Day: March 13, 2011

When you are factoring in the cost of a divorce, it’s advisable to consider whether it’s in your interests to obtain a forensic accountant and/or business valuation expert to assist you and your legal counsel.

How can a forensic accountant help you?

Forensic accountants are experts at analysing complex financial information and presenting relevant information in a concise and helpful manner to the Court. In many cases, forensic accountants will analyse large quantities of documents (either hard copy or electronic) and either quantify a loss or in the case of a divorce matter, they can reconstruct financial records and provide a valuation for a business.

Business valuations can be an extremely important part of a property settlement and a separate article exploring this in further detail can be found here.

The cost of a forensic accountant can range from a few thousand dollars to over $20,000. It depends on the type of business being analysed or valued, the number of documents, the degree to which the documents are in an electronic form and many other factors.

While it’s useful to consider a forensic accountant in the cost of a divorce, it’s our experience that a good forensic accountant can save you much more than the cost of their services. Unravelling complex commercial structures can often have large tax consequences and expert advice in these types of matters will be in your best interests.

If you would like an obligation free quote to obtain the services of a Forensic Accountant then please don’t hesitate to contact us.

About the Author

Andrew Firth is a Forensic Accountant and expert valuation professional. He provides expert accounting reports for family law (divorce) and commercial disputes.  Andrew is a former investigator with the Serious Fraud Office in the UK.  He has also worked for KPMG and Deloitte during his career. Andrew is based in Sydney and provides forensic accounting services throughout Australia and overseas.

If you are in the process of divorce or leading up to divorce it’s important to understand what assets are likely to be included or excluded from the eventual property settlement. Understanding how the process works, planning for a property settlement and engaging an expert valuer/forensic accountant can all have a major impact on your financial position at the conclusion of the divorce proceedings.

For many people their assets will include some or all of the following:

• The family home.
• Other investment properties.
• Household possessions.
• Vehicles including motor bikes.
• Boats and jet skis.
• Investments i.e. shares and managed funds; and
• Superannuation.

However one common asset that is often forgotten when thought turns to assets in divorce is either your or your ex’s business. Businesses come in many forms and can include small ventures such as online businesses, lawn mowing, milk delivery runs and other activities that are run for commercial gain. If you or your ex-partner is a tradesman, then there is likely to be a business and this will need to be valued as part of the property settlement.

When it comes time for a business valuation expert to value the business, then the financial records that are kept are vital pieces of potential evidence in the divorce proceedings. Many smaller businesses have poor record keeping practices and many jobs may not be formally entered into an accounting system. If you or your former partner runs a business, then it’s important to try and secure as much evidence as possible as to the true trading activity of the business. This can include obtaining copies of diaries, bank statements, MYOB or other accounting files, hard copy versions of invoices and any other documentation which shows the true financial position of the business. The value of a business can have a substantial effect on the assets in divorce, and in many situations it can exceed the value of the other assets combined.

The value of a business in a divorce can have a substantial effect on the final property settlement. The valuations can often be complex and require many subjective matters to be taken into account. An expert valuer and forensic accountant will transform various pieces of evidence (such as diaries and other financial records) into a report which clearly spells out the trading activities of the business, its financial performance and ultimately what the business is worth. The reconstruction of financial records is a core skill to a forensic accountant and together with your legal counsel will play an important role in preparing for the divorce proceedings.

About the Author

Andrew Firth is a forensic accountant based in Sydney. He is an expert valuer and specialises in reconstructing financial records and valuing businesses in litigation. If you have a divorce, commerial dispute or other forensic enquiry, Andrew would be happy to discuss this with you.

Rushmore Forensic have offices in North Sydney and Baulkham Hills. They regularly conduct forensic accounting and valuation work across Australia and internationally.