How Best to Engage & Brief Forensic Accountants · 2016-05-02 · How Best to Engage & Brief Forensic Accountants ... – APES 215 Forensic Accounting Services – APES 225 Valuation

How Best to Engage & Brief Forensic Accountants

(Experiences from across the courtroom)

•  Practical tips & considerations when engaging & briefing forensic accountants

•  War stories & suggestions as to how to improve your use of

forensic accounting

•  What happens on the ‘blind side’: joint conferences, joint statement & mediation process

Sydney Office: Suite 1, Level 20 MLC Centre, 19-‐29 Mar;n Place, Sydney NSW 2000 Australia 1300 847 855 expertsdirect.com.au

Webinar outline

Poll Question 1 – How do you select an expert?

(a)  Recommendation from colleague (b)  Existing relationship (c)  Price (d)  CV (e)  CV verified to external source


Selection of the expert forensic accountant

Experts often compared & selected on the basis of price –  Hourly rates & overall estimates can be deceptive –  Hourly rates may be a more accurate guide (consider whether a team will provide

leverage & reduce average hourly rate) –  Beware of potential false economies –  Gauge the precision of the fee estimate against the quality & quantum of

information supplied –  Instances of deliberate under-quoting to win the appointment



Not all ‘accounting’ or related professionals are expert business valuers or investigative accountants:

–  Auditors, liquidators, tax specialists, insurance assessors, business brokers, real estate agents are not business valuers or forensic accountants

Forensic accountants who are expert business valuers are not remuneration experts, stock/chattels valuers, property valuers, marketing experts or lawyers

–  Beware of the business valuer who strays into other technical areas of expertise



CVs are often unchecked –  Review prior to engagement – fit for purpose? –  Check LinkedIn, reported cases, articles & papers written by the expert

Word of mouth / reputational considerations –  Hired guns can be inconsistent, cause unnecessary cost & delay, their opinions

often come unstuck once scrutinised –  May be properly or falsely accused of poor performance

Firm reputation/expertise vs person reputation/expertise



Professional codes of conduct –  APES 215 Forensic Accounting Services –  APES 225 Valuation Services

Involve the expert in the briefing process where possible / practical & consider

•  Communication skills •  Conduct •  Flexibility •  Experience •  Judgment / professional skepticism


Briefing the expert forensic accountant

Poll Question 2: - In complex matters, how involved should the expert be in settling the brief?

(a)  Expert reviews documents & prepares a draft letter

of instruction for the instructing solicitor (b)  Expert involved by way of discussion to define the

scope & whether other experts likely to be required (c)  Expert should not be involved at all



Poll Question 3 - Do forensic accounting experts challenge the suitability of their instructions sufficiently?

(a)  Yes (b)  No



Scope of the assignment must be clearly articulated –  Nature of the claim –  Purpose of the report (the issue/s on which the opinion is being sought and / or

mediation, negotiation, trial) –  Scope of the work –  Instructed assumptions –  Timing & detail of other information to be relied upon by the expert –  Identify who will supply the information & agreed lines of communication –  Relevant court deadlines & trial date

Seek input from the expert as to other expert evidence required

•  Property valuations, remuneration opinion report, marketing experts



Between the time of instructions & issue of the draft report, the forensic accounting expert should:

–  Keep you informed of costs in accordance with arrangements –  Alert you of any issues obtaining the necessary information to enable subpoenas to be

issued or directions sought from the court –  Advise of any foreseeable delay or difficulty meeting the agreed timeframe

The forensic accounting expert should identify issues arising from the documents supplied that properly require resolution prior to the final report being issued


Preparation of the forensic accountant’s report

Poll Question 4 - Should the expert issue a draft report (if time allows)?

(a)  Yes, for review of factual accuracy only (b)  Yes, for input into the scope of the conclusions (c)  No, as they are of limited utility (d)  No, as there is too great a risk that any changes

between the draft & final are attributed to the instructing solicitor’s undue influence


Draft report

DRAFT report – often requested in all but unusual circumstances Facilitates a check of:

•  Factual accuracy / evidentiary shortcomings •  Compliance with the relevant rules •  Any issues with construction •  Proper response to instructions / scope •  Logic & common sense, issues not lost in the detail •  Expert’s knowledge vs opinions expressed •  Unconcluded or qualified opinions •  Validity of reference material relied on •  Which are the key assumptions (instructed &/or chosen) that have a significant

bearing on the conclusions reached

FINAL report should be reviewed against the draft & changes considered


The report

Poll Question 5 - Who should attend the conference of opposing experts?

(a)  Only the experts (b)  The experts & a team member, as pre-agreed

between the experts (c)  The experts & solicitors / clients


Post report

Joint conference of experts

–  Usual preparation & environmental issues involved –  Should be conducted by the experts without influence or interference from

instructing legal advisers –  Should be between the authors of each report, being the potential

witnesses –  Junior staff members might attend (good experience, but passive role only) –  Highly effective at narrowing the dispute if experts are professional – can

extend to “if/then” statements –  Can be a waste of time & money if one expert is entrenched &/or hired gun


The time behind the moon…

Joint statement of experts continued

–  Joint statement can be very constructive for parties & enable lawyers to test strength of arguments

–  Prepared following the joint conference; iterative process

–  Aim is to succinctly set out items agreed, disagreed & why the expert’s respective position should be preferred

–  Can be a very short or long document depending on issues; can take days or weeks to complete


Still behind the moon…


–  Language in joint statement should be clear & dispassionate

–  Any identified errors in reports usually fixed without fuss & issues resolved along the way excised from final joint statement

–  Concessions obtained can have considerable ramifications for conclusions (presence of lawyers is likely to hinder this)

–  Expert/s may need to address new information / new arguments / educate –  Should not be a time for game playing / ambush / delay tactics




–  Can be very expensive (even double the costs to date): •  Can still be value for money if proceedings can be resolved as a result, saving

considerable time & cost of trial •  Disadvantage if approach of one / both experts not ideal (e.g. conduct is poor, little

common ground, instructions differ, many alternative methods presented by one expert that need to be addressed by the other)

–  Substantial risk that expert will be accused of undue influence from legal advisers if drafts released & changes made, so strict policy of most experts is not to release drafts at all



Mediation –  Increasingly common for matters to go to private mediation which may

involve the expert assisting the mediator &/or parties Trial –  Check availability if possible before taking trial dates & let the expert

know, to facilitate preparation and ensure availability –  Confirm when attendance likely at regular intervals –  Consider use of evidence by telephone or video if appropriate –  Use our expertise during the trial – scenario analysis, structure –  Let us know the outcome!


The final phase

Questions?


Richard Skurnik [email protected] expertsdirect.com.au

SYDNEY MELBOURNE BRISBANE PERTH

[email protected]

1300 847 855 expertsdirect.com.au

Sydney Office: Suite 1, Level 20 MLC Centre,

19-29 Martin Place, Sydney NSW 2000 Australia

Contact

Documents

How Best to Engage & Brief Forensic Accountants · 2016-05-02 · How Best to Engage & Brief Forensic Accountants ... – APES 215 Forensic Accounting Services – APES 225 Valuation