Frequently asked questions

What are the Plaintiff’s responsibilities?
The Plaintiff is obliged to prove / vouch their claim and to mitigate their loss.
Falsification on one aspect of claim may give rise to entire claim being rejected.
There is a Statutory Obligation to keep proper books and records for 6 years including sales / purchases.
records / VAT returns/ PAYE Returns/bank/loan statements etc.

When records have been destroyed in Fire / Flood:- It is relatively easy for a Forensic Accountant to reconstruct books/records and establish trading profits/losses in respect of the years that books/records destroyed?
In this situation, a Forensic Accountant will seek copy files/working papers of
accountant/auditor which will have a summary of books/records. They will compare net assets/liabilities at the Beginning / End of year, making adjustments for drawings etc. They will also request Copy Bank Statements / VAT returns/PAYE returns – Supplier’s Invoices and Statements/Customer Records etc.

What are the Duties of an Expert Witness?
The Expert Witness has a duty to the Court in their field of expertise. This duty overrides any obligation to the Party that is paying the Expert (Order 39/Rule 57RSC). They must disclose that the firm has no financial or economic interest in the proceedings (apart from their Fees Order 39/Rule 57(2) (b) RSC)

What documentation does a Forensic Accountant use to review a claim?
1. Copy Financial Statements:- 3 years pre-incident and post incident years for which loss is
claimed. Not Abridged Accounts.
2. Copy Tax Assessments: – these indicate Taxable profits / dates when tax returns were submitted
and shows calculation of income tax/levies/USC.
Tax Returns / Form 11 is not sufficient.
3. Monthly/ Bi-Monthly Analysis of Sales/ Turnover – 3 years pre-incident and post-incident (may indicate major fluctuations in sales/turnover pre/post incident).
4. Copy Bank Statements/ VAT Returns/ PAYE Returns.

What documentation does a Forensic Accountant use to review a claim?
1. Copy Financial Statements:- 3 years pre-incident and post incident years for which loss is
claimed. Not Abridged Accounts.
2. Copy Tax Assessments: – these indicate Taxable profits / dates when tax returns were submitted
and shows calculation of income tax/levies/USC.
Tax Returns / Form 11 is not sufficient.
3. Monthly/ Bi-Monthly Analysis of Sales/ Turnover – 3 years pre-incident and post-incident (may
indicate major fluctuations in sales/turnover pre/post incident).
4. Copy Bank Statements/ VAT Returns/ PAYE Returns

5. Claims where Plaintiff Refuses to Provide Computation Loss/Basis for Claim / documentation are viewed with suspicion.
6. Revenue Statement of Account” &“Payroll Submissions” to Revenue replaced P30 and P35
Returns since 2019. These show details on number of Employees, dates of employment, Tax,
PRSI and USC paid to Revenue.

What Fake Documents can be produced in claims?
As a Forensic Accountant it is necessary to consider how easy it is to falsify documents by producing fake Summaries / Invoices, False Forms such as:

P60 (Now called Employment Detail Summary)

P45 (no longer exists / The Employer must send this information electronically to Revenue).
Need proof of payment that alleged expenditure actually incurred & paid (in addition to
securing copy invoices / vouchers) i.e. proof of payment in Bank Statements.

Why might the Sales income of a business fluctuate?

It is important to compare like with like. Most businesses have some element of seasonal sales/income.

It is necessary to compare sales/ turnover fluctuations by reference to corresponding months in previous / subsequent years E.g. There is little point in comparing construction works/ sales in winter months with sales in summer months.

What is the difference between an Actuary and an Accountant’s report in litigation?

An Accountants report’s quantifies financial loss to date and a base figures for ongoing/future loss.

An Actuarial report sets out capital values to be applied in order to compute ongoing/future loss. An actuary applies actuarial factors determined by – age – normal life expectancy – age of retirement – projected inflation etc.

What are the normal Contents of a Forensic Accountant’s Personal Injuries Report?

