Forensic Accounting
Our specialist forensic accounting group focuses on providing investigative accounting services to gather, analyse and report upon financial information and documentation relevant to an investigation of misappropriation or financial misstatement.
Forensic accountants gather evidence to determine the facts of accounting transactions. These are often complex transactions which have been processed in an environment where there may have been control breakdowns or weaknesses.
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Forensic accountants are generally engaged:
- to investigate a specific situation to ascertain the true financial position where:
- a transaction may have occurred but the cause is unknown, such as an unexplained loss, inventory variance, intercompany balance, unreconciled bank accounts, uncleared suspense accounts or some other anomaly
- a transaction has been deliberately recorded to misstate the financial position.
- to provide evidence in relation to a dispute, such as loss of profit, valuation or accounting interpretation
- to proactively investigate the control environment to identify weaknesses and areas susceptible to fraud or loss.
Through a process of reviewing financial documents and other electronic information and interviewing staff we are able to prepare a report which quantifies any loss and provides an explanation for the cause thereof.
We may also identify opportunities for the recovery of that loss and make recommendations for the improvement of controls to reduce the risk of future losses.
Quantification of Loss
Our forensic accountants can compute calculations of damages arising from various commercial disputes. With a full spectrum of financial, business and accounting skills, we are able to derive a soundly-based damages estimate which can be used to support the decision-making process for both plaintiffs and defendants in considering settlement offers and commencing or maintaining litigation.
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We have significant experience in assisting litigants and lawyers by:
- identifying and utilising appropriate calculation methodologies to prepare damages calculations
- identifying key assumptions in the calculations and providing advice as to how those assumptions might be proven
- preparing a report of the relevant issues, presenting and explaining the valuation and accounting concepts in the dispute context
- providing informal reports for use in mediation/settlement negotiations, including guidance on key issues
- providing briefing papers that can be used by lawyers or counsel for advice on specific issues or in the cross-examination of witnesses (including expert witnesses)
- reviewing and responding to opposing expert reports
- providing expert testimony.
Licensing Management Services
Over 95 per cent of the royalty examinations we have conducted revealed under-reported or misreported royalties, resulting in additional payments to the licensor. Royalty audits involve:
- notifying the licensee that they have been selected for review
- preparing an information request in preparation for the audit
- undertaking reconciliations of the licensees’ royalty statements to the underlying financial records
- discussing any discrepancies with the licensee
- reporting our findings to the licensor, including evidence to support recovery of royalties outstanding.
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Our Forensic Services team can assist by:
- working with lawyers in reviewing licence agreements from a commercial perspective
- researching prospective licensees to assess their capacity to exploit the intellectual property and potentially identify other exploitation possibilities
- valuing the technology and benchmarking comparative royalty structure that suits our clients’ technology and business
- establishing appropriate reporting to obtain visibility as to the licensee’s compliance with the licence agreement
- applying our forensic accounting skills to analyse the licensee’s records to determine whether they are reporting and paying royalties accurately.
We also provide assistance with negotiation strategies for claiming additional royalties due, and our reports may ultimately be used in arbitration or in court proceedings.
