Documents Needed for Incorporated Businesses
There are specific documents concerning corporations that Forensic Accountants frequently request to review in a dissolution matter. Typical ones include articles of incorporation, by-laws, corporate minutes, stock certificate books, stock ownership lists, organograms and job descriptions of key officers.
Articles of incorporation: Forensic Accountants want to know when the company was established and the authority of the laws by which the corporation operates. Identifying whether the corporation was established before or during the marriage may play significantly in assessing the value of the parties’ assets.
By-laws: Through by-laws, accountants discover the names of the board of directors and high-ranking executives, and whether there are any conflicting interests that could effect the case.
Corporate minutes: In some instances, minutes may reveal plans for expansion or acquisitions, which can have a significant impact on the value of a party’s assets. In some instances, we may find that corporate minutes had been altered to mislead the other party, such as withholding of earnings, to attempt to hide the actual value of the corporation.
Stock certificate books: These records provide the history and changes that have taken place in ownership. They may assist in determining the value of shares as the result of ownership transformations.
Stock Ownership lists: These disclose who the current and past owners of the company are.
Organization Charts: Organization charts divulge the level of responsibility and authority of executives, which may prove important in determining the value of assets.
Job descriptions of key officers: When combined with other corporate information gathered, this may help uncover arguments for inadequate or replacement compensation.
Other Documents Frequently Required
Among the additional valuable documents we have yet to mention include the following:
Accountant’s paperwork: Workpapers that accountants use to prepare business and personal tax returns, and financial statements can help uncover the basis for determining certain calculations, as well as clarifying the nature of particular transactions.
Loan agreements: Loan documents impact the determination of the value of a business, as they establish financial commitments, and set ratios and restrictions on salaries.
Operating budgets: Budgets reveal the needs for working capital and affect the computation of the value of a business.
Lease agreements: Evaluating leases can assist in determining the expectations for the future viability of the business. For example, if a party claims his business is struggling and having difficulty meeting its rent obligations, and no attempt has been
made to rent out a portion of the space, it could indicate an anticipation for recovery.
Sales tax records: Reports of sales taxes provide an accurate record of sales, as it is subject to audit and stringent penalties by state agencies. A Forensic Accountant can reconcile reported sales taxes to the sales data provided by the company.
Joint venture agreements: Agreements regarding joint ventures can reveal whether company money has been placed into other companies or investments, and can assist in understanding cash and income restrictions on investments. In addition, these help establish whether investments of the business are operating.
Work in progress reports: These reports can uncover undisclosed assets. The Forensic Accountant should be able to analyze the value of the work in progress and, as a result, help determine the sales, profitability and worth of the business.