Services
forensic accounting
 Our
professionals are experienced
in the reconstruction of
financial information that
can be used in pre-trial,
trial and settlement proceedings.
With our training and experience
in fraud detection, we
are well qualified to investigate
allegations of accounting
manipulation and defalcation.
Furthermore, our forensic
accounting expertise can
be used to assist attorneys
and business owners in
assessing the causal link
between liability and damages.
We have performed investigative
accounting procedures in
numerous cases, including:
- marital dissolution
- fraud
detection and documentation
- shareholder/partnership
disputes
- asset and income
tracing
- business interruption/lost
or diminished profits
The following case studies
present a small sample
of the types of engagements
where our forensic accounting
services can be helpful.
For more information regarding
a specific situation or
set of circumstances, please
send a general message
to our firm or
a specific message to one
of our
professionals.
 When you push
the envelope…
Problem
Alex, a successful professional
speaker, decided to expand
on an idea she’d been
mulling over since college.
As a result, five years ago
she established a firm that
offered educational retreats
to high-powered, high-paying,
corporate executives. These
individuals committed to undertaking
grueling outdoor courses that
last anywhere from three days
to three weeks. Alex’s
business had been an unmitigated
success, and her client list
had grown significantly during
the past three years. Unfortunately,
despite annually increasing
the rates for her programs,
the growth in her company’s
net income had been significantly
lower than expected given the
growth in her client list.
Alex suspects that this may
be due to employee theft and/or
the manipulation of accounting
records. While Alex is an extremely
successful businessperson,
she is unfamiliar with many
of the details of the accounting
process. What should Alex do
if she wants to further investigate
her suspicion of employee theft?
Issues to Consider
What
financial information
has Alex relied upon
in developing her
suspicions? Based
on the facts above,
there are at least
two possibilities
to explain why net
income may not be
growing in correlation
with the growth in
clients (and correspondingly,
in revenues). The
first possibility
may have nothing
at all to do with
fraud but, rather,
with the business’ financial
efficiency. Even
if revenues are increasing
annually, if expenses
are increasing at
a greater rate than
revenues, and if
those increases are
valid (i.e. not as
a result of fraud
or accounting manipulation)
then net income growth
will be slower than
revenue growth for
no other reason than
that the company
is being run inefficiently.
In this particular
situation, Alex may
be better served
by streamlining her
operations through
an evaluation and
ultimate reduction
in unnecessary or
unreasonable expenses.
The second possibility
may be that an employee
or employees are
fraudulently removing
income (and possibly
assets) from the
business. While a
typical audit is
designed to measure
compliance with certain
rules and regulations,
it is not specifically
designed to identify
fraud. A forensic
accounting investigation,
or fraud audit, on
the other hand, is
designed to identify
potential weaknesses
in the accounting
process and then
subsequently test
the extent to which
those weaknesses
may have been fraudulently
compromised, and
by whom. At Sage
Forensic Accounting,
we have the expertise
and experience to
address these issues.
|
 When something
doesn't smell
right…
Problem
Gloria is getting divorced. While
she and her husband have been
able to resolve most of their
differences, they still disagree
on the value of Hibiscus, the
sports clothing retailer that
Gloria started a few years
into her marriage. Furthermore,
her husband is also claiming
that Gloria has been using
the company as her own personal “piggy
bank”, drawing out funds “off
the books” to fund personal
expenses. How can Gloria determine
the value of her business for
divorce purposes and also refute
her husband’s claim that
she has inappropriately taken
funds out of the business?
Issues to Consider
In
which State was the
marital dissolution
action filed? Since
divorce matters are
regulated by statute
and case law in the
state of filing,
each state has developed
different guidelines
for the determination
of business value.
It will be imperative
that the appraiser
understand the nuances
of business valuation
for divorce purposes.
In order to evaluate
her husband’s
claim regarding the
personal use of company
funds, it is important
to evaluate the current
segregation of duties
and to perform an
investigative accounting
analysis of the accounting
records maintained
by the company. At
Sage Forensic Accounting,
we have the expertise
and experience to
address these issues. |
Sage has office locations
in Salt
Lake City, Las
Vegas, and Boise but
provides its services to
clients nationwide.
For more information regarding
a specific situation or
set of circumstances, please
send a general message
to our firm or a specific
message to one of our
professionals.
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