How Attorneys Can Effectively Utilize a CPA in Litigation

Active Passive Appreciation Analysis

A settlement offer made by a husband to his wife during the course of their divorce and equitable distribution case was declined by the wife.  She subsequently hired a business valuation expert.  The Husband’s attorney hired FSS to value the business interests in the marital estate, opine on active passive appreciation issues, rebut the opinions […]

False Claims Investigation

When a whistleblower sounded the alarm on their employer that had allegedly violated the Anti-Kickback Statute and submitted false claims to the government, FSS was hired by the whistleblower’s attorneys to pinpoint evidence and determine the value of any identified claims.

Lost Earnings – Wrongful Termination – Civil Litigation

A former city employee claimed she was wrongfully terminated in retaliation for raising concerns of health and safety issues and questionable financial management practices in her department. FSS was hired to compute a reasonable and reliable estimate of lost earnings and to testify to our findings of economic loss in state court.

Vulnerability Assessment – Cash Flow Shortages

FSS was hired by a company to perform a vulnerability assessment to determine if cash flow shortages were the result of financial mismanagement or asset misappropriation.

Vulnerability Assessment

FSS was engaged to perform a vulnerability assessment of a large construction company’s accounts payable and payroll.

Embezzlement – Nonprofit

FSS investigated allegations of misappropriation of assets and excessive spending by an employee of a federally funded nonprofit organization with reporting responsibilities to the Office of the Inspector General.

Computer Forensics

FSS was hired by the Board of Directors of a regional company to assist with an internal investigation amid questions of unexplained declines in cash flows and the lack of timely financial reporting.

Accounting Malpractice

When a national accounting firm was sued for its failure to follow generally accepted auditing standards which would have uncovered a scheme that duped the bankers and the purchaser of a small manufacturing company, FSS was hired to investigate the allegations and testify before an arbitration panel. A private equity fund made a stock purchase […]

Asset Tracing – Misappropriation of Assets

FSS investigated the alleged misappropriation of assets by two former employees of a multi-faceted conglomerate.

Lost Earnings – Wrongful Termination – Civil Litigation

FSS was hired to compute reasonable and reliable estimates of lost earnings for several plaintiffs and to testify to our findings of economic loss in federal court. Three law enforcement officers filed a civil suit against their former employer alleging they were wrongfully terminated in retaliation for reporting to state officials allegations of corruption and […]

Internal Investigation

FSS was hired by a company to investigate whistleblower allegations to the IRS of underreported revenue.

Ponzi Scheme

FSS was hired by the bankruptcy trustee to determine if an investment run by a rogue money manager (“the Project”) was a Ponzi scheme and to testify before the bankruptcy court regarding our findings. New investors were promised unusually high rates of return. The payment of accrued interest to short term investors was paid current […]

Embezzlement

FSS investigated the allegations of misappropriation of assets from a medical practice amid concerns that the accounting clerk was embezzling funds.

Corruption and Conflicts of Interest

The Los Angeles Unified School District (LAUSD) is the second largest school district in the country with an annual budget in excess of $11 billion.  Mired with problems and a price tag estimated over $200 million, the LAUSD hired FSS to determine the sources and uses of funds for the Belmont Learning Center project. The […]

Economic Damages – Civil Litigation

FSS was hired to compute reasonable and reliable estimates of economic damages and lost profits for an unestablished business, then to effectively present the findings of economic loss to a federal court jury. A business consortium of 15 individual charities and a gaming operator filed a civil suit in federal court alleging the defendant competing […]

The Power of Advanced Data Analytics | Lindsay H. Gill

Lindsay H. Gill, director of forensic technology, explains the benefits advanced data analytics bring to financial investigations Advanced data analytics can provide unparalleled insights when attorneys enlist forensic investigators, helping to ensure vital information does not go undetected.

Analyzing the Variety of Data | Lindsay H. Gill

Lindsay H. Gill, director of forensic technology, discusses the differences between structured data – or “traditional” data – and unstructured data, which investigators use to help fill the holes or see the bigger picture within a case. Lindsay also explains how forensic investigators should use and compare structured and unstructured data.

Gathering Evidence and Interrogation | Kelly J. Todd

Kelly J. Todd, managing member and member in charge of forensic investigations, focuses on techniques that increase the likelihood of detecting the truth in an investigation – open body language, open-ended questions and an open mind. Kelly also shares interview tips to catch a fraudster in a lie and uncover the truth.

Speech, Voice and Body Language as a Lie Detector | Kelly J. Todd

Kelly J. Todd, managing member and member in charge of forensic investigations, discusses how investigators can use vocal tone and body language as a lie detector. Kelly also outlines how statement analysis can help an investigator understand the meaning behind the words, and highlights body language red flags to look for in an interview.

Detecting Deception: Determining the Baseline | Kelly J. Todd

Kelly J. Todd, managing member and member in charge of forensic investigations, explains that everyone has a “norm”– a basic pattern of behavior that they exhibit under normal amounts of stress, which is also known as their baseline. In this video, Kelly outlines the steps to take to determine the baseline during an interview. She […]

Myths in Detecting Deception | Kelly J. Todd

Kelly J. Todd, managing member and member in charge of forensic investigations, discusses common myths in detecting deception. Contrary to popular belief, detecting deception can be a challenge, as people tend to focus on the wrong signals. Kelly explains misconceptions about the behaviors and body language of someone who is lying, and how to increase […]

Active Efforts of Individuals in an Active Passive Analysis | William C. Dameworth

