By Ron J. Anfuso, CPA, ABV, CFF, CDFA, FABFA
A new case typically begins with a phone call from a Family Law attorney who needs forensic accounting assistance on a case. My first action is to proceed with an intake procedure to ensure there is no conflict of interest. I ask for:
• The client’s name
• Whether the client is the petitioner or respondent
• The opposing party’s name
• Who the opposing counsel is
• Date of separation
• Date of marriage, and
• The case number
Once I determine there is no conflict, I ask for a condensed summary of the attorney’s view of the forensic accountant’s assignments. It could be a full-service case defined as a business valuation and cash flow available for support. Other common assignments are:
• Moore/Marsden, and Family Code Section §2640 calculations
• Pension and property sharing apportionment
• Analysis of retirement accounts
• Tracing of commingled bank accounts
• Determination of marital standard of living, or
• Preparation of a community property balance sheet (with a proposal for division)
Once the attorney shares the requirements with me, I ask a few specific questions to forecast the details of the anticipated scope of work. This enables me to calculate a retainer request based on the required tasks. Cases that may require a larger than basic retainer include those involving significant tracing or uncovering hidden assets.
Immediately after the attorney and client express they would like to move forward, my administrative assistant sends an engagement agreement letter and a request for retainer. We then wait for the attorney to get back to us with the signed letter and the retainer.
After receiving the letter and retainer, we set up a file to determine who will take on what task. In some instances, I assume a portion of the workload. I challenge my assigned staff to beat their deadlines and insist on nothing less than excellent work.
We document all the work we need to perform and then send the attorney a document request list. At this point, we wait for them to send the records we need. Once we receive the documents, we inventory them and place them in our document management system that all staff can access. Then we begin working on the case.
Our work starts with the review of documents and preparation of supporting work papers. I hold regular meetings with staff to ensure the accounting work and reports are coming together smoothly, and to ensure accuracy and that we remain ahead of deadlines. We then complete the initial draft of the work product. Once completed, we send the initial draft for review to the attorney and, if requested, to the client, as well. This provides the opportunity for further scrutiny and to confirm complete understanding and satisfaction on the part of the attorney and client. We usually maintain the draft reports until the date of trial in case new information surfaces that necessitates revisions.
Following receiving their feedback, we send a copy to the attorney to provide to the other side with a settlement letter to try to resolve any financial issues. Sometimes the other party also has hired an accountant. This may lead the attorneys to suggest the accountants meet and confer to narrow down their differences. One accountant, for example, may not have information that the other accountant has.
In most instances, the Court will order the accountants to meet, confer and perform a side-by-side comparative analysis. The purpose of a side by side is for the accountants to compare their schedules to uncover any conflicts or disagreements. This enables the Court to get right to the heart of financial disputes, thus saving time and facilitating the Court’s decision making.
Should the accountants agree on the conclusions, there is no reason for the Judge to further question the accountants. However, when financial differences cannot be resolved, the case may go to trial.
I am familiar with all the forensic accounting facts of a case prior to the Court date. Still, I always review our work one last time so it is fresh in my mind. I commit things to memory that I can expect the opposing counsel to ask based on my experience of delivering testimony more than 450 times.
The accountant’s role as an expert witness normally comprises a direct examination, cross examination, re-direct, and re-cross examination. Once the accountants complete their testimony, the Judge usually excuses the accountants from the Court. Not until sometime later do the accountants learn of the Court’s decision.