How Best to Engage & Brief Forensic Accountants (Experiences from across the courtroom)
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
Sydney Office: Suite 1, Level 20 MLC Centre, 19-‐29 Mar;n Place, Sydney NSW 2000 Australia 1300 847 855 expertsdirect.com.au
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
Sydney Office: Suite 1, Level 20 MLC Centre, 19-‐29 Mar;n Place, Sydney NSW 2000 Australia 1300 847 855 expertsdirect.com.au
Selection of the expert forensic accountant
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
Sydney Office: Suite 1, Level 20 MLC Centre, 19-‐29 Mar;n Place, Sydney NSW 2000 Australia 1300 847 855 expertsdirect.com.au
Selection of the expert forensic accountant
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
Sydney Office: Suite 1, Level 20 MLC Centre, 19-‐29 Mar;n Place, Sydney NSW 2000 Australia 1300 847 855 expertsdirect.com.au
Selection of the expert forensic accountant
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
Sydney Office: Suite 1, Level 20 MLC Centre, 19-‐29 Mar;n Place, Sydney NSW 2000 Australia 1300 847 855 expertsdirect.com.au
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
Sydney Office: Suite 1, Level 20 MLC Centre, 19-‐29 Mar;n Place, Sydney NSW 2000 Australia 1300 847 855 expertsdirect.com.au
Briefing the expert forensic accountant
Poll Question 3 - Do forensic accounting experts challenge the suitability of their instructions sufficiently?
(a) Yes (b) No
Sydney Office: Suite 1, Level 20 MLC Centre, 19-‐29 Mar;n Place, Sydney NSW 2000 Australia 1300 847 855 expertsdirect.com.au
Briefing the expert forensic accountant
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
Sydney Office: Suite 1, Level 20 MLC Centre, 19-‐29 Mar;n Place, Sydney NSW 2000 Australia 1300 847 855 expertsdirect.com.au
Briefing the expert forensic accountant
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
Sydney Office: Suite 1, Level 20 MLC Centre, 19-‐29 Mar;n Place, Sydney NSW 2000 Australia 1300 847 855 expertsdirect.com.au
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
Sydney Office: Suite 1, Level 20 MLC Centre, 19-‐29 Mar;n Place, Sydney NSW 2000 Australia 1300 847 855 expertsdirect.com.au
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
Sydney Office: Suite 1, Level 20 MLC Centre, 19-‐29 Mar;n Place, Sydney NSW 2000 Australia 1300 847 855 expertsdirect.com.au
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
Sydney Office: Suite 1, Level 20 MLC Centre, 19-‐29 Mar;n Place, Sydney NSW 2000 Australia 1300 847 855 expertsdirect.com.au
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
Sydney Office: Suite 1, Level 20 MLC Centre, 19-‐29 Mar;n Place, Sydney NSW 2000 Australia 1300 847 855 expertsdirect.com.au
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
Sydney Office: Suite 1, Level 20 MLC Centre, 19-‐29 Mar;n Place, Sydney NSW 2000 Australia 1300 847 855 expertsdirect.com.au
Still behind the moon…
Joint statement of experts continued
– 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
Sydney Office: Suite 1, Level 20 MLC Centre, 19-‐29 Mar;n Place, Sydney NSW 2000 Australia 1300 847 855 expertsdirect.com.au
Still behind the moon…
Joint statement of experts continued
– 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
Sydney Office: Suite 1, Level 20 MLC Centre, 19-‐29 Mar;n Place, Sydney NSW 2000 Australia 1300 847 855 expertsdirect.com.au
Still behind the moon…
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!
Sydney Office: Suite 1, Level 20 MLC Centre, 19-‐29 Mar;n Place, Sydney NSW 2000 Australia 1300 847 855 expertsdirect.com.au
The final phase
Questions?
Sydney Office: Suite 1, Level 20 MLC Centre, 19-‐29 Mar;n Place, Sydney NSW 2000 Australia 1300 847 855 expertsdirect.com.au
Richard Skurnik [email protected] expertsdirect.com.au
SYDNEY MELBOURNE BRISBANE PERTH
1300 847 855 expertsdirect.com.au
Sydney Office: Suite 1, Level 20 MLC Centre,
19-29 Martin Place, Sydney NSW 2000 Australia
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