Forensics Accounting Experts Can Bring Valuable Litigation Results
As published in the Cleveland Metro Bar Journal
Nov 13, 2023
Forensic Accountants, often regarded as the “financial detectives” of the accounting world, can play a valuable role in litigation cases. Whether performing complex financial analysis or telling the story of a messy and complicated financial situation, we bring to the table a unique blend of financial expertise, investigative intuition and communication skills. But how exactly do we provide value in litigation?
The Multifaceted Role of Forensic Accountants in a Case
A forensic accountant doesn’t simply look at numbers. We dissect them, explore them, and piece together financial puzzles that may seem unsolvable at first. Here are some of our core functions in litigation:
Damage Calculations: In cases where financial loss is in dispute, we calculate the value of damages. Our calculations are supported by facts, sound analysis, and reinforced with the credibility of our expert qualifications.
Fraud Detection: Through a detailed analysis of financial records, we can uncover anomalies indicative of fraudulent activities.
Valuation: We assess the worth of businesses or certain other assets for acquisitions, mergers, divorces, or any other purpose that may need support in litigation.
Financial Analysis: We scrutinize financial statements and translate complex data into understandable insights to help tell the case story.
Telling the Financial Story: The Narrative Craft of Forensic Accountants
At its core, every litigation case revolves around a story — a sequence of events, actions, decisions, and consequences. While lawyers narrate the factual and legal aspects, forensic accountants play the pivotal role of narrating the facts of the financial story. Let’s unpack this critically essential aspect of our job:
Beyond Just Numbers: Forensic Accountants delve deeper than the surface numbers. We unwind complex transactions, construct the contexts, including the ‘whys’ and ‘hows’ behind financial transactions. By doing so, we can present a comprehensive narrative that encapsulates the essence of the issue.
Chronological Narration: We can reconstruct jumbled financial happenings in chronological order, providing a logical storyline of events. This timeline can be invaluable in illustrating patterns, showcasing anomalies, or revealing intent in financial actions.
Highlighting the Key Players: Every story has its protagonists and antagonists. In the financial narrative, these roles are often played by stakeholders, entities, or decision-makers. Forensic accountants identify and spotlight these players based on their relationship with the flow of funds, outlining their roles, actions, and impacts on the financial landscape of the case.
Simplification: The gap between complex data and the understanding of an average juror can be vast. We simplify the information and play the role of a bridge — taking a juror from feeling overwhelmed across the gap to the other side where they understand the role the finances play in the case.
Visualization Tools: Despite what you may have heard, Accountants are people too. We understand, perhaps better than anyone, how raw data and numbers can lull a juror to sleep. To combat this, we often employ charts, graphs, colors, and other visualization tools to help jurors grasp the essence of our findings.
The Importance of Unbiased Testimony and Credibility
In court, credibility is currency. While forensic accountants are hired and compensated for their services, it’s paramount that we remain unbiased and only testify to supported positions. Here’s why:
Perception of a “Hired Gun”: There’s a prevailing perception that a paid expert is merely a “hired gun” for the side that brings them to court. Every expert needs to overcome this burden for our opinions to have weight with a jury and thus it is essential that we remain objective. Any sign of bias can erode our credibility and, by extension, the strength of the case we’re supporting.
Impact on Jury Decision: Jurors often rely on expert testimony to make informed decisions. If a forensic accountant is perceived as biased or their findings are deemed questionable, it can significantly influence the jury’s perspective and the final verdict.
Remaining Credible: A good expert will only take positions that are supported by facts. We avoid unreasonable speculation. In doing so, our opinions hold up to cross examination. It resonates with jurors when we have data or a valid rationale to explain every position or stance we take within a case.
The Benefits of Onboarding a Forensic Accountant Early
We are often brought into a case late in the dispute process. But much like diagnosing an ailment early boosts recovery chances, involving a forensic accountant at the inception of a litigation case can be a game-changer.
Getting the Expert you Want: A strong opposing expert can cost your client dearly. Make sure to hire the expert you want, as soon as possible after engaging your client.
Framing the Case: An early financial analysis can help attorneys better understand the financial intricacies of a case, allowing them to frame their strategy more effectively. Forensic Accountants can point out strengths and weaknesses of financial claims, provide a clearer perspective of financial evidence, and assist in framing questions for depositions or court.
Reality Check for Clients: Forensic accountants can offer an objective assessment of financial claims. This can be particularly useful for clients who might have unrealistic expectations or are unaware of their financial position. By providing a reality check, we can assist in setting a more informed strategy or even support out-of-court settlements.
Cost-Efficiency: Detecting issues early on can save on prolonged court battles or the need for multiple experts. Moreover, our early involvement can prevent overlooking critical financial evidence or missing financial claims that weren’t initially discovered.
Discovery: Financial discovery can be a cumbersome process. We know what financial documents to request and how to use correct vocabulary for financial discovery requests so that key documents are not missed.
In Summary
As litigation becomes more intricate, especially in financial disputes, the need for experts who can dissect, and present complex information becomes paramount. Forensic accountants, with our unique blend of financial expertise and storytelling ability, are perfectly poised to fill this role. We don’t just narrate the financial story; we work to ensure that it is heard, understood, and remembered. Most importantly, we commit to providing opinions that are supported, unbiased, and accurate so as to be meaningful to a juror. In the courtroom, where every piece of testimony holds weight, the simplified yet robust narrative provided by us can become a cornerstone of a case’s success.
Kori Bogard is a Certified Public Accountant (CPA), Certified Fraud Examiner (CFE), and Certified in Financial Forensics (CFF) for Morones Analytics. He has worked on a wide range of cases, from criminal fraud investigations to civil litigation cases involving lost profits or damages analysis and has testified in support of his opinions. He has been a member of the CMBA since 2022. He can be reached at (618) 267-1291 or [email protected].
