Forensic accountants are an invaluable ally to attorneys in a number of situations. They examine and facilitate settlements to be more equitable and fair. While the need for a forensic accountant depends on a number of factors, there are some general cases in which they can be used. A forensic accountant can help arbitrate nasty situations and help mitigate disputes as well. Here are six situations in which a person will need to hire a forensic accountant.
1. Assess Commercial Damages
Forensic accountants are most commonly brought into a situation to provide expert witness regarding unjust enrichment or lost funds. This includes, but is not limited to, disputes over fraud, embezzlement, product liability, breach of contract, wrongful competition, and intellectual property infringement.
2. Settle Matrimonial Disputes
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Divorces never end well, and it can be useful to have a competent person divvying up the assets. Divorces and annulments oftentimes require a forensic accountant to trace, locate, and evaluate assets. It is paramount that the accountant ensures an equal division of funds and assets between the two parties involved. A forensic accountant may also determine how much money should be used to pay child support.
3. Uncover Hidden Income and Assets
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In the case of divorce, or suspected foul play by a partner, a forensic accountant may find transferred, deferred, or hidden income. The forensic accountant uses a combination of factors, including a party’s income to pay expenditures, net worth, and bank deposits.
4.Shareholders and Partnership Disputes/Employee Fraud Investigations
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Forensic accountants are often called upon to analyze accounting records to trace and quantify the compensation, benefits, or distributions received by shareholders or owners or partners. This includes, but is not limited to, tracing funds, forensic intelligence gathering, suspect interviews, due diligence reviews, and asset identification and recovery.
5. Commercial Insurance Claims
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Forensic accountants may also be called on to assist with a commercial business claim. This includes business interruption, employee dishonesty (fidelity), and property loss claims. Forensic accountants carefully review a party’s financial situation to provide an accurate estimate of loss. This will help identify how much an entity can collect, and it is important to remember that the forensic accountant, in this respect, can be hired by either the insurance company or by the insured.
6. Personal Injury Claims
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In this particular case, a forensic accountant will be hired to analyze the injured party’s economic losses due to loss of salary or services. A similar set of analysis is required for cases of wrongful termination and medical malpractice. The report is usually given in a formal report or expert testimony.
Forensic accountants are relied upon in a wide variety of situations. Hiring the right accountant could mean the difference between saving thousands of dollars and being footed with a big bill. Make sure that your accountant is reputable, starting with proof that he or she completed a forensic accounting degree from a reputable university.