Fighting Fraud With Forensic Accounting

SEC Investigates KB Home Accounting

2009-10-26T18:45:00.001-07:00

http://www.businessweek.com/ap/financialnews/D9B96BQ02.htm

DIVORCE: HOW A FORENSIC ACCOUNTANT CAN HELP YOU AND HOW YOU CAN HELP YOUR FORENSIC ACCOUNTANT

2009-09-18T14:16:00.000-07:00

About the Author: Saul Gordon is the owner of SGI Consulting, a forensic accounting and consulting firm located in Newport Beach, Orange County, California. He is a Certified Public Accountant, Certified Fraud Examiner, Certified Internal Auditor and Chartered Accountant (

South Africa

). He has testified in court in criminal and civil trials. He may be reached at 949-278-3599, sgic@mail.com or his website of www.sgiforensic.com

While it is not possible to discuss everything as relates to forensic accounting in divorce in the space of one short article, a few areas thought to be helpful to your understanding are discussed here in varying levels of detail. No one-size fits all.

This article does not constitute legal advice or specific advice of any sort. Be sure to consult with your family law attorney and other appropriate professionals as each situation is different.

For ease of reference in this article, an ex-spouse or soon-to-be-ex-spouse has simply been referred to as “spouse.”

Consider the following:

How A Forensic Accountant Can Help You In a Divorce Scenario

Very simply put, forensic accounting is accounting that is used in a legal setting.

In a divorce scenario (which may include child support issues), a forensic accountant may be interested in various types of documentation, both business and personal, that can reveal financial information about a spouse, for example, tax returns, accounting records and financial statements, bank statements, cancelled checks, credit card statements, appointment books, sales invoices, business contracts, financial projections, mortgage applications and other documentation.

Depending on the particular circumstances, your attorney’s requirements and the terms of the engagement, some of the ways in which a forensic accountant can be used in divorce scenarios are as follows:

Search for hidden assets and/or hidden income. This may include searching for hidden bank accounts (including off-shore accounts) and hidden property. For example, the payment of utilities through the other party’s bank account at an address previously unknown to you may indicate the existence of a property owned by the other party or even the existence of an extra-marital relationship (the other party could be paying for a property in which to house a paramour). A forensic accountant may find assets that the client spouse is unaware of simply because of his or her lack of participation in the couple’s financial affairs. Sometimes the forensic accountant finds things because the other party does not remember or did not keep records – this does not equate to mal-intent.

Search for inconsistencies between financial information on certain important documentation.

Corroborate financial information with non-financial information.

Determine and quantify personal expenses accounted for as business expenses by the other party and which may impact items such as the valuation of a business.

Perform a business valuation.

Calculate the cash flow which may be used in calculating support payments.

Perform a tracing to be used in determining the separate or community nature of property.

Assist your attorney in preparing document requests of the other party. If you don’t ask for the right documents, you may not get the right answers.

Assist your attorney in gathering information to be used in the preparation of subpoenas.

Assist your attorney in preparing interrogatories or in preparing deposition or trial questions to be asked of the other party’s forensic accountant.

Review certain work performed by the forensic accountant working with the other party.

Testify in court or at depositions.

Should your attorney require them, possibly have contacts with computer forensics specialists, private investigators and other professionals.

Provide input during the settlement process on the tax consequences of certain proposed actions.

Etc.

How You Can Help Your Forensic Accountant in a Divorce Scenario

Although you are probably not a forensic accountant, you may be in a position to help your forensic accountant. You may think this unlikely, but in better times, you may have been privy to the source and use of your spouse’s funds. You may have also visited a business owned or co-owned by your spouse and have an understanding of what documents and records are maintained and in what media. You are also probably familiar with the habits of your spouse and may be familiar with their close relationships (those people may assist your spouse in hiding money), travel habits (these may reveal off-shore bank accounts or the existence of a paramour) and attitude towards risk-taking (this may help determine possible strategies used by a spouse to hide assets), etc. Information that may at first seem insignificant to you may be extremely useful to a forensic accountant.