William C. Dameworth, managing member and member in charge of valuation services, discusses the need for businesses appraisers to perform active passive analyses to assist legal counsel and the court in the jurisdiction-specific process of determining what part of separate property asset appreciation caused by the efforts of individuals might be divisible.  Bill discusses helpful […]

Market Forces in an Active Passive Analysis | William C. Dameworth

William C. Dameworth, managing member and member in charge of valuation services, focuses on market forces in an active passive analysis, and how business appraisers might  approach market forces when performing an active passive analysis. Bill discusses the potential steps that can be taken to determine the increase in value caused by market forces versus […]

Causation in an Active Passive Analysis | Bill Dameworth

William C. Dameworth, managing member and member in charge of valuation services, discusses various components of an active passive analysis, and the jurisdictional differences that can exist. In this video, Bill focuses on  a common theme that runs throughout active passive analyses – causation. He also discusses the allocation of appreciation between the various factors […]

Tax Cuts and Jobs Act of 2017 Effects on Alimony Litigation | Kelly Schmid

Kelly Schmid, director of valuation services, examines how divorces executed after December 31, 2018 will be affected by the Tax Cuts and Jobs Act of 2017. Kelly discusses the numerous ways that the Act will affect how alimony is negotiated, as well its possible impact on prior divorce agreements, which should be revisited.

Tax Cuts and Jobs Act of 2017 Effects on Business Valuations | Kelly Schmid

Kelly Schmid, director of valuation services, explores how the Tax Cuts and Jobs Act of 2017 might affect businesses valuations. Kelly explains the importance of business appraisers proactively discussing with management the expected utilization of enhanced cash flows from tax savings. Kelly also discusses the need for business appraisers to consider using longer-term discounted cash […]

Using Data to Tell a Story & Find the Answers | Kelly J. Todd

Kelly J. Todd, managing member and member in charge of forensic investigations, discusses how FSS uses advanced data analytics to ferret out the truth in fraud investigations via data visualization. Kelly explains how electronic evidence and data can be leveraged in forensic investigations, from verifying or challenging a plaintiff’s testimony to identifying trends and patterns […]

Defining Embezzlement & How to Prevent It | Kelly J. Todd

Kelly J. Todd, managing member and member in charge of forensic investigations, explains what embezzlement is and how it occurs. To prevent embezzlement from occurring, it is essential for employers to trust their employees, but verify their actions. In the video, Kelly provides best practices that employers should implement to accomplish this.

Leveraging Technology in Auditing | Ralph Q. Summerford

Ralph Q. Summerford, president, discusses technology’s presence in the world of forensic accounting, focusing on the old – data mining – and the new – artificial intelligence and digital currency, such as bitcoin. He explains how FSS has extensive experience in leveraging these technologies to take their work to the next level, and stresses the […]

The Benefits of Technology in Auditing | Ralph Q. Summerford

Ralph Q. Summerford, president, examines the benefits data mining and artificial intelligence provide to auditors. Ralph discusses the differences between these technologies, and how they help auditors spot trends and unusual transactions. While auditors are beginning to introduce data mining and artificial intelligence into their processes, Ralph stresses that these technologies do not allow auditors […]

Accounting Malpractice Lawsuits: The Importance of CPAs Seeking Outside Counsel | Ralph Q. Summerford

Ralph Summerford, president of Forensic Strategic Solutions, discusses the importance and benefits of CPAs hiring outside counsel if they are at the center of an accounting malpractice case. He also discusses confusion that CPAs often have surrounding accounting malpractice insurance.

Accounting Malpractice Lawsuits: The Value a CFE Brings to Attorneys | Ralph Q. Summerford

Ralph Summerford, president of Forensic Strategic Solutions, discusses the critical value a certified public accountant (CPA) who is also a certified fraud examiner (CFE) can add to an accounting malpractice case for attorneys, whether the attorney is prosecuting or defending an accountant. One of the greatest values a CFE can add is their ability to translate […]

Depreciation & Capital Expenditures – Business Valuations | Kelly Schmid

Kelly Schmid, director of valuation services at Forensic Strategic Solutions, discusses the process of estimating depreciation expenses and capital expenditures in a cash flow forecast. She also examines how an incorrect estimate can impact a business valuation.

What Are Capital Expenditures & How Do They Depreciate? | Kelly Schmid

Kelly Schmid, director of valuation services at Forensic Strategic Solutions, explains what capital expenditures are (also known as fixed assets). She also discusses the replacement and depreciation of capital expenditures, as well as the common misconception that depreciation and capital expenditures should always be equal in a normalized cash flow forecast.

Conflicts of Interest: Educational Tools for Employers | Kelly J. Todd

Kelly Todd, managing member at Forensic Strategic Solutions, discusses how conflicts of interest can arise in the workplace and challenges associated with conflicts of interests that employers often face. She also discusses educating employees on conflicts and how to detect conflicts.

The Common Denominator of Corruption: Conflicts of Interest | Kelly J. Todd

Kelly Todd, managing member at Forensic Strategic Solutions, discusses the close relationship between conflicts of interest and corruption. She also discusses preventative measures that can be taken to minimize opportunities for conflicts of interest to morph into corruption.

Active/Passive Appreciation in Divorce Litigation: Part Two | William C. Dameworth

Active/Passive Appreciation in Divorce Litigation: Part One | William C. Dameworth

Leveraging Social Media in Fraud Investigations – II | Lindsay H. Gill

Lindsay Gill, director of forensic technology at Forensic Strategic Solutions, shares insight into the benefits associated with attorneys hiring forensic investigators to uncover evidence on suspects’ social media accounts. She also discusses how to authenticate the evidence gathered and the methods to do so.

