxes: You’re guilty until you prove yourself innocent.

That’s the way it works with the Internal Revenue Service. You have to be able to prove the numbers on your income tax return. If you can’t, the IRS auditor will pick a number and it’s up to you to prove them wrong.

It sounds unfair, doesn’t it?

Of course it does, but that’s the way the law works in the U.S. In normal criminal cases, you’re presumed innocent until the government proves you guilty. In tax cases, it’s the other way around.

Taxpayers run into trouble when they don’t have documentation to support the numbers on their tax return. What if the IRS believes a business has unreported income? Maybe the company has bad documentation. The IRS may use bank records to prove their case, assuming that all of the deposits are revenue. They may make an assumption that additional revenue was not deposited and was concealed. They have all sorts of methods to calculate what they think these numbers are.

That’s where a forensic accountant comes in. She can help shoot holes in their theories and their methods. Things get complicated quickly, and you need an expert who is well-versed in the methods the IRS uses to calculate income.

I help attorneys evaluate the numbers in tax cases (either civil or criminal) and challenge the government’s numbers.

Read More →

21 Jun

Rebuttal Reports

My favorite part of being a forensic accountant is rebuttal reports. An attorney comes to me with an expert report filed by the other side, which details some sort of economic loss. My job is to analyze that report and poke holes in it.

The things I will potentially criticize might include:

  • The numbers are wrong – mistakes were made in the calculations, wrong numbers were used, transactions were skipped or incorrect, etc.
  • The methods used to calculate the numbers are not widely accepted or used in the accounting profession
  • Assumptions used were unreasonable or inappropriate
  • The quality of data used in the calculations was suspect or unreliable in some way
  • Procedural errors may render the results unreliable – the process for validating numbers was bad, wrong documents were relied upon, etc.
  • Important information was ignored or glossed over -maybe it was detrimental to the other side’s case, which is why they ignored it
  • Facts unknown to the other side materially affect the numbers – sometimes we know important things that they do not

Sometimes I will offer an alternative way to calculate the numbers, and sometimes I won’t. That is up to the attorney when he/she defines the scope of my work.

17 May

Accountants and Family Law Cases

Family law cases involving complex financial issues often require the assistance of a financial expert for the following issues:

  • Preparing a financial disclosure, including creating a marital balance sheet
  • Comparing balance sheets from period-to-period to evaluate changes in assets and liabilities
  • Analyzing financial disclosures or affidavits prepared by the spouses
  • Calculating the historical income of the spouses
  • Determining income (or the ability to pay) in order to calculate support
  • Determining the standard of living (or the need for support)
  • Valuing business entities or other assets (such as real estate, pensions, and the like)
  • Identifying assets and determining whether they are non-marital (separate) or subject to division (marital or community)
  • Tracing and finding funds or other assets
  • Analyzing claims of dissipation, wasteful spending, or fraudulent conveyance
  • Evaluating the income tax impact of various scenarios
  • Assessing the work of an opposing financial expert
  • Other litigation assistance, such as assistance with drafting discovery demands and interrogatories or preparing for the depositions of individuals with financial information

In addition to these financial issues, an accounting expert could also play the following roles in family law cases:

  • Assisting with settlement activities, evaluating the financial impact of a settlement offer, making certain calculations, and giving opinions on various settlement scenarios.
  • Mediating a divorce case with financial issues to help the parties reach a settlement.
  • Acting as a neutral expert in the divorce, providing an objective opinion on financial matters. The parties may agree together on the financial neutral, or the court may appoint the accountant.
  • Participating in post-court activity, aiding in the evaluation of financial disputes, including things like allegations of fraud during the divorce process or motions for modification of support.