Divorce Financials: Finding Hidden Income

divorceIt is not unusual for the “out” spouse (the one who is not the major breadwinner in the family and who does not have control over the family’s finances) to suspect that income and assets are being hidden during a divorce.  When one party is accused of hiding income, how can a forensic accountant find it?

Below are a few techniques that I may use to uncover hidden income. A more in-depth discussion of this topic appears in Chapter 9 of my book, Lifestyle Analysis in Divorce, published by the American Bar Association.

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Tips For Finding Hidden Assets in Divorce

It is not uncommon for one spouse to hide assets during a divorce. Everyone is in love until they’re not, and then they may not feel much like splitting everything with a soon-to-be e-spouse. If hidden assets and streams of income remain hidden, it may be impossible to get a fair divorce settlement.

Women are very often in the lesser position when it comes to the finances of the family. The money earner in the family is most often the husband. Even when both spouses work, most often the husband earns more than the wife.

Assets are hidden in divorce more often than you would expect, and women are disproportionately affected by this due to their tendency to be in the less powerful financial position.

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Lifestyle Analysis in Divorce: Is It Simply Data Entry?

When completing a lifestyle analysis in a divorce or child support case, I am often asked whether my work is simply data entry. Why does a forensic accountant need to do the lifestyle analysis? Can’t anyone with a bit of accounting training do it?

As Tracy discusses in the video below, a lifestyle analysis is much more than a data entry exercise. There is a high level of quality control needed to ensure that all transactions are included in the analysis, and that none are duplicated. In larger cases, this gets complicated because of the high volume of data to manage. The divorce client needs an expert who can handle this volume of data AND maintain the integrity of the data.

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Ponzinomics: MLM Fraud and the FTC

Robert FitzPatrick, president of Pyramid Scheme Alert has written a new book about multi-level marketing and how the FTC allows these pyramid schemes to exist. In PONZINOMICS, the FTC’s Protection of Multi-Level Marketing, he discusses the political interests involved in MLM and the lack of action by FTC officials. What is “Ponzinomics”? FitzPatrick uses the … Read more Ponzinomics: MLM Fraud and the FTC

Identifying and Preventing Corporate Fraud

Internal fraud is a huge risk to companies. Experts estimate that on average it costs companies 3% to 5% of revenue each year. When profit margins are thin, internal fraud can literally put some companies out of business. Executives are prone to underestimating the amount of fraud that exists within their companies. They want to believe that their internal controls are better, their employees are more honest, and their ability to stop fraud is more effective than that of executives at other companies.

The truth is, they are often unaware of all the frauds committed within their company’s walls. Indeed, fraud is often hard to find and may be hidden among the seemingly more trustworthy employees, those who are necessary for keeping the business running. They are the ones putting companies at risk; they have access to assets and information and the opportunity to steal and cover up fraud.

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