Employing Open Source Data, OSINT, and SOCMINT in the Due Diligence Phase Today’s accountants specialize in document management, research, money laundering, inter-national banking, e-discovery, and much more. They go even further. They ask to learn about open source research, cryptocurrency, and network-based financial transactions. In this article, the author discusses how to use public record resources, social media resources and open source monitoring in due diligence and business investigations to expose fraudulent business activities, locate assets, and gather undercover intelligence. Today’s accountants specialize in document management, research, money laundering, inter-national banking, e-discovery, and much more. They go even further. They…
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Forensic engagements that involve determining lost profits or other economic damages often require a “time series” of economic and market data. When the lost profits or other economic damages engagement involves comparing international companies, multi-country economic data, and international market data, the challenges in locating meaningful data become especially difficult. In this article, the authors share how a time series analysis was used in an engagement, resulting from a breach of a franchise in a European Union (EU) country. To perform the time series analysis, the authors needed to gather multi-country economic data to determine the alleged lost profits and/or…
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The Role of the Expert in 21st Century Dispute Resolution—A Recovering Judge’s Perspective As technology evolves, the role of the expert and the interplay between experts and the judiciary will evolve. This change is already underway. In this article, QuickRead presents the presentation made by Retired Judge Platt at the NACVA and the CTI’s Annual Consultants’ Conference, held in Salt Lake City. Judge Platt describes this evolving landscape and employment opportunities. Introduction I appreciate this opportunity to discuss the role of the “expert” in the 21st Century profession of dispute resolution from the perspective of what I now call myself,…
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In More Ways Than One It seems every few months we read about a financial institution involved in a money laundering scandal. The bank typically agrees to pay a fine, promises to behave, hires consultants to monitor and report to the regulators, and the scandal is generally forgotten. You may ask what do the consultants do and what do they monitor? This article will discuss the development of two recent scandals that made noteworthy headlines, the redflags to be watchful for, and the safeguards deployed to understand, monitor, and control the risks. It seems every few months we read about…
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(OSB) The OSB technique is indispensable to establish veracity when hearing or reading questions and answers, such as deposition transcripts, expert report content and even daily conversation. You can (and should) use the OSB mnemonic in most of your public and private communications, including if you provide expert witness testimony. And, once you begin applying the technique you will find it indispensable in your forensic practice. The following describes its application. [su_pullquote align=”right”]Resources: Forensic Accounting Academy© Financial Statements—Written Confessions Thriving in Forensics—Practice Instruction for Forensic Operators© The Art & Science of Investigating People & Money©—Behavioral and Financial Forensics [/su_pullquote] Background…
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Un-Impeaching Opinions of Calculated Values Valuation or calculation? That is the question asked, answered, and argued by judges, experts, lawyers, and industry thought leaders apropos to whether a calculation of value can be used in litigation. The answer echoed throughout courtrooms across America thus far is a resounding “it depends.” This article offers a synopsis of the debate over calculation engagements being used in litigation. The full version appears in The Value Examiner, September/October 2018 issue.
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Knowing the Business is Critical to Effective Risk Oversight In this article, the author shares excerpts of a speech he presented to board members regarding the importance of managing risk and sources of risk.
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Case Study on the Use of Visuals to Track Revenue, Expenses, and Process What is CCO? How is it used? The CCO technique has no traceable origin, but its application is self-evident and imminently practical. The technique is typified by its initialism, i.e., CCO that self-describes the process: what is the condition underlying the problem(s), what is the cause of the underlying problem(s), and what is the outlook of the underlying problem? Here, the author provides an illustration of CCO and how his firm used it in an engagement.
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Behavior Detection in Forensics The United States Marine Corps (USMC) has deployed behavior detection techniques for years, most recently in counterterrorism actions. Marines are taught the techniques during their Combat Hunter Course so that bad guys can be detected before they can do bad things. “Left of bang” means before the bad things happen; “right of bang” means that bad things have already happened, e.g., ambush, improvised explosive device (IED), etc. Therefore, managing to stay “left of bang” means staying alive for the Marines. Likewise, “left of bang” applies to forensic operators; avoiding bad things such as missing fraudulent activities,…
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Opportunities for Valuation Pros The widespread destruction left in the path of Hurricanes Harvey, Irma, and Maria provides ample ground and opportunities for CVA professionals to assist the public. In this article, the author, a CVA, details those opportunities.
