Week 6: What expert knowledge does a Forensic Accountant need in civil litigation?



Two of the expert opinion matters required of forensic accountants are location and quantification of hidden assets, as well as the general calculation of damages in civil cases (e.g. a personal injury lawsuit).

Firstly, according to Catherine Schnaubelt, there are four main ways of hiding assets:

  •        “Denying the asset exists
  •        Transferring the asset to a third party
  •        Claiming the asset was lost
  •       Creating false debt” (2019).
Their role is to identify the action taken to hide/deny an asset, investigate and quantify this, potentially changing the course of settlement or ruling.  A forensic accountant has extensive knowledge in analysis of financial documentation and auditing methodology which exposes hidden assets, and poses questions to clarify discrepancies at play (Emerson, 2016).

The goal is to gain the clearest knowledge of a party’s financial status to proceed with a case – this allows the most accurate ruling to be made.

Another area of expertise required is the calculation of damages in civil cases, such as a personal injury trial. “Seasonality, customer trends, area economic trends and competition” (Bogdan, n.d.) are some of the areas included in the calculation of a claim’s loss in monetary value. A forensic accountant must analyse a person or organisation’s previous income streams and what they have now lost as a result of the event at hand (e.g. permanent disability, a journey accident). This also includes expenses they have saved (for example – if one has no taxable income, they potentially save on income tax (Brennan & Hennessy, 2001)).

It’s important to have specialised knowledge as a forensic accountant, as lawyers may not know how to wade through an excess of financial documents, or spot small but important discrepancies in statements. The level of attention to detail is what makes a Forensic Accountant good or bad – because these small discrepancies can impact the whole case.

(269 words without referencing or quotes)

Brennan, N. & Hennessy, J. (2001). Forensic Accounting and the Calculation of Personal Injury Damages. Bar Review, 6, 533-539.

Emerson, M. (2016). Emerson Family Law. Disclosure, Hidden Assets and Working with Forensic Accountants to Locate them. https://emfl.com.au/our-publications/disclosure-hidden-assets-and-working-with-forensic-accountants-to-locate-them/

Schnaubelt, C. (2019). Forbes. Finding Hidden Assets In A Divorce. https://www.forbes.com/sites/catherineschnaubelt/2019/03/08/finding-hidden-assets-in-a-divorce/#2e85f72f6fd1

Bogdan, K. (n.d.). How Do Forensic Accountants Calculate Lost Profits. A Primer to Accurately Calculating Lost Profits. https://www.mdd.com/forensic-accounting-articles/primer-accurately-calculating-lost-profits/


Further Reading