1. Role of Forensic Accountant in Litigation
1. Initial understanding of the assignment with the client and attorney.
a. History and background
b. Reviewing documents which gave rise to the litigation
c. Identifying specific time periods
d. Identifying specific events
e. Identifying specific account that may have been compromised
2. Investigate and review of internal controls for strengths and weaknesses.
3. Interview with employees and management.
4. Types of Analysis
a. Balance sheet analysis
i. Common Sizing
ii. Trend analysis
iii. Testing individual accounts.
iv. Account roll forwards
v. Red Flags
b. Income Analysis
i. Timely recording of revenue
ii. Comparing revenue to cash received and changes in receivables
iii. Shifting expenses to different time periods
iv. Failing to properly record or relieve liabilities
v. Red Flags
c. Ratio Analysis
i. Types of ratios
ii. Comparison to industry statistics.
iii. Red Flags
5. Detailed investigation of identified problem areas.
6. Identification of quantification of damages.