FAQs forensic accounting
What information is required?
The information required will depend on the forensic accounting matter, the required outcome, the time available and the complexity of the matter.
For business and equity valuations the information we typically require to begin with includes:
- Last 5 years of financial statements
- Current year-to-date monthly management accounts
- Details of non normal and non business operating revenue and costs
- Details of discontinued businesses and new business opportunities
- Budget & Forecasts (together with performance against budget)
- Business history and background
- Details of key customers, products & services, markets and suppliers
- Any contracts and special or unique relationships held by the business
- Key management and staff
- Business plan and competitive advantage details
- Any IP owned by the entity
Usually once we have had access to the financial information we will have additional questions.
How long does it take?
It really does depend on the scope of the engagement, complexity and the amount of information involved. For a straight forward valuation report we would prefer 3-4 weeks from the the time of receiving all the requested information. The earlier the notice we get the better we are able to incorporate all relevant information
What does the report look like?
A report will typically be comprehensive but easy to understand. The format will depend on the type of engagement, so for example. a valuation report would typically include:
- Glossary of relevant valuation terms and appropriate rules and standards followed
- Engagement & instruction details, purpose of engagement and scope, definition of value and why, key assumptions, information relied upon (contained in appendix), statement of independence and duties to the court
- Description of the business, business ownership structure and what is being valued (eg. equity or the business)
- Consideration and description of key customers, products & services, suppliers, competitive advantage and risk profile
- Consideration and description of relevant industry analysis
- Analysis of financial information for the last 5 years and analysis of current financial & forecast information, consideration of the accounting policies applied and sources of financial information, eg. audited?
- Consideration and description of any non business and non recurring income and expenses
- Consideration and description of appropriate valuation approaches and explanation for the method chosen
- Consideration and description of any relevant market date, eg. relevant transactions or comparable company data
- Where relevant, the application of a Discount for Lack of Control and the rationale and support for the discount applied
- Where relevant, the application of a Discount for Lack of Marketabilty and the explanation and support for the discount applied
- Where relevant, consideration and description of any surplus assets and liabilities
- Valuation calculation and explanation
- Any methods used as a cross check, eg. rules of thumb
- Consideration of the value applicable to intangible assets, including goodwill
- Qualifications & experience
Are there any rules and guidelines that you follow?
We follow the appropriate guidelines dependent on the engagement. So for example, for a valuation engagements we follow:
APES 215. The Accounting Professional & Ethical Standards Board standard on Forensic Accounting. The standard covers issues such as public interest, professional independence, professional competence and due care, confidentiality, duties to the court, expert reports and quality control.
APES 225. The Accounting Professional & Ethical Standards Board standard on Valuation Services. The standard covers issues such as the different types of valuation engagement, responsibilities of members, engagement and mandatory reporting requirements.
AICPA International Glossary of Terms. Any report will be use the terms as defined by the American Institute of Certified Public Accountants, as required by the Australian Accounting Professional & Ethical Standards.
International Valuation Standards Council. Where applicable the report may refer to the standards issued by the international valuation standard setters the IVSC.
AVCAL. In some situations in may be appropriate to refer to the Australian Private Equity & Venture Capital Association Valuation Guidelines.
IFRS. International Financial Reporting Standards are the standards developed on how to deal with items in financial statements, for example, they deal with issues such as recognition of revenue, fixed assets and provision. It may be necessary to consider how the standards have been applied to financial statements, eg. whether the treatment of assets, liabilities, income and expenses is in accordance with the standards.
We also comply with the relevant expert evidence guidelines:
Expert Evidence Practice Note (GPN-EXPT). The Federal Court Practice Note CM7 “Expert witnesses in proceedings in the Federal Court of Australia” has been replaced with the new general practice note GPN EXPT
Uniform Civil Procedure Rules. Rules 426 to 429B. Particular rule 426 and the duty of an expert and 428 requirements of the report.
Family Law Rules 2004. Part 15.5 of the rules covering the definition of an expert witness, reports and when an expert witness can be used in a family law matter.
How much do you charge?
We generally operate on a fixed fee basis where ever possible. Once we have sufficient information we provide a fee based on our understanding of those requirements. Valuation reports start at $5,000 plus GST