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.
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.
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:
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.
Family law cases involving complex financial issues often require the assistance of a financial expert for the following issues:
In addition to these financial issues, an accounting expert could also play the following roles in family law cases:
How do I come up with a fixed fee for a forensic accounting engagement? I’ve been doing fixed fees for 18 years, so I’ve developed a pretty good formula.
With a fixed fee, a client is paying for a result, rather than buying my time. In most of my cases, the “result” is an expert report.
The following things go into the fee:
Some family law attorneys are reluctant to retain forensic accountants in their cases. Money may be a factor, but sometimes the need for an outside expert is not clear. While law firms may have paralegals or attorneys on staff who are very knowledgeable about financial issues, the outside forensic accountant offers several advantages:
Sometimes it seems like the numbers aren’t complicated and an expert witness isn’t required. But one of the most important things your forensic accountant may do is properly present the numbers. Non-experts don’t often know how to present the numbers in the best way. Someone who does fraud investigations and expert witness engagements all the time will likely have a better way of presenting the data.
The culmination of a financial expert’s work in a divorce or child support case is the expert report. This is followed by testimony, at deposition and possibly trial. The process of reporting and testifying should not be taken lightly, as these tasks make the financial analysis come to life.
The forensic accountant or financial analyst will complete a lifestyle analysis or other financial analysis, typically producing a report that can be understood by non-accountants. The financial expert always runs the risk that a user of the report will not understand it. This is especially precarious when the user of the report is the judge in the family law case.
The Report
Although a written report is not necessarily required of a financial expert in a family law case, a written report is recommended because it is the best way to present complicated financial issues. The report is a roadmap of the financial issues for the attorneys and the judge. Read More
Nearly all of my work is done under fixed fee arrangements. My client and I determine the scope of a project (what documents will be used, what analysis will be done, what time period is covered, etc.) and I quote them a fixed fee for my analysis and expert report. In this video, I explain how I calculate and explain the fixed fee structure to a potential client.
What sources of income are commonly included when calculating spousal support in a divorce case? While the specifics vary by jurisdiction, in general the courts will commonly consider: wages, investment income, business income, rental income, and royalties. Tracy talks in this video about why it is important to have a forensic accountant evaluate these items and how they should be factored into the spousal support calculations.
In this short video, Tracy talks about some of the services a forensic accountant could provide in a bankruptcy case.
These services could include: