By Tamara Kido
Roughly half of all marriages will end in divorce. The nastier the breakdown of the marriage and the more money there is at stake, the likelier it is that one of both spouses will attempt to hide assets. The hiding of funds can take place over many years, with one party carefully planning an exit and squirrelling away marital assets in the attempt to avoid dividing the net worth of the couple with their spouse. In situations where one partner had been in control of the finances, this can prove particularly troublesome for the spouse left in the dark.
If you suspect your spouse is hiding money, or you have a complicated financial portfolio with a variety of assets and liabilities, or one of you owns a business, a forensic accountant can be crucial to your case. Your family lawyer will be able to advise whether your situation would benefit from these expert services.
A forensic accountant is trained in accounting, auditing, and investigation to examine the finances of a business or individual. If fraud is a possibility, a trained forensic accountant reads beyond the financial records and find inconsistencies in the economic data to present a more accurate representation of a party’s assets and income. As part of your divorce team, your forensic accountant can help provide supporting evidence required in court to assist in the negotiation of the fairest settlement.
What Services Can I Expect from my Forensic Accountant?
- Assist your attorney in the Discovery phase. Having access to the right documents for review is crucial to uncovering the truth. Your forensic accountant will collaborate with your lawyer to provide a list of documents required from the other party.
- A review of financial documentation to look for inconsistencies and hidden assets. Some of the documents reviewed by your forensic accountant will include bank statements, credit card statements, tax returns, business ledgers, copies of cheques written, sales invoices, expense receipts, appointment diary, stock trading transactions, and contracts to name a few. Simply put, if your spouse is a business owner, some of the ways they might hide money involve understating the business assets or overstating liabilities. For example:
- supplier overpayments to a dummy corporation
- underreporting income
- padding payroll or paying a “ghost” employee
- fake debts
- Forensic accountants can also perform computer forensics, which in some cases, can help reveal valuable evidence. You may be able to get access to mobile phones, or computers which can be imaged and investigated to find help establish the location of funds.
- Can connect you with other professionals like private investigators or handwriting experts to investigate the legitimacy of any forged documents.
- Calculate cash flow. A cash flow analysis or review of spending habits can help reveal inconsistencies or be used to calculate support payments
- Determine if personal expenses were accounted for as business expenses. The classification of personal expenses and business expenses is one of the more common ways that the finances of a company might be manipulated to make the company appear less profitable. This manipulation would adversely affect a business valuation.
- Help your lawyer by suggesting questions to ask of the other party during questioning of the other spouse.
- Trace assets; A forensic accountant will investigate all aspects of the financial affairs of a spouse. This may include the analysis of business accounts, where a spouse has a significant share of the company. If there are inconsistencies between the information presented and the factual position, the forensic accountant will remove the discrepancies, and the assets of the union revalued
- Testify in court. Your forensic accountant can serve as an expert witness. Always remember that as an expert witness, a forensic accountant has a duty to present their best determination of the truth, whatever that may be.
Having a forensic accountant to sift through all the financial documents can prove to be invaluable in a case where the financial picture is being inaccurately presented, or hidden assets are suspected. Revealing these assets could significantly impact the outcome of a divorce settlement. Talk with your lawyer to help you decide if a forensic accountant could be an excellent addition to your divorce team.