6/4/2012 THE ROLE OF THE FORENSIC ACCOUNTANT Very F Few w - PDF document

6/4/2012 THE ROLE OF THE FORENSIC ACCOUNTANT Very F Few w Friendly La Lawsuit wsuits Ba Battle les Ov Over er:  Division of Marital Property  Child Custody  Support Obligations St Stor ories:  Bitterness  Sneakiness  Vindictiveness  Hatefulness  Etc. DIVORCE FORENSIC ACCOUNTING “UNIQUE” Seek Seeks t to Un Uncover Beh Behavior: De Devi vious Designed t Desi to Puni Punish Planned anned tax tax-avoi oida danc nce Moti Motivation on - - different 1

6/4/2012 EXPECTATIONS OF A FORENSIC EXPERT Prim Primary fin financial in investigator Unco covering unre unreported incom income and and asse assets Exper pert w witness – ess – testim timony Ad Adviso sor to r to atto torne rney:  Finance  Tax  Business Practices PROFESSIONAL RELATIONSHIPS WITH MATRIMONIAL ATTORNEYS What i What is att attorney looking f for? Creden Cr entials als Exp Experience ce Reputa Re tatio tion Deme Demean anor ATTORNEYS Attorneys – – few ha have the the w work rking g knowle knowledge of busi busine ness, tax , tax and and acco account unting ng m matt tters that acco that accoun untants do do! 2

6/4/2012 THE ACCOUNTING EXPERT Acco ccoun unting e expert: Mo More C re Curre rrent:  Matters of business accounting  Techniques used by business people  May be less expensive  Understand tax matters ACCOUNTANTS AS EXPERT WITNESSES “Accoun ccountants as as expert witne witnesses can can be be very use useful be becaus cause of the their abil ability to testify on on a broa oad r range of fin of financial, t tax a x and business pr practices.” WRITTEN REPORT AND FORMAL DECLARATIONS Fo Forensi nsic expert m must have d decent w nt writing s g skills Re Report will b be intr troduced into to c court a t as evid idence Repo port must must be be a a mo mode del o l of clari clarity Le Least ast am amount of “ “acco ccountant nt-speak ak” 3

6/4/2012 TESTIMONY IN COURT A A writ itten rep report, in in and d of its of itself, is n is not t admi missibl ble a as evidence in in a a cou court of la of law. Tech chnical cal t term rm – – it t is is he hearsa arsay. To be ac accept pted ed – – exper ert m must test stif ify ENGAGEMENT CONSIDERATION Conflic licts o s of interest a terest and bias  Non-divorce related services to one of the spouses  AICPA Code of Conduct  Related parties  Opposing Counsel  Disqualification Keep eep an open open min mind t to a avoid oid bia bias Coop ooperation of t of the pa e parties Lo Locat cation Approp opriat ate S e Skills and and Experien ence ce Tim Timing and and Due Due Dat Dates Def Definition o of Ser Services Avai ailable F e Fina nanc ncial ial R Reso sources Fee St ee Stru ructure WHO IS YOUR CLIENT? Re Retained by by a atto torne rney  Attorney-client privilege  Attorney-Work-Product privilege Pa Party’s e expert Neu Neutral e expert:  Court’s expert  Mediator’s expert  Joint expert Engagemen gagement Letter and er and Retainer A iner Agreemen ement 4

6/4/2012 ENGAGEMENT LETTER Natur Nature o of the the re relat lation onship Parties t ies to the agr agreemen ement Party r y respo sponsi sible f e for p r payment ent Th The lim e limitation ons on on the n e numb mber of h of hours or or fees – – “no fix fixed f fee”. Forensic nsic a accountan tants e s exact d t duties Allo Allowance f for w with thdr drawal UNDERSTANDING THE PROCESS Property rule Pr rules in in v vario rious stat states  Community  Marital  Separate Property  Equal or Equitable Distribution BASIC MATRIMONIAL LITIGATION PROCEDURE Preliminar iminary P y Phase Fault o t or N No-Fault ault S Stat ate Disc Discover ery Dema Demand f for Doc Documents Financial a ncial affida davit vit Interrogat ogator ories ies “T “Tak aking the the Fif Fifth” Depo Depositions Third-Par Party S y Subpoenas oenas Request f est for r admissions ssions Loca Local r rules les of of cour court  Required mediation Expert W Witne tness D ss Disclosur losure Deposition of Depo of Ex Exper pert Pretr Pretrial and and T Tria ial Po Post-d -div ivor orce ce P Proceedings ngs 5

