Contents. Foreword... xi Preface... xiii About the Author... xv Acknowledgments... xvii

Transcription

1 Contents Foreword... xi Preface... xiii About the Author... xv Acknowledgments... xvii Chapter 1 Forensic Accounting Overview... 1 The Goal Is to Dominate... 1 How a Forensic Accounting Divorce Engagement Case Can Go Very Well... 3 Forensic Accounting Defined... 6 Chapter 2 Meeting and Engaging CPAs How CPAs Become Forensic Accountants Shopping Forensic Accountants Before One Is Needed Selling Your Client on a Forensic Accountant Engaging a Forensic Accountant When You Have a Specific Client and Case Consulting or Testifying Expert? Reading, Understanding, and Explaining the Engagement Agreement Advice to Lawyers When Hiring a Forensic Accountant The Game Is On Getting the Documents as Soon as Possible v

2 vi Contents Chapter 3 Accounting for Lawyers Accounting Basics Public Filing of Financial Statements Accrual and Cash Basis They Call It Accounting Because of the Accounts Audits, Reviews, and Compilations Chapter 4 The Hunt for Hidden Assets Red Flags, Schemes, Scams, Lies, and Damn Lies The Continuum of Lies Red Flags Severity of Lies Financial Lies Come in Many Flavors What Is Best in Life? More on Bad Debt Manipulation More Details on Other Schemes Adjustments Managing Forensic Accounting Investigation Costs Chapter 5 Discovery Documents, Details, and Transactions The Impact of One Missing Statement Time Frame for Valuation and Analysis Formal vs. Informal Requests Interrogatories and Requests for Production of Documents Written Discovery or Depositions? The Search for the Holy Grail and the Discovery Catch Subpoenas Depositions... 97

3 Contents vii Supplementation Discovery and Research about Opposing Experts Obtaining Tax Documents Directly from the IRS Researching Public Records and Assets Production Memos, Deficiency Memos, Gap Charts, and Bates Stamping Chapter 6 Methodologies, Investigation, and Techniques Methodologies and Scoping Investigation Techniques Conclusion Chapter 7 Asset Identification, Classification, and Valuation From Simple to Complex Organizing Assets and Debts Identification Classification Valuation The Information Needed Depends on the Assets and Debts Calculating Estimates of the Value of Deferred Pension Benefits Complex Compensation, Bonus Packages, and Perks Stock Options Documents You Need for Stock Options Stock Option Valuation Reload Provisions Time Rule Formulas Tax Issues vii

4 viii Contents Deferred Distribution Approach Negotiating Advice Regarding Deferred Distribution Division Buffet of Employment Benefits and Retirement Qualified vs. Non-qualified Plans Defined Benefit Defined Contribution Investments Unrelated to Employment Other Investments Not Related to Retirement or Employment Chapter 8 Determining Income Documented Income Claimed Income versus Documented Income Imputed Income Net-Worth Method Problems with Cash and Cash Businesses Money In and Money Out of a Business Reading W-2s The Family Lawyer s Not-So-Concealed Weapon FICA, Medicare, Self-employment Taxes, FUTA, and SUTA Wage Base Limit Numbers, Numbers, and More Numbers Yippee! Goody! Goody! Chapter 9 Lifestyle Analysis The Five Quadrants Quadrants One and Two Quadrants Three and Four

5 Contents ix The Fifth Quadrant Credibility Expense Time Periods The Lifestyle Analysis A Sample Report Page 1 Marital Balance Sheet Page 2 Wife s Need for Support Pages 3 and 7 Wife s Retirement Savings and Husband s Retirement Savings Pages 4 and 8 Wife s Investment Savings and Husband s Investment Savings Pages 5 and 9 Wife s Personal Living Expenses and Husband s Personal Living Expenses Page 6 Husband s Ability to Pay Support Page 10 Net Worth Accumulation of Marital Assets Double-dipping Chapter 10 Ethics and Standards AICPA s Code of Professional Conduct AICPA s Independence Requirement AICPA s Rule AICPA s Rule CPAs and Client Confidentiality Contingency Fees, Unpaid Fees, and Future Streams of Income AICPA s Statement on Standards for Consulting Services AICPA s Statement on Standards for Valuation Services Special Report Chapter 11 Reports and Testimony Report Requirements ix

6 x Contents The Scheduling Order Preparing for an Opposing Expert Deposition What Deposition Style Should You Use? The Deposition Questions Scoping Out the Opposing Expert Defending Your Client s Expert Deposition Strategic Decision: Old School vs. New School Trial Preparation Direct Examination of the Client s Forensic Accountant Exhibits Planning the Direct Examination The Opinion and Attack Phases Cross-Examination Conclusion Bibliography Appendix A Burrage & Johnson Agreement Appendix B Sample Company Financial Statements Appendix C Riker Report Appendix D Deposition Question Checklist: Opposing Forensic Accountant Index