Leveraging Social Media in Fraud Investigations – I | Lindsay H. Gill

Lindsay Gill, director of forensic technology at Forensic Strategic Solutions, discusses social media and its role as a helpful tool to uncover fraudulent electronic evidence in an investigation. She also describes best practices for forensic investigators to collect, analyze and interpret findings to connect the dots.

What to do When You Suspect Fraud at Your Organization – II | Kelly J. Todd

Kelly Todd, member in charge of forensic investigations, discusses how to handle the alleged perpetrator, including notifying the perpetrator, conducting an admission-seeking interview and restricting the wrongdoing employee from company access. She also notes the importance of notifying your insurer when you think you might have fraud occurring in your organization.

What to do When You Suspect Fraud at Your Organization – I | Kelly J. Todd

Kelly Todd, member in charge of forensic investigations, discusses the prevalence of fraud in businesses and actions one should take when they suspect fraud in their organization, including assembling a team for the fraud investigation and securing potential evidence.

Accounting Malpractice: When CPAs Miss the Fraud | Leslie P. Littrell

Leslie Littrell, forensic analyst at Forensic Strategic Solutions, discusses accounting malpractice and the recent increase in claims as well as the importance of fraud education. Ms. Parker cites FSS’ work with Auburn University to develop its forensic accounting courses within its Master of Accountancy program as an effort to help expand the knowledge of fraud […]

Data Analytics with a Focus on Technology | Lindsay H. Gill

Lindsay Gill, director of technology at Forensic Strategic Solutions, reviews the key areas in which technology has changed the landscape of fraud investigation and how data continues to become a growing risk for businesses.

Business Valuation for Private Companies | William C. Dameworth

Bill Dameworth, member in charge of valuation services at Forensic Strategic Solutions, discusses the differences between the valuation of privately-held and publicly-held companies and those focused on profit maximization versus tax minimization.

Employee Fraud Awareness Training | Kelly J. Todd

Kelly Todd, member in charge of forensic investigations, gives fraud prevention tips aligning with the ACFE 2014 Report to the Nations research describing employee fraud awareness training as an extremely effective way to reinforce fraud policies, encourage anonymous tips from whistleblowers and establish compliance.

Fraud in Charitable Non-Profit Organizations | Ralph Q. Summerford

Ralph Summerford, president of Forensic Strategic Solutions, cites recent New York Times statistics to help reveal some reasons for the high frequency of fraud in non-profits, including high turnover, poor management and lack of tax audit enforcement. All of these issues make it increasingly difficult for the IRS and law enforcement to uncover and prosecute […]

Financial Fraud Investigations: Spotting the Red Flags and Stopping White-Collar Criminals | Kelly J. Todd

If you scatter a thousand $1 bills around the company breakroom and hang a sign asking employees not to steal, how long will it take before someone gives in to temptation? Perhaps an employee might start taking cash by rationalizing that no one would miss a few dollars. Or worse, they might take advantage of […]

Business Valuation in a Divorce: Analyzing Cash Flow v. Net Income – Don’t Expect (or Give Away) What Doesn’t Exist | Kelly Schmid

When a couple is divorcing in an equitable distribution or community property jurisdiction and their assets include ownership in a closely held company, the value of the business typically must be determined. Analyzing the company’s cashflow is imperative during such a valuation. This is true whether the couple tries to establish the value themselves—with or […]

Calculating Economic Damages: It’s About Far More than the Math | Jeffrey H. Lewis

Economic damages are designed to give claimants a chance to recover their financial positions in the wake of injuries caused by another party. To calculate those damages, however, is no easy task. Experts are required to help counsel and claimants build a credible calculation that matches the facts and circumstances of a case and can […]

Financial Fraud Investigations: Why an Employee’s Vacation is a Great Time to Detect Fraud | Lindsay H. Gill

Time off isn’t just a necessity to help employees recover and regroup, it’s also an opportunity for an organization to measure its efficiency and to uncover vulnerabilities it may face from fraud, waste, and abuse. Here are just a few of the ways an organization can leverage its vacation and time-off policies to help detect […]

In a Financial Fraud Investigation, It Pays to Follow the Digital Footprint | Lindsay H. Gill

Fraudsters often believe they have covered their tracks so well that their activity is untraceable, but they are increasingly running into a significant obstacle when attempting to hide their crimes: Their digital footprint. During the last decade, people have integrated digital tools into their personal and business lives at an astonishing rate. Since 2010, for […]

Business Valuation Calculation Reports: Analyzing Assumptions in Cash Flow Forecast | Kelly Schmid

During my over two decades of working in the valuation profession, I have valued several hundred entities and reviewed hundreds of valuation reports, including business valuation calculation reports, summary reports, and comprehensive valuation reports prepared by other experts. While I have only infrequently seen valuation theory applied incorrectly, I routinely have seen business appraisers make […]

How Attorneys Can Effectively Utilize a CPA in a Breach of Contract Claim | Jeffrey H. Lewis

Selecting the right expert to calculate economic damages in a breach of contract claim can be critical in the success of an attorney’s case. The expert must be able to calculate damages resulting from a breach of contract and convey the story to a trier of fact in a manner that will make the attorney’s […]

Business Valuation in Divorce Cases in a COVID-19 World, Part I: An Overview of Active Passive Appreciation Analysis | William C. Dameworth

The impact of COVID-19 on the value of private company interests is being actively explored and discussed nationwide by business valuation professionals, their professional trade associations, and users of business valuations (e.g. attorneys). Because COVID-19 can materially impact the value of a private company, consideration must necessarily be given to the impact of COVID-19 on […]

