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Total Number of Subscribers: 428 |
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Date: 9 June 2008 |
Compiled by Mr. M. Sathya Kumar |
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Solicitors
often appear to be reluctant to use a forensic accountant; even in cases
where instructing a forensic accountant might significantly strengthen their
clients case or undermine that of their opponent. Is that because forensic
accountants are perceived as expensive and unapproachable, or simply because
the solicitor has seldom used a forensic accountant in the past and so would
not feel comfortable finding and using one? David Winch, of NIFA member Accounting
Evidence Ltd, explores the potential benefits and costs of using a forensic
accountant and gives some tips about selecting and instructing one. What is a
forensic accountant?
When people ask me what I do I say, "I
am a forensic accountant". Usually they look impressed, for a moment.
Then they ask, "What is
a forensic accountant?". The short answer is that a forensic
accountant is an accountant who assists with the financial elements of cases
being prepared for, or heard in, court. Sometimes he may be referred to as a
litigation support accountant. He may act as an expert witness at trial. When
should a forensic accountant be used?
There will be a variety of situations in
which a solicitor could make use of a forensic accountant. One might be required,
for example, where a valuation is required of a business, or an asset, or
even a lost opportunity. This could be in relation to matrimonial
proceedings, personal injury, an insurance claim for damage or loss,
infringement of a patent or copyright, breach of contract the list is
endless. Alternatively a forensic accountant might be
used by a solicitor in civil or criminal proceedings in relation to alleged
crime or proceeds of crime. This is the field in which I specialise. The common factor in all these situations is
that there is a dispute involving money or value. An expert opinion from a
seasoned professional forensic accountant can carry substantial weight in
such disputes. There may also be a mass of accounting
records or data, the meaning of which is difficult to glean. In these
circumstances a forensic accountant can be invaluable to rapidly focus on
important information and explain its significance. Why
should a forensic accountant be used?
A forensic accountant is able to provide a
professional, objective and independent opinion on matters within his field. The documents and evidence relevant to a
dispute may be number-intensive and might require analytical skills not
ordinarily found amongst solicitors and barristers. A forensic accountant, using
his accountancy skills, can work to the detailed instructions of the lawyers
to collate and analyse evidence. He will then draw appropriate conclusions
and can present those conclusions in writing and in person at trial. Not only is a forensic accountant able to
give evidence directly in court, in a way in which the clients solicitor and
barrister are not, but also, where public funding is being obtained, it may
be the case that work done by the forensic accountant will be funded whereas
similar work undertaken by the barrister or solicitor would remain unpaid. What will
it cost?
A good forensic accountant will give you the
maximum control over the cost of using his services. Initially he is likely to be able to give
you a certain amount of assistance without cost at all. Exploratory
discussions can help establish the scope and nature of the contribution from
the forensic accountant which would be most cost effective in the particular
situation with which you are faced. Then a charge for future work will be
agreed, usually on the basis of agreed hourly rates and an estimated time
budget for the work to be undertaken. In publicly funded cases authority can
be obtained for the forensic accountants fees before they are incurred. If it
appears likely that additional time will need to be spent, the forensic
accountant will agree this with you before incurring that additional cost. Sometimes it is appropriate to agree for the
work to be done in phases so that a provisional work plan can be reconsidered
as matters develop. In this way the work of the forensic
accountant can be handled within budgetary constraints or public funding
authorisations. A good
forensic accountant
A good forensic accountant is much more than
just a good accountant. Any good accountant will certainly be
competent in accountancy matters, will produce accurate information compiled
under generally accepted accounting principles, will act with integrity, and
will respect confidentiality. In addition a good forensic accountant has a
particular aptitude for this type of work. This includes an inquisitive mind,
tenacity and attention to detail, excellent communication skills both written
and oral, an ability to deal with a large amount of documentary evidence
whilst working to a tight deadline, a knowledge of relevant law and
experience of court procedures. Importantly, a good forensic accountant will
be able to look at the evidence before him from different standpoints so as
to recognise different possible interpretations of that evidence and the implications
of those interpretations for the matter in hand. That involves not only
objectivity but also skills derived from experience in the field. In that way the forensic accountant can make
his client aware of both the strengths and potential weaknesses in his case
at an early stage. Further work can then be done as appropriate to address
areas of weakness. Selecting
a forensic accountant
When selecting a forensic accountant for a
particular engagement it is important to consider the past experience of the
individual to be instructed. No two forensic accountants are the same. If one is dealing with, for example, a case
involving loss of earnings and occupational pension entitlement following an
injury one clearly needs a forensic accountant with knowledge and experience
in similar cases, including an in-depth understanding of occupational
pensions. That same accountant might however be wholly unsuited to dealing
with a case involving fraud within a small or medium sized business. The geographical location of the forensic
accountant is unlikely to be a deciding factor. In most cases the bulk of the
forensic accountants work will involve examination of documents or computer
records which have been copied to him either on paper or in electronic form. Instructing a
forensic accountant It will greatly assist both you and the
accountant if you can initially let him have a summary of main facts and
issues in the matter and copies of a few key documents. At the same time it
is useful at the outset to advise him of the most important tasks connected
with his work which you need to achieve, your deadlines for achieving them,
and any budgetary or other constraints which you need to apply to his work. Ideally you should identify one or two
individuals within your organisation who will be the accountants main contact
points for your instructions, information passed to him and his feedback to
you. Finding a forensic
accountant The Network of Independent Forensic
Accountants, NIFA, is a grouping of qualified and experienced forensic
accountants which acts as a centre of excellence. NIFA members meet regularly
to hone their skills and share their experiences in forensic accountancy
work. NIFA members pride themselves on producing reports
which illuminate key facts and issues and which can readily be understood by
persons not experienced in accountancy matters. Further information about the Network of
Independent Forensic Accountants, its member firms, the services provided and
particular specialisms is available on the NIFA website. Article by David Winch
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