The Association of Certified Fraud Examiners (ACFE) recently released its Report to the Nations: 2018 Global Study on Occupational Fraud and Abuse. This article highlights key findings from this biennial report, including the importance of implementing active antifraud controls, rather than relying on passive methods of detection. A sidebar identifies six behavioral red flags of occupational fraud to watch out for.
The level of value used in a business valuation may affect an expert’s analyses and techniques. This article explains how experts determine the appropriate level of value and why it’s critical to make this determination before work begins.
Owners of privately held businesses may draw large salaries because of tax advantages or take little or no salary to enhance the company’s reported earnings. In these cases, the valuation expert needs to “normalize” owners’ compensation and adjust it to a reasonable level. This article identifies factors that valuators consider in determining reasonable owners’ compensation.
A buy-sell agreement can help avoid disputes over ownership rights, control and the value of a company when an owner leaves the business. Whether the agreement is triggered voluntarily or involuntarily, owners need to protect their financial interests with an agreement that’s legally enforceable and comprehensive. This article points out that it’s important to define buyout terms, avoid ambiguous or outdated valuation formulas and specify the financial data to be used in a buy-sell agreement.
Allegations of hidden assets, or even fraud, can muddy the waters and heighten tension in divorce cases, making a fair resolution difficult. Especially when a private business interest is involved, valuation and forensic accounting expertise is key in helping spouses equitably divide their assets. This article discusses some strategies moneyed spouses sometimes use to attempt to hide business assets, delay revenue recognition or overstate expenses.
When courts or shareholders question valuation results or the conclusions of opposing experts are widely divergent, a rebuttal report can bring much-needed objectivity. This article discusses various uses of rebuttal reports and situations in which they can be useful. It also explains how to determine the best rebuttal report format for a particular situation.
One of the most effective weapons in a forensic accountant’s arsenal is lifestyle analysis. This article talks about how experts seeking hidden assets and income sources conduct such analysis. It discusses several techniques, including the bank deposits, expenditures and asset methods. A sidebar illustrates how tax returns can be used as an investigative tool.
Struggling businesses face different financial challenges than healthy ones do. This article discusses how business valuation experts factor these differences into their estimations when valuing troubled companies.
Most business valuation professional standards recognize two types of engagements: calculations and valuations. This article explains the critical distinction between these types of assignments — and the reason a full valuation report is necessary in most litigation contexts.
In commercial tort claims, courts must decide how much damage the plaintiff suffered from the defendant’s alleged wrongdoing. This article summarizes a recent Eighth U.S. Circuit Court of Appeals case that upheld a jury’s damages award based on lost market value, even though the business wasn’t completely destroyed. A sidebar highlights the benefits of hiring a separate financial expert to conduct a formal appraisal review.
West Plains, LLC v. Retzlaff Grain Co., 870 F.3d 774, 8th Cir., August 30, 2017