6/4/2012 FORENSIC EXPERTS’ ROLE IN COURTROOM Gener General Pr l Provisions  Educate  Jury and Judge  “Everyman’s Language”  Explain your work  Try to make yourself likeable Dress C ss Code Ad Addressing t essing the C Court, t, O Other C r Counsel a sel and the J Jury Testimon imony D Demean anor or Pape Pa pers rs a and d Org Organization TESTIFYING Prelimin iminary Q y Qualif ific ication ion  Credentials  CV or resume`  Waiving expert credentials Dire Direct ct, Cr Cross and and Redi direct ct Exam Examinations Obje Objections Visu Visual al Aids Aids Depositions Depo MARITAL PROPERTY Va Valuation Charac Characteriza zation on Divi Division Mar Marital A l Agreement eements  Prenuptial Agreements  Standard of Conduct Between Spouses Trust a Tr and Estates 6

6/4/2012 MARITAL FRAUD Def Definition o of Fraud aud Why S Spouses ses Commit it Fraud St Standard of of Conduct BADGES OF FRAUD Beh Behaviors Co Cond ndition itions Evidence Evid Lifest styl yle I e Issues es Diver verted ed o or Hidden en Income me Inappr appropria opriate T e Tran ansf sfer ers s Busin siness ss Wild ld G Goos oose C Chase INVESTIGATING BUSINESS ASSETS Role-Evaluation luation o of t the Business ness Pe Perks UR URI Depreciatio iation m methods thods  Bonus  Section 179 Valuation E Va Expert Buy-Sell A Sell Agreem ement ents Re Real V Value Active ve v vs. Passive ve Gif Gift T Tax x Retu turns – – Disc iscounting Tax F Ta Fraud 7

6/4/2012 BEGINNING THE INVESTIGATION Obtaining t ining the N Necessar ssary D y Documentation mentation Business T ss Tax R Returns rns Business ss Agre reement ents a and C d Contract ntracts Corp rporat ate O e Ownership rship Records Comp mpan any F y Financial S ncial Stat ateme ements Appointme intment B t Book – ok – Calendar dar “Docum umenta tation D Durability ty” Loan Loan Docu Documents In Insurance Pa e Pape pers rs Ban Bank R Reco cords Fina Financial Sta Statem ement M Mani nipulation “URI” UNREPORTED INCOME Pe Personal al L Lifestyle style Investi vestigation Conce ncealing asset assets or inco income “PROCESS FOR FINDING URI” Ev Evaluate I Inco come me T Tax R Retu turn rns Gif Gift T Tax R x Returns Tr Trust I Income Ta Tax R Returns Bank R Ba Records  Compare Sources of Income Ca Cancelled Che Checks Bank De Ba Deposits Income Ex Inc Expe pected b but no t not t included Gif Gifts a and I d Inhe heritances Pe Person onal E al Expens nses es Nonmari arital al Re Real E Estate Nonmari arital al Pe Personal onal P Property Paymen ent o t of Cred edit C Card B rd Bills Seco cond R Rental o or Ut Util ility Bil Bill Cre Credit Ca Card Reco cords Saf Safe D Deposit B t Box R Records Brok oker erage A e Account Re t Records rds Loan Applications Loan A ns and F and Financial Stat Statements 8

6/4/2012 MARKETING YOUR SERVICES Id Iden entify y your M Market Methods o s of G Genera rating B ting Busin siness ss  Referrals  Personal  Fellow Professionals  Existing Clients Semina minars and and Othe her S Speaking ng Engag gagement ments We Website Busin siness ss C Card rds Br Brochures Ne Newsletters Giveaw away ays Endorsemen rsement L Letters ers Direct M Mail Solicita citati tion Ad Adve vertisin ing NOW YOU CAN BE AN EXPERT WITNESS! Just be Just be Careful! Careful! Don’ Don’t Ge Get t Sho Shot!!! 9