Unlocking the Potential of Electronically Stored Information to Determine Lost Profit Damages | Kelly J. Todd

At many small businesses, it’s not uncommon to still find a mass of paper records, yellowing with age and haphazardly tossed in boxes, as well as old-school computers and dot-matrix printers with tractor feeds and green bar paper. Yet even the most unorganized and technologically unsophisticated small business may contain a trove of useful electronically […]

How Getting Too Close to Clients Can Lead Accountant Malpractice Claims | Ralph Q. Summerford

Accountant malpractice claims have been a growth industry for litigators for more than two decades, thanks to increasingly strict professional standards for auditors and accountants.   And there’s no letup in sight. In fact, even in 2020, with the coronavirus wreaking havoc with the business community, regulators have continued to crack down on auditors who […]

Fraud Examination: Protecting Your Business from Workplace Fraud  | Kelly J. Todd

Despite the distractions and upheaval the Covid-19 pandemic has had on your business, be careful not to overlook another threat that could be looming around the corner — fraud in the workplace. Occupational fraud is the misuse of one’s occupation for personal gain and includes anything from stealing office supplies to cooking the books to […]

What Beneficiaries Can Do to Help Spot Fraud in a Trust or Estate | Lindsay H. Gill

It’s an all-too frequent concern for people who are no longer managing their own finances: Are they being taken advantage of by a trustee, executor, or attorney-in-fact—and what can they do to spot and prevent such activity? At Forensic Strategic Solutions, we are often approached by beneficiaries or their loved ones to investigate possible trust […]

How to Prevent Workplace Corruption and Collusion? Think Like a Financial Fraud Investigator | Kelly Todd

When financial fraud investigators discuss corruption in the workplace, they are usually referring to a single employee who is exploiting their position for personal benefit. Collusion, however, involves multiple people working together to abuse their power. When a collision occurs, the damage to a company’s finances and reputation multiplies. And pinpointing the perpetrators and the […]

The Shift to Teleworking: Protecting Your Business Data from Fraud | Kelly Todd

The mass exodus of employees from traditional offices in the wake of the COVID-19 pandemic and the growing ease with which information can be moved and shared has made one thing clear: Businesses are facing a risk-filled new frontier when it comes to their data security. The rapid shift to telework has only expanded the […]

Accountant Malpractice Claims Are Likely to Rise. Are You Prepared? | Ralph Q. Summerford

CPAs, especially those in smaller accounting practices, usually have close relationships with their clients—and rightfully so. After all, who else is better positioned to understand clients’ finances and businesses than their trusted accountants? That is until they suffer a financial fraud scheme that a CPA has failed to uncover. Then, what I call the “client […]

Worried About Workplace Fraud? Pay Attention to These Employee Behaviors | FSS

Economic turmoil can serve as a powerful accelerant for employee fraud, pressuring cash-strapped companies to sacrifice compliance activities to save money and fueling financial insecurity and temptation among workers.

Eight Tips for Detecting Fraud in Accounts Payable | Lindsay H. Gill

According to the Association of Certified Fraud Examiners 2018 Report to the Nations, fraudulent disbursement schemes remain the costliest form of asset misappropriation fraud to threaten small businesses. Although this risk can seem overwhelming, it may be avoidable through taking proactive steps against fraud within your company. Here are eight tips to help you expose […]

Brilliance v. Ethics – Which One Wins? | Ralph Q. Summerford

Originally published by ACFE Insights. Smart people commit fraud every day. A recent case gives us a prime example. A federal judge asked Donald Watkins, Sr. to step away from the jury box as Watkins, Sr. made an impassioned plea in his closing argument. Watkins, Sr. was in the personal space of front-row jurors, who were […]

Auditors Who Stole the Exam Are Convicted of Fraud | Ralph Q. Summerford

This failure of duty matters – it violates public trust and costs innocent people their jobs, their pensions and above all – faith in a system. The Wall Street Journal reported on March 11, 2019 that David Middendorf, the former national managing partner for audit quality and professional practice at KPMG, and co-defendant, Jeffrey Wada, […]

Cash Flow and Fraud Go Hand-in-Hand | Leslie P. Littrell

Imagine working at a company for a period of time, checking your bank account and realizing that no paycheck had been deposited in exchange for your work. This scenario would undoubtedly raise red flags. Similarly, cash flow analysis performed by lenders and auditors that reveals stagnant or negative cash flow can also serve as a […]

Big 4 CPA Firm Knew in Advance Which Audits Would Be Inspected by Government Watchdogs | Ralph Q. Summerford

This is violation of trust, and it matters! Auditors must design their audits to look for fraud, and failure to do so may cause massive losses for stakeholders, investors, creditors and retirees. Neglecting to detect fraud can be truly life-altering — especially for retirees. While teaching a business ethics class in Jackson, Mississippi, I was […]

Capital Expenditures, Depreciation and Amortization in a Cash Flow Forecast and the Impact of the New Tax Law | Kelly Schmid

The US Tax Cuts and Jobs Act (“TCJA”) passed by Congress on December 20, 2017, will impact forecasts of a company’s cash flow and thereby will likely impact the valuation of a company. One of the forecast elements impacted is the forecast of capital expenditures, depreciation and amortization. The lowering of the C Corporation income […]

The Power (and Variety) of Data in Forensic Investigations | Lindsay H. Gill

Time and time again, we trumpet the incredible value of advanced data analytics in forensic investigations – often, it is the key to finding the needle in the haystack. Fortunately, our firm remains at the forefront of utilizing data to identify unexpected patterns when investigating financial fraud – that red flag that tells us something isn’t as it should be – whether for a qui tam case involving kickback schemes or a case of underreported revenue.