Introduction
Background to Claim
Details of Plaintiff / Plaintiff’s Business – financial statements / earnings pre and post incident
Computation on loss including basis for claim
Other relevant financial information such as monthly sales analysis/ seasonal nature of business/ special factors relevant in reviewing/ computing claims.
Schedule of Areas of Disagreement, if appropriate

What are the reasons Post- Incident Sales / Profits may increase / reduce other than the issue at the heart of the claim?

Commercial Factors:

Competitors Importing Products at Cheaper Price
Loss of Sales Agency / Contract
New Competitors entering market
Discontinuation of Unprofitable Products/Division
Foreign Exchange Rate Fluctuations
Increased/reduced production costs
Decline in availability of Raw Materials

When is a Company /Business Valuation required?

Oppression of Minority Interests
One Party seeks / ordered to purchase business interest of another at a ‘fair price’
The Memorandum of Association of a company may set out the basis for company/business valuations
Cessation of business:- aggrieved party seeks to quantify loss in goodwill value
Matrimonial / Divorce cases involving valuation of Companies / Businesses
Discount Factors must be applied for minority shareholdings when valuing a business
Claims for loss of Goodwill in addition to loss of profits

The crux when valuing a company is to try to determine what price a reasonable interested party would buy and / or sell the Business / Shares for.

What are the methods of Company Valuation?

Net Asset Value – Current Value of Assets Less Liabilities
Multiple of Earnings – Price Earnings Ratios which vary substantially from business to business
Discounted Cash Flow Basis – Value of a Company is the sum of the present values of the future cash flows.
Dividend Basis – This method is for company’s quoted on the Stock Exchange. Share price reflects dividends and property / capital assets. Note: It is important to be aware of trends in the Industry / new Competitors.

What is the Mediation Act 2017?

Solicitors and Barristers are required to offer mediation before court proceedings begin. The parties are obliged to confirm to the Court that they have been advised about the mediation option and have considered it. The Judge could invite parties to consider mediation even after proceedings have commenced. The aim of the Legislation is to reduce pressure on the courts and legal costs for the parties. Statistics show a success rate for mediation averaging 80% (Irish Mediation Association).

Mediation is effective in the following circumstances:

Finding solutions when parties are willing but stuck
As a preventative intervention early in a conflict
To avoid costly public litigation
To improve communication, narrow outstanding issues, defuse emotions and define areas of agreement.
It is a bespoke process geared towards the circumstances of each dispute that are agreed in advance

What is involved in a Matrimonial Dispute / Divorce?

Tracing, locating and evaluation of business, property and other assets/ liabilities.
Investigation of unreported income and hidden assets.
Company / Business Valuations.
Determining income available for child and spousal support.

Role of Forensic Accountant in a Matrimonial Dispute

Meeting With Expert Witness for other side (Obligatory)
Preparation of Schedule of Areas of Agreement and Disagreement (Obligatory)
Producing list of financial Queries/ Outstanding Information
Preparation of a report on Business Valuations/ Schedule of Assets/ Liabilities / Income/ Outlay/ Pensions / Life Assurance for Inclusion in the client’s Affidavit of Means

What are the main issues relating to COVID 19 and Business Interruption claims?

It may be difficult to distinguish between genuine losses due to accident/fire etc and job loss/business closure that arose due to the pandemic. A Forensic Accountant will look at the following:

Would a downward sales/ profit trend have occurred regardless of incident due to COVID-19?

Review monthly pre-incident sales to see if decline in sales relates to COVID-19 or the accident/ incident.

Some industries have been hit harder by COVID-19 e.g. recruitment agencies/ pubs/restaurants while in some industries, profits actually increased during pandemic e.g. supermarkets/ DIY stores / pharmacies.

Profits may not have declined due to Wage Subsidy Schemes and Government Assistance such as:

Wage Subsidy Schemes:

Pandemic Unemployment Payment (PUP)

Employer COVID Refund Scheme

Temporary Wage Subsidy Scheme (TWSS)

EWSS Employment Wage Subsidy Scheme (EWSS)

Government Assistance:

COVID Restrictions Support Scheme (CRSS)

Waiving of Commercial Rates

Reduction of Standard Rate of VAT

Warehousing’ of tax liabilities

Business Continuity Voucher