If you are unsure of whether or not a piece of information is important, it is probably wise to err on the cautious and let your forensic accountant and attorney know.

Often, in divorce scenarios, a party getting divorced is emotionally exhausted and wants to hand over control to the professionals hired to help that person through the process. It is important for you to stay engaged as forensic accountants may be able to greatly benefit from input that you may have to offer, and, by doing so, you may be able to reduce the amount of time and money involved in the divorce process as a whole.

The thoughts in this article are only the present thoughts and opinions of the author and do not constitute mandates or instructions. Consult with your attorney and other appropriate certified professionals as needed, or if you are unsure.

USCIS Introduces New Naturalization Test

2009-09-04T13:39:00.000-07:00

http://www.gallingerlaw.com/uscis-introduces-new-naturalization-test/08/

Some Tips For The Small Business Owner For Managing a Professional Practice

2009-08-26T12:42:00.000-07:00

Some Tips For The Small Business Owner For Managing a Professional Practice

As a business-owner, with a forensic accounting and consulting practice, I have learned many valuable lessons on how to manage a professional practice. While it is not possible to discuss everything I have learned in the space of one article, a few areas thought to be helpful are discussed here in varying levels of detail. No one-size fits all, so apply the information contained in this article to your particular circumstances only if appropriate.

Consider the following:

Time Management

In an age of ever-increasing demands on one’s time, it is important to manage one’s time well. Often small business owners have to wear many hats as they do not have the staffing and resources available to draw on, as do employees in larger organizations. Effectively, the solo practitioner has to manage all departments of the business.

Being efficient and taking actions that achieve results can only result in time savings. Efficiencies may be achieved through automation, outsourcing, having strong processes in place and identifying and eliminating those activities that waste time. Do you have written policies and procedures? Have you planned ahead for the expected growth of your practice and the time when you will need to hire some employees? Has business been slow lately? This could be a good time to develop good workflow processes and implement those systems that are going to save you a lot of time in the future.

Safeguard your time from being gobbled up unexpectedly: back-up your programs and data. An unexpected system failure can literally put you out of business and you may also be in breach of laws and professional guidelines. Also be sure to test your back-ups regularly to ensure that they actually work.

If you obtain a retainer for the work that you do and replenish the retainer as it runs out, you will effectively eliminate your collections departments (one less hat to wear!). Be sure to obtain further retainers before the prior retainer(s) run out, so that you are not in a situation of not being able to work because you did not plan ahead.

Client Selection

As much as clients select their vendors, as professionals, we should exercise due professional care in selecting our clients. Clients that draw a disproportionate amount of your resources (time, money, energy) can be devastating to one’s practice, leaving one feeling unfulfilled, unappreciated and exhausted. There is the added risk that desirable clients will be impacted by your diminished capabilities when you are able to work on their cases. Clients who do not wish to pay their professional bills may even threaten to resort to filing complaints with licensing authorities as a means to avoid payment. Choose wisely upfront to avoid problems later.

Resource Allocation

Think of yourself as a machine that runs on oil. When there is enough oil applied to the machinery, the machine functions smoothly, does not break down and does not wear down beyond normal wear and tear. When the oil is depleted, the metal parts cause friction and start to wear each other down, damaging the machine. When the machine wears itself down enough, it may no longer function or if it does still function, may be damaged for the long term.

Most people only have a certain amount of energy, time etc. (the oil) to allocate to their professional practices each day. When this has all been utilized, the asset itself (you) starts to become depleted. If possible, safeguard the asset by ensuring that you use your oil reserves wisely. Therefore, carefully allocate the relatively scarce supply of daily oil to important tasks each day and do not expend it on non-value added activities.