How Attorneys Can Effectively Utilize a CPA in Litigation | Lisa G. Miller

The right expert selected to compute economic damages is a critical ingredient to help an attorney’s case involving economic damages. As CPAs, we are asked to provide independent, objective opinions and/or consult on issues in a case.

Lost Profits Damage Measures: More than just a Mathematical Calculation | Lisa G. Miller

The methodology of a lost profits calculation of damages in a breach of contract claim or intellectual property claim attempts to restore the injured party to their prior financial position. To prepare a calculation that is not viewed as speculative, evidence of loss must match the facts of the case and cannot be cherry-picked.

Detecting Deception: Gathering Evidence and Seeking Admission | Kelly J. Todd

OPEN is a key word to remember when detecting deception. Open body language – and an open mind – are your best friends when looking for the truth. An open mind is going to help keep you in the “information-gathering” mode, which usually proves to be more effective than the gruff interrogation techniques you’ve seen […]

Detecting Deception: Body Language | Kelly J. Todd

Now that we’ve peeked behind the curtain of speech and facial expressions, it’s time to move on to body language. But before we focus on our subject’s nonverbal cues, let’s shine the light on our own body language. Remember: when detecting deception, we aren’t looking for the lie – we are looking for the truth. […]

Detecting Deception: Facial Expressions | Kelly J. Todd

THE FACIAL FAUX PAS Now that you have gathered your intel – you have your subject’s baseline squared away and you’ve peeked behind their words – it’s time to focus on the facial faux pas. There are many facial signs that are likely indicators of deceptive hot spots. When your subject’s expressions and gestures don’t […]

Detecting Deception: Speech and Voice as a Lie Detector | Kelly Todd

Once we’ve established the baseline, it’s time to drill down to expose the meaning behind the words. While body language has long been the focus of detecting deception, research has shown that the analysis of a person’s speech may be much more accurate than merely observing non-verbal behavior. No matter the lie, there will always […]

Detecting Deception: Calculating the Baseline | Kelly J. Todd

In my previous blog post, I noted that when assessing whether someone is lying, you must first consider the person’s baseline – their typical behavior. A LIAR IS CAUGHT… OR IS HE? Body language helps us identify a person’s stress signals of deception. The key word here is “helps” – body language is far from […]

Detecting Deception: Common Myths | Kelly J. Todd

THE MASTER OF DECEPTION Bernie Madoff infamously stole $65 billion reflecting 4,900 client accounts in a Ponzi scheme. All told, his investors lost approximately $20 billion of real principal. How was he able to look hundreds of people in the eye without arousing suspicion, all the while knowing he was robbing them blind? This man […]

Active Passive Appreciation – Active Efforts of Individuals | William C. Dameworth

As discussed previously, once it has been determined that a separate business interest appreciated in value during a marriage, learned treatises and case law often delineate the active passive analysis into the following elements: Identifying and quantifying market forces that caused the separate property appreciation. Identifying and quantifying the separate property appreciation caused by the […]

Active Passive Appreciation – Market Forces | William C. Dameworth

As discussed previously, once it has been determined that a separate business interest appreciated in value during a marriage, learned treatises and case law often delineate the active passive analysis into the following elements: Identifying and quantifying market forces that caused the separate property appreciation. Identifying and quantifying the separate property appreciation caused by the […]

Active Passive Appreciation – Causation | William C. Dameworth

The business appraiser performing an active passive appreciation analysis looks to their engaging legal counsel to define and interpret state law in the particular jurisdiction. An active passive analysis is performed when state divorce law requires a determination of whether, and under what circumstances, appreciation in otherwise separate property is classified as a divisible marital […]

Working Capital Changes in a Free Cash Flow Forecast– Part III | Kelly Schmid

Part II of my working capital blog identified methods often used by business appraisers when forecasting working capital. In this installment, I will present some additional thoughts regarding this topic. Depending on the facts and circumstances, it is typically appropriate to consider the company’s historical working capital ratios and industry working capital metrics at the composite level (e.g. total working capital), as well as each separate component of working capital (e.g. accounts receivable, inventory, accounts payable, etc.).

Working Capital Changes in a Free Cash Flow Forecast– Part II | Kelly Schmid

Part I of my working capital related blog addressed the impact on free cash flow of changes in current assets and changes in current liabilities, which are the two components that comprise working capital (calculated as current assets minus current liabilities). The combined impact of changes in current assets and changes in current liabilities equals the impact of changes in working capital on free cash flow. Part II of this blog identifies methods often used by business appraisers when forecasting working capital.

Working Capital Changes in a Free Cash Flow Forecast – Part I | Kelly Schmid

In a business valuation income approach, the income stream being capitalized (in a capitalized income method) or discounted (in a discounted income method) is often the free cash flow generated by the entity being valued. Free cash flow is typically calculated on an after-tax basis, and represents the cash available to a company’s owners after […]

The Value of Advanced Data Analytics | Kelly J. Todd

A picture says a thousand words – and nothing tells a story better than electronic data. FSS has successfully used advanced data analytics for years to ferret out the truth and bring a story to life through data visualization, from supporting or challenging a plaintiff’s testimony to identifying the patterns and relationships that help uncover […]

Capital Expenditures, Depreciation and Amortization in a Cash Flow Forecast | Kelly Schmid

When valuing a private operating company, an appraiser is likely to use an income approach, either as the main valuation method or in conjunction with another method. Whether the appraiser capitalizes cash flows in a capitalized cash flow (“CCF”) model or uses forecasts of future cash flows in a discounted cash flow (“DCF”) model, they have incorporated both explicit and implicit assumptions into the cash flows used in their model.