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Principles, Methods, and Applications Everett P. Harry, III and Jeffrey H. Kinrich assembled 45 authors, chosen for their expertise in lost profits damages, and contributed and co-edited this comprehensive lost profits damages “how to” book. The authors pay tribute to Robert L. Dunn, among others, for his vision in identifying the need for this book. The book marks an attempt by the authors to provide a single-source reference for practitioners who are tasked with selecting an appropriate methodology for determining lost profits, carrying out the analysis, and potentially defending their work during proceedings. In this book review, we provide an…
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Identifying Gaps and Risks Valuation and financial forensics professionals and their firms often provide other services. In this article, the author discusses Anti-Money Laundering (AML) actions and which industries are at risk for violating Bank Secrecy Law and AML provisions. Many kinds of businesses are at risk for money laundering and for penalties if AML programs do not meet regulatory standards. Financial institutions—banks, credit card companies, investment brokers, etc.—are under scrutiny to comply with AML requirements as are casinos and dealers in hard goods such as automobile, boat, and airplane dealers, and jewelers. Certain industries, such as insurance and real…
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Fraudulent Payroll and Expense Schemes (Part III of III) This article represents the third installment of a three-part series discussing the potential for embezzlement within an organization by its Accountant Bookkeeper Office Manager (ABOM). Part one discussed how the ABOM could mishandle incoming cash receipts to commit fraud. Part two discussed how the ABOM could mishandle outgoing cash disbursements to commit fraud. This article will be discussing how an ABOM can alter payroll data to embezzle cash. There are two types of payroll schemes that a law organization can fall victim. An ABOM can engage in a ghost employee scheme…
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Don’t be a Victim of Fraud Fraud can affect virtually any organization and fraud costs can be far more than just monetary losses. The author discusses the recent Wells Fargo fraud investigation and shares her views regarding what makes for an effective risk identification program. The effects of fraud can go beyond simple dollar losses and include harm to the organization’s reputation, employee morale, legal costs, and erosion of confidence by investors among other negative effects.
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Fraudulent Billing/Cash Disbursement Schemes (Part II of III) This article represents the second of a three-part series discussing the potential for embezzlement within a firm or organization by its Accountant Bookkeeper Office Manager (ABOM). Part one discussed how the ABOM could mishandle incoming cash receipts to commit fraud. This article will be discussing how an ABOM can mishandle outgoing cash disbursements to commit fraud. There are several fraudulent cash disbursement schemes that can take place within a firm or organization. These schemes fall under two main categories: billing schemes and check tampering schemes. It is possible for these schemes to…
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Cash Receipts (Part I of III) This article represents the first of a three-part series discussing the potential for embezzlement within an organization by its accountant/bookkeeper/office manager (ABOM). ABOM is considered one of the most trusted employees within an organization, making them prime candidates to commit internal fraud. On a daily basis, an ABOM may be dealing with incoming cash receipts, cash disbursements, and processing payroll, including employee benefits programs and expense report reimbursements. This article, specifically, will address the ABOM’s ability to embezzle funds related to cash receipts using skimming and larceny techniques.
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“I Should Have Known!” When you hear the news that someone was just arrested for committing fraud at their work, it is usually accompanied by fellow employees or managers saying one of two things. Either, “I never thought they were capable of stealing” or “I should have seen it coming.” Why do employers say that they “should have known” and how exactly is it that they should have known? In my experience, there are some common characteristics of people who perpetrate a fraud. And if business owners are aware and vigilant about their business, they might never have to say,…
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Income of Partners and Owners of Pass-through Entities (Part II of II) This is the second part of a two-part article where the author discusses the methodology for assessing the lost earning capacity of a self-employed person. This article provides an overview for analyzing the lost earning capacity of the self-employed and discusses why this category of work provides unique assessment situations. In this second part, the author discusses how to address fringe benefits, worklife, mitigation, the value of a business.
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Advise for Budding and Experienced Experts The third edition of The Comprehensive Guide to Lost Profits and Other Commercial Damages is marked departure from the prior editions. This two-volume set is replete with valuable information and insight from experienced practitioners.
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Differences Between the Two Values Damages remedies often focus on lost profits and lost business value, with such remedies typically calculated by financial experts. There continues to be a trend in the courts to preclude experts from testifying, or to disregard them altogether because their opinion does not meet the reasonable certainty standard. Either of these outcomes can be a devastating result for the client. These results occur, in part, from a lack in understanding of the proper calculation of lost profits or lost value. A relevant and reliable opinion, able to withstand the court’s scrutiny in litigation, needs to…