Resource Identification

There can be a tendency among entrepreneurs to want to build a business “on my own” without any assistance from others. If one really thinks about it, one relies heavily on others in life. Typically, we do not cut our own timber to build our own offices, build the electronic equipment we use, connect the telephone lines, manufacture our own supplies and so on. No one can do it all by themselves. Once one gets over the “on my own” mindset, one may be more inclined to reach out to others who may be powerful resources. Drawing on these resources to assist one in building one’s practice can free up a lot of time for more important business activities.

Ensure that your process for identifying and evaluating resources is sound. Ensure that the person you wish to be a resource is really a resource and saves you time and/or money, and does not instead become a drain on you and your practice. At times, it may be more efficient to do things oneself than to delegate the work to someone else and then to review it. It is an exercise in cost-benefit analysis, often difficult to quantify, with a decision being reached after considering all of the necessary factors.

Ask yourself what professionals are available to you to make your life easier. Utilize those people who have been there before you. You don’t have to go through each learning curve that exists in your business world – others can help.

Marketing

Your business cards should state what it is that you do. People may use this information later to remember you. A website can add professionalism to your business. Consider writing articles, blogging, networking or exploring other appropriate avenues to get your name out there. Most small business owners have to be marketers as well unless they have a marketing department or a constant stream of referrals.

If you do attend networking events as part of your marketing endeavors, arrive early to network. It is often not enough just to be present. Don’t be afraid to smile and say hello. Be friendly. People are generally more responsive to friendly people. Dress appropriately and ensure that you have enough business cards with you.

If business is slow, that could be a good time to market. Remember to keep up with your marketing, so that you stay busy beyond your current assignments.

Make sure that people you know have a good idea of what it is that that you do and in what situations you can assist others, so that if a referral opportunity comes along, you do not lose it unnecessarily.

Be able to state in simple terms what it is that you do. While large words may impress some people, they may hurt the growth of your business.

Goal-Setting

What are your goals? How much of a work-life balance fulfils you? How large do you want your firm to grow? Remember that revenue is not the same as net profit. Making more sales does not necessarily translate into higher net profit and you may be working harder to make less money! Be sure to appropriately control your costs.

Be a problem solver – life is filled with problems, but it is our attitude towards them that makes all the difference. In doing so, identify the real obstacle that is standing in the way of your goal and address that obstacle (and not another one that is more comfortable for you to address!). Be proactive. Don’t procrastinate.

Automation

We live in the age of technology and technology is changing very quickly. To survive, we must embrace the change. The expression “adapt or die” may be familiar to you. If you are not tech-savvy, learn or, at the very least, be willing to learn. Many technologies are becoming increasingly affordable, and thus access to them becomes easier. Find out what technologies are out there – you may not know unless you ask. And you can obtain these answers easily and quickly – go to your favorite search engine.

Use technology to make your life easier. At times, it may be more appropriate or efficient to perform tasks manually – technology is not always a better route, but oftentimes it can be.

When is the right time to implement a new system? When the technology is cheap enough? If you do not have the time to implement a new system, then the implementation generally has to wait, but if it will save you time in the long run and you have the time to do the implementation, do it now.

Contact Management

Make sure that you have a good contact management system in place. When one meets large quantities of people, one may forget those that one meets. Make sure that as soon as possible after the meeting you record your contacts in your centralized repository of contacts and record any notes that are memorable about that person. The longer one puts this task off, the more difficult it becomes. Get into the habit of not only recording your contacts shortly after you meet, but also following-up as appropriate. This may include a phone call or an email or even setting up an appointment for a second in-person meeting.

Pricing Your Services

Some of the factors that you should consider when setting a price for your services include:

Constraints: Ensure that you comply with all laws and ethical guidelines. These may be in the form of price ceilings or how prices may be charged e.g. hourly or fixed fee.

Supply and Demand: Generally, certain services provided by a particular industry are presently in greater demand than other services. Supply and demand changes as the market changes. Consider how much your competition is charging for similar services.

