The Forensic Accounting Deskbook: A Practical Guide to Financial Investigation and Analysis for Family Lawyers

The Forensic Accounting Deskbook: A Practical Guide to Financial Investigation and Analysis for Family Lawyers

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Product Details

ISBN-13: 9781614380634
Publisher: American Bar Association
Publication date: 12/16/2012
Edition description: New Edition
Pages: 374
Product dimensions: 6.00(w) x 9.00(h) x 0.90(d)

About the Author

Miles Mason is an attorney and CPA in Memphis, Tennessee.

Table of Contents

Foreword xi

Preface xiii

About the Author xv

Acknowledgments xvii

Chapter 1 Forensic Accounting Overview 1

The Goal Is to Dominate 1

How a Forensic Accounting Divorce Engagement Case Can Go Very Well 3

Forensic Accounting Defined 6

Chapter 2 Meeting and Engaging CPAs 17

How CPAs Become Forensic Accountants 17

Shopping Forensic Accountants Before One Is Needed 18

Selling Your Client on a Forensic Accountant 22

Engaging a Forensic Accountant When You Have a Specific Client and Case 24

Consulting or Testifying Expert? 28

Reading, Understanding, and Explaining the Engagement Agreement 30

Advice to Lawyers When Hiring a Forensic Accountant 31

The Game Is On-Getting, the Documents as Soon as Possible 32

Chapter 3 Accounting for Lawyers 35

Accounting Basics 36

Public Filing of Financial Statements 40

Accrual and Cash Basis 41

They Call It "Accounting" Because of the Accounts 43

Audits, Reviews, and Compilations 52

Chapter 4 The Hunt for Hidden Assets-Red Flags, Schemes, Scams, Lies, and Damn Lies 57

The Continuum of Lies 58

Red Flags 60

Severity of Lies 64

Financial Lies Come in Many Flavors 65

"What Is Best in Life?" 68

More on Bad Debt Manipulation 69

More Details on Other Schemes 71

Adjustments 73

Managing Forensic Accounting Investigation Costs 75

Chapter 5 Discovery-Documents, Details, and Transactions 77

The Impact of One Missing Statement 78

Time Frame for Valuation and Analysis 78

Formal vs. Informal Requests 79

Interrogatories and Requests for Production of Documents 81

Written Discovery or Depositions? 84

The Search for the Holy Grail and the Discovery Catch-22 85

Subpoenas 88

Depositions 97

Supplementation 98

Discovery and Research about Opposing Experts 98

Obtaining Tax Documents Directly from the IRS 99

Researching Public Records and Assets 100

Production Memos, Deficiency Memos, Gap Charts, and Bates Stamping 101

Chapter 6 Methodologies, Investigation, and Techniques 107

Methodologies and Scoping 110

Investigation 116

Techniques 116

Conclusion 133

Chapter 7 Asset Identification, Classification, and Valuation-From Simple to Complex 135

Organizing Assets and Debts 137

Identification 140

Classification 141

Valuation 141

The Information Needed Depends on the Assets and Debts 142

Calculating Estimates of the Value of Deferred Pension Benefits 144

Complex Compensation, Bonus Packages, and Perks 154

Stock Options 157

Documents You Need for Stock Options 158

Stock Option Valuation 159

Reload Provisions 160

Time Rule Formulas 161

Tax Issues 161

Deferred Distribution Approach 162

Negotiating 162

Advice Regarding Deferred Distribution Division 163

Buffet of Employment Benefits and Retirement 163

Qualified vs. Non-qualified Plans 166

Defined Benefit 166

Defined Contribution 167

Investments Unrelated to Employment 170

Other Investments Not Related to Retirement or Employment 171

Chapter 8 Determining Income 187

Documented Income 189

Claimed Income versus Documented Income 190

Imputed Income 194

Net-Worth Method 195

Problems with Cash and "Cash Businesses" 201

Money In and Money Out of a Business 203

Reading W-2s-The Family Lawyer's Not-So-Concealed Weapon 205

FICA, Medicare, Self-employment Taxes, FUTA, and SUTA 206

Wage Base Limit 206

Numbers, Numbers, and More Numbers-Yippee! Goody! Goody! 206

Chapter 9 Lifestyle Analysis 211

The Five Quadrants 212

Quadrants One and Two 213

Quadrants Three and Four 213

The Fifth "Quadrant"-Credibility 215

Expense Time Periods 215

The Lifestyle Analysis 217

A Sample Report 223

Page 1-Marital Balance Sheet 224

Page 2-Wife's Need for Support 235

Pages 3 and 7-Wife's Retirement Savings and Husband's Retirement Savings 238

Pages 4 and 8-Wife's Investment Savings and Husband's Investment Savings 238

Pages 5 and 9-Wife's Personal Living Expenses and Husband's Personal Living Expenses 239

Page 6-Husband's Ability to Pay Support 239

Page 10-Net Worth Accumulation of Marital Assets 239

Double-dipping 240

Chapter 10 Ethics and Standards 243

AICPA's Code of Professional Conduct 244

AICPA's Independence Requirement 246

AICPA's Rule 102 249

AICPA's Rule 201 251

CPAs and Client Confidentiality 258

Contingency Fees, Unpaid Fees, and Future Streams of Income 259

AICPA's Statement on Standards for Consulting Services 262

AICPA's Statement on Standards for Valuation Services 264

Special Report 08-1 265

Chapter 11 Reports and Testimony 267

Report Requirements 268

The Scheduling Order 274

Preparing for an Opposing Expert Deposition 276

What Deposition Style Should You Use? 279

The Deposition Questions 280

Scoping Out the Opposing Expert 281

Defending Your Client's Expert Deposition 282

Strategic Decision: Old School vs. New School 283

Trial Preparation 284

Direct Examination of the Client's Forensic Accountant 286

Exhibits 286

Planning the Direct Examination 288

The Opinion and Attack Phases 303

Cross-Examination 304

Conclusion 307

Bibliography 309

Appendix A Burrage & Johnson Agreement 313

Appendix B Sample Company Financial Statements 321

Appendix C Riker Report 325

Appendix D Deposition Question Checklist: Opposing Forensic Accountant 351

Index 373

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