THE BENEFITS OF USING A FORENSIC ACCOUNTANT

The benefits of using a forensic accountant from an ICAEW member firm

The benefits of using a forensic accountant include giving balanced and unbiased advice. If this is early on in any matter, so much the better. Litigation is expensive and time consuming. It can also be destructive to working and family life. Any credible insight that can be provided that reduces the arguments or shortens a matter can save more than just money spent on professional fees! At Mark Jenner & Co Limited an initial appraisal is always provided for any case without obligation.

Recently I received a telephone call from a lady whom I had spoken to the previous year. She had a problem following the death of her father involving his estate. I set out a series of simple steps she could follow. She could do this before a dispute with her sister needed the significant expense of lawyers and forensic accountants. The lady thanked me, having followed my simple instructions. She was well on the way to overcoming the dispute with her sister.

I can recall many occasions when I have been asked to provide services to a client. Often I have come away from the telephone call without winning any work. When people have a dispute, the problem becomes all consuming. Then, it is natural to want other parties to become involved. This is often in an attempt to justify an argument. I feel that it is the duty of any professional lawyer or accountant asked for advice in a dispute to provide an honest preliminary view. This is especially important if it diffuses the matter and leads to an early settlement.

A Credible Independent Forensic Viewpoint

As an independant expert forensic accountant, my greatest value to any matter is to provide unbiased opinion based on facts. The facts can sometimes be a little obscure. Take somebody who has overlooked their household finances for a few months. They will know how difficult it can be trying to remember what that odd £50 debit was in the bank statement. Imagine looking at ten years of bank statements and complicated financial records! Here the accounts have been neglected or a fraud has been secretly taking place. When a dispute arises one party will make claims that the other party sometimes struggles to understand.

Often, the logic behind a loss of profit claim is flawed. It can be based on little or no evidence. Usually it is exaggerated. If such a claim is presented eloquently, the respondent has to suffer substantial stress and anxiety until such a time as the case can be examined and its flaws and weaknesses highlighted. The benefits of using a forensic accountant can inlcude reducing the stress associated with litigation.

An Honest Forensic Accounting Appraisal

Therefore, it is not so much about defending a claim that is being made, but understanding it quickly. Its strengths and weaknesses need to be aired promptly. Comunicating these to any claimant can have a great balancing effect. They can even promote a more measured confrontation between the parties.

Much of a forensic accountant’s time can be spent sifting through reams of financial documents. We are looking for anomolies or quantifying losses. Make no mistake, I still do this. However, much value to the work I do now comes from the initial overview. This is the ability to pick out patterns and motives. The conclusions I provide have to be based on factual evidence, of course. However, understanding the circumstances and background accurately can allow conclusions to be accepted by either party in a dispute. Here is an example that demonstrates where understanding the background can help. I have added another where my explanations may fall on deaf ears:

Inflated Insurance Losses

According to more than one whistle blower a fraud was being systematically comitted within a PLC with numerous branches throughout the UK. The scale of the fraud appeared to be massive. It was being committed in such a way at grass roots level that no amount of examination of books and records or bank data would reveal the losses. The victim was reluctant to accept this. I suggested an alternative approach that allowed a thorough forensic audit of the business. It allowed identification of a substantial number of perpetrators and the implemenation of a series of robust preventative controls. The losses were mitigated by the introduction of a pay freeze on bonusses that would have been payable to the 1000s of employees. They had been secretly “creating” extra work that they were being paid for through the provision of a specific insurance clause.

Husband Claims Money That Had Been Spent

The benefits of using a forensic accountant in matrimonial cases

I was asked to examine the finances in a matrimonial dispute where the husband insisted his wife was wealthy from a previous marriage settlement. Although I was acting for the husband, I had to explain to him throughout the matter that the money had been spent (by both parties during the marriage). There was little left. In this example, the explanations were not accepted until the last minute when I assisted the Court throughout a two day settlement hearing. The benefit of using a forensic accountant in this case certainly fulfiled its primary purpose of assisting the court to reach a balanced decision.

Lessons Learned?

It is important for me to understand a case quickly. During the first case conference with a barister any initial observations can assist with formulating an appropach to defending/prosecuting a case. This is where the argument for being a key part of a legal team is strong. In the case of the insurance fraud, the overiding issue was to identify and quantify some form of loss that could be negotiated between parties. Finding a way to do this was a key result. It was only possible with a clear understanding of the business and what had been going on.

The matrimonial case on the other hand demonstrates how ignoring the early findings from forensic accounting investigation in favour of pursuing embittered feelings can be detremental. In this case there was very little available for settlement, with the judge awarding what little there was to the wife as a result of a wasted battle in court. The benefit of using a forensic accountant comes after finding one you like and then making them a key member of your legal team.

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About Mark Jenner

Mark Jenner is an experienced forensic accountant specialising in fraud and white collar criminal matters. He provides independent financial investigation and expert accounting witness services to police forces, fraud regulators and criminal defence lawyers, also providing assistance and solutions to organisations embroiled in financial disputes.

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