Full Disclosure to Equitably Settle Marital Disputes An important step in the divorce process is reviewing and disclosing financial matters. In this step, both parties are typically required to prepare and sign their respective financial affidavits. In matrimonial matters, a financial affidavit represents a sworn written statement of a spouse’s assets, liabilities, income, and expenses. The information disc ...

The Annual Audit Does not Identify Operational and Financial Risks According to the Association of Certified Fraud Examiners’ (ACFE) 2014 Report to the Nations on Occupational Fraud and Abuse, an estimated 5% of revenues each year are lost to fraud. What processes can management put in place to identify financial and operational risks? In this article, the author shares his experience and thoughts on that q ...

The global nature of today’s economy makes the process of recovering the assets of fraud and other business crimes all the more difficult. The legal benefits provided by different jurisdictions are often used illegitimately by individuals to hide the proceeds of fraudulent activities, making it more difficult for the victims of fraud to recover their assets. In this article, Eric Rein discusses the strategi ...

Part 2: AIRA Issues New Standards for Distressed Business Valuation In this second article on AIRA Standards, the author discusses unique issues valuing distressed companies. These include the standard of value used, the premise of value, the intended use of the valuation, and cost of capital. The author also discusses the use and level of acceptance of the Industry Risk Premium (IRP) in the bankruptcy/reor ...

AIRA Issues New Standards for Distressed Business Valuation In 2004, The Association of Insolvency & Restructuring Advisors (AIRA) launched the Certification in Distressed Business Valuation (CDBV). Before the inception of the CDBV program, there was no professional designation to recognize those skilled and experienced in distressed business valuation work or expert valuation testimony in bankruptcy li ...

The Trouble for the Innocent Spouse with the IRS and State Tax Authorities Spouses that unwittingly sign a state or federal tax return may be held joint and severably liable for underpaid taxes. The expanded innocent spouse relief provides potential relief, but that relief takes time and requires extensive documentation. ...

  Daily trading of foreign currencies is estimated to be about $5 trillion—a staggering figure, no doubt, but the sheer volume of the foreign currency market coupled with other factors such as weakened international regulation, the misapplication of translation standards, and the introduction of virtual currencies (bitcoin) has given rise to an environment where hedging, speculation, and fraud are prev ...

  Nathan J. Mueller embezzled $8.5 million in barely four years from financial giant, ING through a series of corporate incompetence, “happy” accidents and missteps inside the company. His case is unique in the amount of money he stole and the length of time it went undetected. The breach of controls at ING was astonishing, but not nearly as incredible as hearing Mueller describe how easy it was in his ...

  Eventually, everyone who works with or around money professionally comes across a particular transaction that just doesn’t look right. Lots of these eyebrow raisers turn out to be false alarms, and some even have odd, albeit legitimate and legal explanations. Still, there are those that defy explanation of any kind. If you’re not in the business of looking for fraud on a daily basis, will you be able ...

Three key elements of fraud risk assessment Organizations that have not performed a fraud risk assessment may be two-thirds more likely to suffer a fraud-related event, states KPMG-endowed fraud and forensic accounting professor Larry Crumbley. Learn the three key elements that a company’s fraud risk assessment should address. ...

The International Forum of Independent Audit Regulators (IFIAR) recently released its second annual Survey of Inspection Findings for the year 2013. The report includes findings from IFIAR members’ (international audit regulators independent of the audit profession) inspections of audit firms, primarily those associated with the largest international audit firm networks. Findings from audit firm activities ...

The digital age represents both forensic challenge and opportunity Forensic financial analysts can increase their effectiveness and value by expanding their training and knowledge in IT forensics. ...

The choice and use of an ex-ante or ex-post analysis can lead to divergent results in protracted litigation. The article provides an illustration of how and why the results may differ. Litigation consultants are advised to consider the above and await instruction from legal counsel regarding the approach that needs to be taken. ...

Misuse of university endowments and school funding tax dollars Money laundering is usually associated with criminal activity, but that is a narrow view. Money laundering takes many forms. In this article, Professor Larry Crumbley contends that money laundering occurs in multiple instances—from the local school board to the university setting. Learn the keys to identify the misappropriation and misuse of fun ...

Know your state licensing laws! This article examines an important issue that is only now coming to light in cases being litigated: namely, whether professionals also need an investigator license. There is no absolute answer, and professionals—especially forensic accountants and fraud examiners—are advised to read this article. ...

Are there hidden risks to the valuator? The best defense against liability is a good offense. As Joseph Petrucelli explains in this article, a good starting point to ensure the appropriate level of professional skepticism and due professional care is maintained in engagements is asking the question: “What would a reasonable person think about my judgment?” ...

Reconstructing gross profits Mr. Kremer provides an overview of the techniques utilized in a shareholder oppression action where he was engaged to calculate the fair market value of the company. The challenge in this forensic and valuation engagement was that the company collected a substantial portion of the revenues in cash, and the reporting did not appear to be accurate. ...

Uses of the Z-score in litigation and insolvency matters Dr. Edward Altman’s Z-score turned 45 years old this month. For the operations-focused valuation analyst, the Z-score is just as relevant today as it was when Dr. Altman introduced it in September 1968. The key to its enduring success is that it is based on fundamental financial ratios that represent value drivers, even in today’s changing market. ...

It is far broader than forensic accounting While financial forensics may share some common ground with forensic accounting, these professions are far from identical twins. D. Larry Crumbley, CPA, MAFF lays out the differences between these often misunderstood professions and explores the academic factors that may be contributing to the confusion. ...

Financially-sound companies can more easily obtain lines of credit at low interest rates, as well as more easily issue debt financing or issue bonds on better terms. Companies often take advantage of loopholes to present themselves as more profitable than they are. Most do it in a way that they’re not technically breaking the law, but ethics certainly come into question. When should you be concerned and whe ...