25 Years of FSS: Looking into the Past, Present and Future | Ralph Q. Summerford

25 years ago, a dream came true – Forensic Strategic Solutions (FSS) came to life! In October of 1992, FSS was created as the product of a plan to specialize in investigative financial services. We narrowed our scope to the specific field of fraud investigation, while also serving as expert witnesses on complicated financial matters. Many people thought such a niche practice would not be successful, but today, the industry continues to flourish. In fact, back in 1992, few people – especially in the general public – had even heard of forensic accounting. Most folks thought forensic accounting was providing accounting services to dead people!

Trust Your Employees, but Verify Their Actions | Kelly J. Todd

Our team recently wrapped up another sizeable fraud examination for a small business whose trusted bookkeeper embezzled hundreds of thousands of dollars. While the names and the faces of fraud change, the story remains the same: the employee you least expect, the most trusted of them all, takes advantage of their position – and you […]

Technology is Changing Auditing | Ralph Q. Summerford

Or… has technology already changed auditing?

The accounting and auditing world is buzzing with talk of how automation and other technologies will reshape the accounting profession. Oh, how slow this world catches on! The reshape should have already taken place as both technology and automation have far surpassed the capabilities and knowledge of most auditors.

Analyzing Assumptions in a Cash Flow Forecast | Kelly Schmid

Forecasts of future cash flows within the income approach to business valuation are loaded with assumptions. During my nearly two decades of business valuation experience, I have reviewed hundreds of valuation reports prepared by other experts that serve as a constant reminder that mathematical accuracy does not always equate to a reasonable value. I have seen erroneous assumptions made by business appraisers that range from illogical disconnects within the valuation to outright errors or unsubstantiated speculation. 

28th Annual ACFE Global Fraud Conference in Nashville — Like a Fine Wine | Ralph Q. Summerford

The premier annual conference for anti-fraud professionals just concluded in Nashville at Music City Center. Nashville has every reason to beat its chest about this new venue — it is just fantastic. It’s as good as, if not better than, any conference center in any major city across the country.

Best Practices for Employers: Conflicts of Interest | Kelly J. Todd

In my last blog, I discussed why corruption in the workplace always requires a conflict of interest. Conflicts of interest arise when employees have interests that may make it difficult to maintain one’s duty of loyalty to their company in an objective and effective manner. Quashing all conflicts of interest within businesses would be difficult to conduct; therefore, it is important to know how to reduce the risks inherent in conflicts of interest.

Quickbooks Audit Trail: Fraudulent Behavior Detection | Lindsay H. Gill

The QuickBooks Audit Trail (or Audit Log, depending on the version) provides a log of each accounting transaction and denotes any additions, deletions or modifications affecting the integrity of the transaction. The tool captures every transaction from the time it is initially entered into QuickBooks, and tracks changes to the original entry, including transaction type, date, account, vendor/customer name, transaction amount, quantity, and price. The Audit Trail also reveals the User ID under which the entry, deletion or modification was made. The Audit Trail is a report built in the QuickBooks ReportCenter– all you have to do is click a button to generate the report.

Why Corruption Always Requires a Conflict of Interest | Kelly J. Todd

When it comes to corruption, there is almost always a common denominator: a conflict of interest. A conflict of interest exists when an individual or corporation has the opportunity – real or perceived – to exploit their position for personal or corporate benefit. Corruption occurs when the individual or corporation takes advantage of that opportunity and indeed abuses their position for private gain.

Social Media Evidence: Where to Look and Protocols to Follow | Lindsay H. Gill

As a digital technology expert, it is fascinating to observe how today’s technology-centric world obsesses over anything and everything digital – especially social media. From sharing locations on Instagram and Facebook to live tweeting events, people constantly update their friends – and strangers, if their account is public – on their every movement. Social media […]

Adding the Value: Business Valuation Expertise in Divorce Litigation – Part Two | William C. Dameworth

In my last blog post, I explained what an active/passive appreciation study is, scenarios in which it would be conducted and the value that a business valuation expert brings to the table when performing the analysis. As a refresher, an active/passive appreciation study is often required in matrimonial litigation when an existing business or business interest is owned by one spouse prior to the marriage, or is gifted or bequeathed to one spouse during the marriage. Since we have covered the basics, we can now dive deeper and discuss the various phases and steps of an active/passive appreciation study.

The Digital Footprint: Where to Look | Lindsay H. Gill

The world of technology offers the opportunity for fraud experts to trace the “untraceable.” With technology becoming more popular and present in our lives by the day, people are conducting their lives more digitally, whether through email, texting, social media or Internet browsing. Collecting, analyzing and interpreting the electronic evidence of fraudulent activity is becoming more widespread in the fraud examination world, and will most likely soon become the standard.

Adding the Value: Business Valuation Expertise in Divorce Litigation | William C. Dameworth

When going through a divorce, determining the marital value of private business interests can often get tricky – this is especially true if one spouse has a separate ownership interest in a business. An active/passive appreciation study is often required in matrimonial litigation when an existing business or business interest is owned by one spouse prior to the marriage, or is gifted or bequeathed to one spouse during the marriage.

Strengthen Waged-Based Loss Cases with a Forensic Accounting Expert Sooner Rather than Later | Kelly J. Todd

I have worked in investigative financial consulting for more than 17 years, and during my tenure I have worked with attorneys in a variety of capacities to provide financial consulting and expert support in a broad range of personal and corporate disputes. One of those capacities includes serving as a forensic accounting expert on cases involving wage-based losses.

