When high net worth individuals file for divorce, both sides have a financial incentive to hide assets owned by their spousal “partnership.” So, it’s important to inventory the marital estate as soon as possible. This article discusses some ways spouses may attempt to conceal their wealth and techniques that financial experts use to investigate.
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.
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
Courts tend to prefer the market approach in business valuation, because it’s based on real-world “comparable” transactions. This article identifies different pricing multiples that may be used in the market approach and explains when each one tends to work best. Statistical tools can help business valuation experts evaluate which multiples are most relevant based on market evidence.
The laws in most states make a distinction between marital and separate property for purposes of marital dissolution. In cases where property increases in value during the marriage, experts may be hired to determine whether that appreciation is passive or active. This article explains the difference between these terms and why it matters when divvying up a marital estate in divorce. A sidebar highlights the need to take a holistic approach when differentiating between the active and passive appreciation when valuing a business.
Bair v. Bair, 214 So. 3d 750 (Fla. 2nd DCA 2017)