INTRODUCTORY MATERIAL

• PREFACE
• HOW TO USE THE GUIDE
• ACKNOWLEDGMENTS
• ACKNOWLEDGMENT OF COPYRIGHTS
• ABOUT THE AUTHORS . . .
• LIST OF SUBSTANTIVE CHANGES AND ADDITIONS

CHAPTER 1: INTRODUCTION TO LITIGATION SUPPORT SERVICES

• 100 INTRODUCTION
  • For Whom Is This Guide Written?
  • The CPA's Role in a Lawsuit
  • Practice Development Opportunities
• 101 OVERVIEW OF THE LITIGATION PROCESS
  • Civil versus Criminal Cases
  • Malpractice Cases
  • Steps Involved in a Typical Lawsuit
    • Investigations and Pleadings.
    • Discovery.
    • Motion Practice and Negotiation.
    • Trial and Appeal.
• 102 ORGANIZATION OF PPC'S GUIDE TO LITIGATION SUPPORT SERVICES
  • Chapter 2--Administering a Litigation Services Practice
    • Pre-engagement and Planning Phase.
    • Data-gathering and Analysis Phase.
    • Reporting and Wrap-up Phase.
  • Chapter 3--Lost Profits Analyses Involving Closely Held Businesses
  • Chapter 4--Damage Studies Involving Individuals
  • Chapter 5--Divorce Services
  • Chapter 6--Bankruptcy Services
  • Chapter 7--Claims against Accountants
  • Chapter 8--Employee Fraud Engagements
  • Chapter 9--Criminal Tax Cases
  • Chapter 10--Business Valuation Services
  • Chapter 11--Expert Witness Services
  • Chapter 12--Providing Services to the Trier of Fact (or Facilitator) or as Joint Expert
  • Chapter 13--Alternative Dispute Resolution
  • Chapter 14--Insurance Claims

CHAPTER 2: ADMINISTERING A LITIGATION SERVICES PRACTICE

• 200 INTRODUCTION
  • Overview of This Chapter
• 201 PROFESSIONAL STANDARDS AND OTHER GUIDANCE
  • AICPA Pronouncements
  • Other Organizations
  • Federal Rules Governing Expert Witness Testimony
  • Statement on Standards for Consulting Services
    • Categories of Consulting Services.
    • Standards Established by SSCS No. 1.
  • Code of Professional Conduct
    • Rule 201--General Standards.
    • Rule 102--Integrity and Objectivity.
    • Rule 301--Confidential Information.
    • Rule 302--Contingent Fees.
    • Rule 502--Advertising.
    • Rule 203--Accounting Principles.
    • Rule 101--Independence and Litigation Services.
    • Public Company Restrictions.
  • The Valuation Standards
    • Standards of the American Institute of Certified Public Accountants (AICPA).
  • The Attestation Standards
    • Prospective Financial Information.
    • Other Attestation Standards.
  • Statements on Standards for Accounting and Review Services
    • Management-use Only Financial Statements.
    • Must the SSARS Standards Be Followed in Litigation Services Engagements?
    • What the SSARS Interpretation Means to the CPA Who Performs Litigation Services.
    • Financial Statements Included in Business Valuations.
  • Applicability of Quality Control Standards
  • AICPA Special Reports
    • Special Report 03-1 on Applicable Professional Standards.
    • Special Report 08-1, Independence and Integrity and Objectivity in Performing Forensic and Valuation Services.
    • Special Report, Forensic Procedures and Specialists: Useful Tools and Techniques.
  • Applicable AICPA Practice Aids
    • Practice Aid 96-3, Communicating in Litigation Services: Reports.
    • Practice Aid 98-2, Calculation of Damages from Personal Injury, Wrongful Death, and Employment Discrimination.
    • Practice Aid 04-1, Engagement Letters for Litigation Services.
    • Practice Aid 05-1, A CPA's Guide to Family Law Services.
    • Practice Aid 06-1, Calculating Intellectual Property Infringement Damages.
    • Practice Aid 06-2, Preparing Financial Models.
    • Practice Aid 06-3, Analyzing Financial Ratios.
    • Practice Aid 06-4, Calculating Lost Profits.
    • Practice Aid 07-1, Forensic Accounting and Fraud Investigations.
• 202 ESTABLISHING AND MAINTAINING A LITIGATION SERVICES PRACTICE
  • Evaluating the Firm's Capabilities
  • Obtaining Relevant Experience
  • Training Requirements
  • Certifications
  • Library Resources
  • Staffing and Scheduling Considerations
  • Marketing Litigation Services
    • Attorney Referrals as a Source of New Work.
    • CPA Referrals.
• 203 OVERVIEW OF A LITIGATION SERVICES ENGAGEMENT
  • Practice Aids
• 204 PRE-ENGAGEMENT AND PLANNING PHASE
  • Perform a Conflict and Business Relationship Review
  • Evaluate Whether to Accept the Engagement
    • Nature of the Requested Services.
    • The Expected Profitability of the Engagement.
    • Potential Collection Problems.
    • Ability to Appropriately Staff the Engagement.
    • Attorney's Ethical Practices.
    • Issues with the Client's Case.
    • Documenting the Client Acceptance or Rejection Decision.
  • Obtain an Engagement Letter
    • Engagement Letters in Bankruptcy Engagements.
    • Engagement Letters When Acting as the Court's Expert or a Special Master.
  • Developing Time and Fee Estimates
    • Billing Rates.
    • Responsible Party.
    • Retainers and Collection.
    • Executing a Security Agreement to Ensure Payment.
  • Prepare a Work Program
  • Obtain the Appropriate Approvals
• 205 DATA GATHERING AND ANALYSIS PHASE
  • Data Collection
    • Types of Data.
    • Sources of Data.
  • Performing the Specific Procedures Necessary to Achieve the Engagement Objectives
  • Documenting Work Performed and Conclusions Reached
    • Keeping Time Records in Litigation Services Engagements.
• 206 REPORTING AND WRAP-UP PHASE
  • Confirm Certain Information in Writing When Appropriate
  • Draft a Report of the Engagement Findings When Appropriate
    • The CPA Should Confirm with the Attorney That a Written Report Needs to Be Prepared.
  • Review the Report Draft and Supporting Documents
  • Obtain an Independent Internal Review of the Report Draft and Supporting Documents If Practical
  • Resolve Any Professional Disputes
  • Discuss Engagement Findings and Report Draft with the Client and the Client's Attorney
  • Follow Up and Resolve Any Issues or Open Items
  • Prepare the Final Report If Requested
    • Reporting When the CPA Serves as an Expert Witness in a Civil Case.
    • Should CPAs Serving as Expert Witnesses Always Submit a Report Meeting the Requirements of Rule 26(a)(2)(B)?
    • Updated Reports.
    • Reporting When Testifying as an Expert in a Criminal Case.
    • Practice Aids and Illustrative Reports.
  • Sign the Report or Transmittal Letter and Deliver It to the Client's Attorney
  • Help the Client's Attorney with Presentation and Cross-examination
  • Provide Expert Witness Testimony If Required
  • File the Supporting Documentation
  • Identifying Additional Services
• 207 COURT-APPOINTED EXPERTS
• APPENDIX 2A: Practice Aids
  • APPENDIX 2A-1: Litigation Services Engagement Acceptance Form
  • APPENDIX 2A-2: Initial Interview Questionnaire
  • APPENDIX 2A-3: Relationship Conflict of Interest Search Form
  • APPENDIX 2A-4: Preliminary Time and Fee Estimate Worksheet
  • APPENDIX 2A-5: Engagement Letter Drafting Form
  • APPENDIX 2A-6: Engagement Letter Addendum Drafting Form
  • APPENDIX 2A-7: Security Agreement Drafting Form
  • APPENDIX 2A-8: Document Request Letter Drafting Form
  • APPENDIX 2A-9: Document Request Letter Drafting Form for Pension Plans
  • APPENDIX 2A-10: Detailed Time Summary
  • APPENDIX 2A-11: Litigation Services Report Checklist
  • APPENDIX 2A-12: Litigation Services Report Drafting Form
  • APPENDIX 2A-13: Representation Letter Drafting Form
  • APPENDIX 2A-14: Engagement Review Checklist
  • APPENDIX 2A-15: ET Interpretation 101-3 Independence Documentation Form

