Litigation Support: The Value of Forensic Accountants by Joel Glick, CPA/CFF, CFE, CGMA, and Fernando R. Diaz, MBA
Posted on October 05, 2023
by
Joel Glick
Forensic accountants can be significant assets to attorneys working on various litigation engagements that require specific knowledge of financial reporting, asset valuations and fraud investigations. Following are some examples.
Litigation Consulting
A forensic accountant can provide counsel in the preliminary stages of litigation with a comprehensive perspective and in-depth overview of estimated damages. This type of financial analysis can help establish a clear representation of the facts of a case and aid counsel in developing a solid litigation strategy moving forward, which can ultimately save clients significant amounts of money over a dispute.
Discovery Process
The discovery process is often a labor-intensive burden for attorneys juggling various litigation matters. Forensic accountants can help by identifying information necessary to quantify or rebut damages and assist counsel with the preparation of requests for production. Moreover, working with forensic experts in deposition preparation and attendance can positively impact an engagement and aid in analyzing the opposing counsel’s strategy.
Expert Testimony
Forensic accountants may be relied on as expert witnesses to quantify damages relating to lost profits or a breach of contract. This may involve testimony investigating frauds/financial crimes; commercial disputes, including calculation of lost profits; preparation of business valuations or family law matters. Having an expert witness testify on critical factors of a case can be an advantage to getting a favorable resolution.
Fraud Detection and Prevention
During financial crime litigation, forensic accountants can help counsel collect and analyze large quantities of financial data, including bank statements and other documents, to uncover any discrepancies that may point to a financial crime. If evidence of fraud is discovered, accountants can help counsel and clients develop systems, policies and other preventative measures to protect against further fraud in the future.
Forensic accountants’ ability to aid counsel at the initial stages of a case can provide alternative paths and an understanding of how a case can turn out. Often, the key discrepancies identified at the beginning of a litigation can determine the direction of a case. Regardless of the opposing counsel’s strategy, a forensic accountant can demonstrate that “numbers don’t lie” and illustrate these facts to a jury or judge.
Lost Profits
Counsel may rely on the assistance of forensic accountants to quantify economic damages based on how a business would have performed but for the opposing party’s actions. Rather than focusing solely on the impact of those actions, forensic experts look at the difference resulting from the effects. It is crucial accountants have a solid understanding of the facts in the dispute.
Business Valuation
Forensic accountants can assist counsel in determining the value of a business, whether it involves a sale, a partner/shareholder dispute, tax and estate planning purposes or the division of marital assets.
About the Authors: Joel Glick, CPA/CFF, CFE, CGMA, is a director in the Forensic and Advisory Services practice with Berkowitz Pollack Brant, where he serves as a litigation consultant and expert in forensic accounting matters relating to bankruptcy and receivership, economic damages and forensic investigations. He can be reached at the CPA firm’s Miami office at (305) 379-7000 or via email at info@bpbcpa.com.
Fernando R. Diaz, MBA, is an associate with Forensic and Advisory Services practice with Berkowitz Pollack Brant’s Forensic and Advisory Services practice, where he provides forensic investigation, litigation and lost profit calculation support. He can be reached at the CPA firm’s Miami office at (305) 379-7000 or via email at info@bpbcpa.com.
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