The Give and the Take in Charitable Giving | Ralph Q. Summerford

Charitable giving, while good with intent, is not always received as expected. Let’s say you and I give to a seemingly worthwhile charity. You may be surprised at who really takes from the charity – frequently, it’s the fundraisers and executives. Oftentimes the fundraisers and executives are one in the same, since many founders will leave the charity to start a consulting and fundraising business to contract with the charity. This is really where it begins to get out of hand.

Benefits of Seeking Independent Counsel in an Accounting Malpractice Lawsuit | Ralph Q. Summerford

Most CPAs will never face the underbelly of an accounting malpractice lawsuit. Those who do, however, will say the challenges are something they never want to experience again in their lives.

Fraud Suspected in the Workplace? Employers, You Better Read This – Part Two | Kelly J. Todd

When you think of fraud within an organization, a newer employee may be top-of-mind, but according to the Association of Certified Fraud Examiners (ACFE), seven percent of perpetrators committed fraud during their first year and more than 53 percent had been with their organization for more than five years.

Fraud Suspected in the Workplace? Employers, You Better Read This – Part One | Kelly J. Todd

There’s no way around it—according to the Association of Certified Fraud Examiners, an estimated five percent of annual revenues are lost to financial crime. What do these numbers mean for you? Big or small, public or private – with statistics like these, there’s a good chance your business is more likely than not to fall victim to internal fraud.

Technology Talk: Active Data for Excel | Lindsay H. Gill

We all recognize budget is a constant concern for auditors and investigators. Oftentimes our technology budgets are just too tight. We find ourselves looking for powerful tools to add to our toolbox that do not break the bank. One of these tools is Active Data for Excel.

Pre-divorce Business Downturn Syndrome | William C. Dameworth

Reflecting back on the performance of more than 1,000 business valuations over the last 20-plus years, I have observed the regular occurrence of an economic event in many divorce-related engagements that I have named the Pre-divorce Business Downturn Syndrome (“PBDS” for short).

A Lesson on Investigating Fraud from A Fictional Investigator | Ralph Q. Summerford

As a frequent speaker on the subject of fraud, people often ask me, “How do you investigate fraud?” My answer is always the same: You look for the anomaly. To me, it sounds so simple until I step back and realize that most people cannot see the anomaly, although it is usually right in front of them.

Identifying Fraud Symptoms: What Really Goes on Between the Balance Sheets? Part II | Kelly J. Todd

Identifying fraud symptoms in financial statements requires observation and recognition. If you don’t look, you’re unlikely to find it. Worse yet, if you do look, are you sure you will recognize the symptoms of fraud?

Identifying Fraud Symptoms: What Really Goes on Between the Balance Sheets? | Kelly J. Todd

Fraud, unlike acts of terror, murder, or bank robbery, is rarely observed. Instead, only symptoms or indicators, most often exhibited through changes in the financial statements, are present.

Careful Out There – Ponzi Schemes are Alive and Well | Ralph Q. Summerford

With all of the publicity that surrounded the Bernard Madoff, Scott Rothstein, ZeekRewards and Allen Stanford Ponzi schemes, among many others, you would think that people would have by now received the message about Ponzi Schemes; how they work and how those investors lose their money.

When Crowdfunding Becomes Crowdfrauding | Leslie P. Littrell

Crowdfunding is the relatively new process of using social media to receive small contributions from many different individual investors.

Summation Shortcuts | Leslie P. Littrell

Rooting through and indexing large amounts of documents can be a complex and time-consuming task, placing undue burdens on investigators and clogging a case’s workload. This sort of complication can have negative effects on the timeline and outcome of a case. Enter Summation, an excellent multi-faceted software program used to keep documents organized so that […]

Technology Talk: Excel Shortcuts | Lindsay H. Gill

I was recently surprised to learn at a team meeting that my peers were not as familiar with the many Excel shortcuts that I apparently take for granted. Urged by our team to share more, I decided I should share a few of the more frequently used Excel shortcuts with you:

Show Your Work | Leslie P. Littrell

With the increase in accounting malpractice claims being filed today, it is of utmost importance that attorneys advise their clients on how to act in anticipation of litigation rather than being forced to react. It is becoming more a question of when than if auditors will be sued by one or more of their clients at some point during their career, and they need to be prepared at all times.

Cyber-security: Minimizing Internal Threats | Kelly J. Todd

Like a magician’s sleight of hand, the barrage of headline news related to hackers and cyber criminals may divert attention away from the equally dangerous, but perhaps less obvious, threat to your corporate assets: employees. While trusted employees are moving, sharing, and exposing corporate data just to do their jobs, the malicious employee may be deliberately taking confidential information for personal gain or other nefarious reasons.

Know Your ABCs – Serving on Nonprofit Boards | Forensic Strategic Solutions

As professionals, many of us have had or will have the opportunity to serve on the Board of Directors of a nonprofit organization. This can be a rewarding experience and a way to maintain civic involvement and a connection to the community. But what if the nonprofit organization is defrauded by an employee, or worse yet, by the CEO? This event can have serious ramifications, especially if the organization receives government grants, not to mention the effects on those whom the nonprofit benefits.

When Should You Start Looking for Fraud? | Kelly J. Todd

Larger organizations are more likely to experience fraud by an employee’s misuse of influence in a business transaction in order to gain a direct or indirect benefit. Small organizations, however, typically fall victim to the rogue employee who directly steals the organization’s assets or misuses its resources.

