Criminal Fraud and the Law - Week 5

AYB115 WEEK 5 - Criminal Fraud and the Law

“It is not the forensic accountant’s role to determine whether the opposing party is guilty or innocent. Instead, it is their role to investigate the quantification of loss and damages to be paid to their client”

I agree that forensic accountants should not determine whether the opposing party is innocent or guilty and should investigate the potential losses and damages that should be paid to the client using their expertise to provide an accurate financial analysis and potentially their expert opinion to assist within those legal proceedings.

 

Within the context of a civil law case, a forensic account may be required to give their expert opinion to calculate the losses and damages that must be paid out. Those two scenarios are in the case of a business valuation, and in lost profits.

 

In terms of the business valuation, a forensic accountant may be asked to provide their expert opinion where the damages awarded must be a lump sum and once and for all, so it is often needed for a forensic accountant to give an estimate value at the time of the damages being awarded, and for any losses that are expected to continue in the future.

 

A claim for an account of lost profits arises when a breach of contract or breach of trust and fiduciary duty occurs and is seen as an alternative to a claim of damages. The claim for lost profit is when the defendant is required to give up their ill-gotten gains to the plaintiff for the breach of contract and/or trust which is when the forensic accountant must give an expert opinion to determine the projected profits that would’ve been lost, as well as any additional expenses that will be incurred as a result of their actions.