One of the most frequently-asked questions new divorce-related clients ask us is: “If I need a forensic accountant can you do that?”
The answer we give is that we are not forensic accountants, but you probably need us anyway because forensic accountants don’t do what we do. And, you may need a forensic accountant as well. Fact-finding and forensic accounting go together to give you a much better shot at finding assets than either function working alone.
What’s the difference?
One forensic accountant we have worked with on assignments describes some of her practice as including corporate fraud investigations, [and] lifestyle analysis for divorce and child support.
What won’t this forensic accountant do? Exactly what we will: Searching the globe for hidden assets and conducting interviews.
A forensic accountant can do a brilliant job analyzing the flows of money into and out of a business to see if funds are leaking to private accounts they shouldn’t be touching. But what happens if you don’t know that a business is linked to the person whose assets you are searching?
That is where we come in. Just as we wouldn’t know what to do if presented with thousands of bank statements, tax returns and deposit slips, most forensic accountants don’t excel at an assignment that reads, “What does this person own anywhere in the world? What companies is he hiding? Which people could we talk to to find out more about him and his activities? What’s the best way to approach these people?”
As an example, we were once asked to find assets of a husband who had controlled some 30 businesses owned by him and his wife. She knew little to nothing of how it all worked, but when they were divorcing, things followed a customary pattern.
The businesses had a “bad year” and showed greatly reduced earnings and assets. What to do?
We were hired first and concluded after a week’s work that the husband was hiding what were probably his most profitable companies (over a dozen of them) while showing his wife’s lawyer the money-losers.
Our advice: Subpoena the missing company financial records, and then get a forensic accountant to tell you if the fuller financial picture makes sense.
Asset searching and accounting are specialties. You don’t ask your lawyer to fix your roof, and you don’t ask your plumber to draft a will.
When two jobs are different, two heads are better than one.