Let’s Get Digital: Putting Benford’s Law to Use in Fraud Examinations | Forensic Strategic Solutions

A man by the name of Frank Benford. In the 1930s, physicist Benford developed a theory of leading digits, now known as Benford’s Law. Benford’s Law tells us that in a variety of data sets, the probability of occurrence of each digit (0 through 9) as the first digit in a number follows a certain distribution. That is, the digit 1 will occur with about a 30% frequency, followed by the digit 2 at 17.6%, through the digit 9 at 4.6%. See Figure 1.

B.Y.O.D. | Lindsay H. Gill

“Bring your own device,” or “B.Y.O.D,” is a concept that an increasing number of companies are implementing. B.Y.O.D allows employees to use their personally-owned devices in the work place. These devices can range from laptops and tablets to cell phones and flash drives. While B.Y.O.D may be a good plan in theory – employees can work with devices they are comfortable using – It is important for employers to thoroughly consider the implications and potential pitfalls before implementing a B.Y.O.D policy. Consider, for example, the following key areas regarding the security of corporate information and infrastructure:

Debits, Credits, and…Edits? | Forensic Strategic Solutions

As accountants, we know the significance of numbers.  But in the process of balancing our debits and credits, it is easy to forget the significance of words.  Although it’s important to develop and maintain our skills in spreadsheets, calculations, and analysis, our writing skills are just as important.

Social Media in Fraud Investigations | Lindsay H. Gill

There’s no denying it: social media has changed the way we interact with each other. People are tweeting live from events, “checking in” on Facebook, posting pictures to Instagram and commenting on, liking or sharing just about everything. The amount of personal information that social media users willingly put “out there” is staggering.

Accounting Malpractice Is a Growth Industry | Ralph Q. Summerford

CPA’s have close relationships with their clients (especially in smaller accounting practices) and rightfully so. Who else is better to understand their client’s financial and business affairs than their trusted CPA? And the relationship generally remains close…

QuickBooks Audit Trail: Leveraging This Tool to Expose the Footprints of a Fraudster | Forensic Strategic Solutions

Employers, if you use QuickBooks for your company’s accounting needs, you have a built-in tool for fraud prevention and detection at no additional cost to you: the QuickBooks Audit Trail.

Computer Forensics v. E-Discovery: What Every Expert Should Know | Kelly J. Todd

Increasingly, the answers to the most fundamental litigation questions – the “who, what, where, when, and why” – are contained in electronically stored information (ESI), which can be retrieved through electronic discovery (e-discovery) and/or computer forensics.

How to Find Electronically Stored Information | Kelly J. Todd

In our case study, gas station owner, Morris, has alleged that Green Fuel, a small gasoline distributor, overcharged him. Both parties had inadequate and unsophisticated documentation, making determining losses very difficult.

Electronically Stored Information: The Case Study | Kelly J. Todd

You might not think that a small business would have useful or accessible electronically stored information (ESI). Consider this example of identifying and obtaining relevant forensic evidence to determine lost profit damages with this particular small business.

Unlocking the Potential of Electronically Stored Information | Kelly J. Todd

Think twice before you assume that an unsophisticated small business cannot possibly have any useful or accessible electronically stored information (ESI).

Look for the anomaly to find fraud | Ralph Q. Summerford

Events may happen in a person’s life that can lead to an act of desperation. And desperate people may take irrational actions. I am talking about bad economic times, the failure of a business, the loss of a job, divorce, a family member on drugs, disease, children in trouble, criminal acts by a family member […]

Time off to discover fraud | Lindsay H. Gill

Regardless of the time of year, employees will always have reasons to come and go in the office. Vacations, conferences and meetings are a regular part of most employees’ daily schedules.  So rather than worrying about the empty chair they leave behind, take advantage of the time they take off to measure efficiency and expose […]

Preventing fraud during the holidays | Lindsay H. Gill

As we discussed in last week’s blog post, there can be more fraud during the holiday season for a variety of reasons. A few quick steps you can take to reduce your vulnerability to fraud include: Be present – The perception of detection is often one of the strongest controls against fraud.  Business owners need […]

Why is there more fraud during the holidays? | Lindsay H. Gill

Fraud happens all the time, but the holiday season provides situations that people may try to take advantage of. The “fraud triangle” has three points to it: Need or Greed Opportunity Rationalization During the holidays, we often see changes in two of these points: increased need or greed and increased opportunity. People want to be […]

Guarding Against Embezzlement Fraud: Defensive Measures | Ralph Q. Summerford

Now that you’ve gained valuable information from the first and second parts of our educational series, Guarding Against Embezzlement Fraud, we offer insight into defensive measures. It is extremely important to understand the necessity of an adequately controlled investigation.  The moment embezzlement or fraud is suspected, steps should be taken to mitigate the company’s damages while […]

Guarding Against Embezzlement Fraud: What Can Go Wrong? | Ralph Q. Summerford

Welcome to the second installment of our three-part educational series on Guarding Against Embezzlement Fraud. Catch up on part one, Guarding Against Embezzlement Fraud: Developing An Action Plan. Simply adopting an action plan doesn’t necessarily eliminate the risk altogether. What can go wrong? Many varied problems. The reason unexpected situations arise is because they are unexpected. […]

Guarding Against Embezzlement Fraud: Developing An Action Plan | Ralph Q. Summerford

We’d like to introduce our three-part educational series on Guarding Against Embezzlement Fraud. In this first installment, we will discuss preventive measures you can take. The second part will explain how embezzlement cases can bring about unexpected problems, and the third and final part of our series will discuss defensive measures. It’s not something business […]