Forensic Accounting

The science of investigating
what people do with money

Why do litigators need forensic accountants?

Forensic accounting specialists are financial investigators who work with financial information – business records, bank statements, tax returns - for the purpose of deciphering complicated data and preparing easily understood reports for attorneys to use in research, negotiations or court proceedings.

In private practice, forensic accounting is used to help clarify and resolve a wide number of legal disputes, including shareholder disagreements, malpractice claims, business dissolutions, bankruptcy proceedings, and divorce proceedings, as well as fraud and embezzlement.

Embezzlement and fraud…
Embezzlement has long been the most frequently committed white collar crime in the US. Employees may be involved in kickback schemes, identity theft, or conversion of corporate assets for personal use. The forensic accountant combines observation of suspected employees with physical examination of assets, invigilation, inspection of documents, and interviews of those involved. An experienced forensic accountant will also be able to offer suggestions as to internal controls that owners could implement to reduce the likelihood of fraud.

Bankruptcy and insurance claims…
Information provided by the forensic accountant is often the most effective way of obtaining convictions of persons suspected of engaging in criminal activity. The forensic accountant may also be engaged by bankruptcy court when financial information is suspect, or if employees (including managers) are suspected of taking assets.

In addition to these activities, forensic accountants are often called upon to determine the amount of damages sustained by victims, testify in court as an expert witness and assist in the preparation of visual aids to illustrate facts presented in court.

Financial Investigation
and litigation support at CJBS

The CJBS financial investigation and litigation support team is trained to detect fraud, uncover hidden assets, and provide due diligence services. Typically, our engagements involve evaluating indicators of possible wrong doing, preparing innovative audit and investigative plans, interviewing of witnesses and preparing searches for hidden assets.

Our efforts have consistently provided meaningful insurance recoveries, enabling client companies to get back on their feet. If requested, we go beyond the fraud investigation, coaching, consulting and implementing state-of-the-art internal controls to ensure our clients achieve the fullest recovery possible. Our goal is simple: to maximize positive outcomes for our clients.

CJBS has earned a reputation for providing valuable and impeccable professional services to major law firms and has served in dozens of state and federal cases with an impressive record of success. Whether acting as forensic accountants or as expert witnesses, our focus is always to apply our skills and experience to achieve our client’s goals.

Our Financial Investigative Team offers:

Litigation Support Services for:

• Shareholder disputes
• Malpractice
• Business dissolutions
• Bankruptcy accounting
• Asset recovery and damage analysis
• Full Audit services
• Calculating economic damages & lost profits
• Preparation for deposing financial witnesses

Due Diligence Reviews:

• Operational and Financial Analyses
• Analytical reports
• Evidence Collection
• Trend Analysis

Risk Management and Internal Control Consulting:

• Full risk assessment
• Documentation
• Design
• Testing
• Seminars and On-site Training

Certified Business Valuations
Examples of CJBS case experience in providing attorneys with expert forensic accounting support:

Bankruptcy
Retained by bankruptcy trustees to perform forensic analysis of preferences, fraudulent transfer, and hidden assets.

Accountant malpractice
Calculated damages and testified in accountant and legal malpractice cases.

Divorce
Calculated income and analyzed if there was hidden income in divorce matters

Breach of contract
Analyzed possible damages and records so the litigators could determine if there was sufficient evidence to file a case

Corporate fraud and malfeasance
Prepare forensic analysis to determine if there was embezzlement, income manipulation and defalcations in numerous matters

The Latest Techniques
Used in Forensic Accounting

Modern technology is being used to achieve greater economic efficiencies and broaden the likelihood for success in forensic accounting investigations. Some of the new computer analysis methods employed by the financial investigation and litigation support team at CJBS include:

Benford Testing
Benford's Law, also called the first-digit law, states that in lists of numbers from many real-life sources of data, the leading digit is distributed in a specific, non-uniform way. Based on the assumption that people who make up figures tend to distribute their digits fairly uniformly, a simple comparison of first-digit frequency distribution from the data with the expected distribution according to Benford's law ought to show up any anomalous results.

Genograms
A genogram is a pictorial display of a person's business and family relationships. When used for forensic accounting purposes, a genogram provides a visual representation of factors that punctuate relationships and can be used to identify repetitive or inconsistent patterns of fiscal behavior.

Full and False Inclusion
The forensic accounting team compares and contrasts transactional and pattern-sensitive financial data measures to provide a record for forensic analysis. Full and false inclusion tests are used to determine the appropriate "universe" of data under investigation. This ensures that no extraneous data is included and that no appropriate data is excluded.

To learn more about the Forensic Accounting services available from CJBS, e-mail or call: Larry Goldsmith - larry@cjbs.com or 847-580-5427.