Perceived value: If your services are perceived to be of a higher value than your competition, you may be able to charge a premium for your services, e.g., having a particular credential may result in a perception of greater value.

Length of time for which you have been in practice: If you are new in business and lack experience in certain areas, there will be a learning curve. It is not recommended that you charge your clients for your learning curve.

Market penetration: Charging a lower price than your competition may allow you to penetrate a market new to your business, resulting in more business. However, it may not be advisable for price alone to be one’s only differentiator. Sometimes, charging too low a price can actually cause you to lose business as people may not perceive that you are very good at what you do.

Drive-time: Consider if you should charge for your drive-time and how much to charge. Consider if you should charge a standard rate for mileage. Determine if this should this be in addition to your drive time.

Prestige/goodwill: Branded firms may be able to charge a higher price for their services. Generally smaller firms are not branded firms.

Experience vs. price: You may not be able to reflect years of experience in the price charged for certain services. This is because the market may only bear so much for a particular kind of service, regardless of the length of your experience.

Break-even: Consider setting a price so that you cover the costs of doing business and also make a living. Don’t forget to set aside enough money to pay your taxes, retirement etc!

Buying in bulk: You may want to charge a prospective client with 1,000 hours of work a lower price than a prospective client with 10 hours of work.

Price versus volume considerations and opportunity cost: If you reduce your price, you may have a corresponding increase in volume. You may also not have the time to accept higher-paying jobs when they arise due to the volume that you are handling. Similarly, increasing your price may result in a decrease in volume. Although you may be charging a higher price, you may make less money overall. In a tough economy, ask yourself if it is better to get something than nothing.

Personal goals: How important is it for you to maximize the amount of money you make versus helping people who are in need of your services but cannot afford your regular rates? How many hours do you want to work in a given period of time? What are your personal goals? What other ongoing commitments do you have in your life? In order to have available the amount of personal time that satisfies you, you may need to charge a higher price.

Price per hour or fixed price: Generally speaking, with a price per hour system, the client bears the monetary risk of excess hours worked. Generally speaking, with a fixed price system, the professional vendor bears the monetary risk of excess hours worked.

Vacation time: If you are a business owner, be aware that when you are on vacation, you cannot bill hours like you normally do. You should consider factoring your vacation time in to the price you charge.

Price setting may be different for different services that you offer.

Conclusions

Having your own business is a lot of work, but it can be very rewarding as well.

The thoughts in this article are only the present thoughts and opinions of the author and do not constitute mandates or instructions. Consult with appropriate certified professionals as needed or if you are unsure.

About the Author: Saul Gordon is the owner of SGI Consulting, a forensic accounting and consulting firm. He is a Certified Public Accountant, Certified Fraud Examiner, Certified Internal Auditor and Chartered Accountant (South Africa). He has also testified in court in both civil and criminal trials. He may be reached at 949 278 3599, sgic@mail.com or his website of www.sgiforensic.com

August 23, 2009

Signs Of Cheating

2009-08-18T21:19:00.000-07:00

http://www.womansdivorce.com/signs-of-cheating.html

In Ranks of Heroes, Finding the Fakes

2009-08-04T14:03:00.000-07:00

http://www.nytimes.com/2009/08/02/us/02imposters.html

Fighting Just to Win: Is it worth it? (An Article on Divorce)

2009-07-25T20:56:00.000-07:00

http://www.divorcemag.com/articles/Financial_Planning/los-angeles-family-law-fighting-to-win.html

Employee Fraud

2009-07-25T18:30:00.000-07:00

http://www.cfodailynews.com/workers-gone-wild-7-outrageous-cases-of-employee-fraud/

Home Owners' Association Fraud

2009-07-20T13:52:00.000-07:00

Take a look at the article below and let us know your thoughts....

http://www.ahrc.com/new/index.php/src/news/sub/article/action/ShowMedia/id/2284