CHAPTER 3: LOST PROFITS ANALYSES

• 300 INTRODUCTION
  • Organization and Scope of This Chapter
  • Expert Witness Testimony
  • Statement on Standards for Valuation Services
• 301 ELEMENTS OF A LOST PROFITS CLAIM
  • Breach of a Legal Duty
    • Breach of Contract Claims.
    • Tort Claims.
  • Causation
  • Damages Must Be "Proximately Related" to the Defendant's Actions
  • Types of Damages
• 302 DETERMINING THE APPROPRIATE RULES OF RECOVERY
  • The Client's Attorney Should Know the Applicable Rules of Recovery
• 303 CONDUCTING A LOST PROFITS ENGAGEMENT
  • Step 1--Discuss the Primary Objectives of the Engagement and Applicable Rules of Recovery with the Client and Client's Attorney
  • Step 2--Determine the Known Facts and Assumptions of the Case
  • Steps 3 through 5--Obtain Documentary Evidence Needed to Perform the Engagement
    • Obtaining Documents and Records from the Opposing Side.
    • Should the Expert Work with Original Documents or Copies?
    • Filing and Retrieving Evidence.
  • Step 6--Obtain Additional Information from Client Personnel and the Opposing Party, and through Independent Research
    • Interviewing Client and Opposing Personnel.
    • If Requested, Prepare Interrogatories to Be Submitted to the Opposing Side.
    • Attend (or Obtain Transcripts of) Depositions of Opposing Party Personnel.
  • Step 7--Perform the Lost Profits Computation
    • Lost Revenues before Trial.
    • The "Before and After" Method.
    • The "Yardstick" Method.
    • The "But For" Method.
    • Mitigation of Damages.
    • Period of Recovery.
    • Variable Cost of Lost Revenues.
    • Should Lost Net Earnings Be Reduced for Income Taxes?
    • Projected Lost Revenues after Trial.
    • Consideration of AICPA Standards Relating to Forecasts and Projections.
    • Using Information Contained in Financial Forecasts and Projections.
    • Revenue Factors for Certain Industries.
    • Determining the Period of the Estimated Future Revenues.
    • Projected Variable Cost of Lost Revenues.
  • Step 8--Discount the Projected Lost Profits
    • Ex-post Discounting Method.
    • Ex-ante Discounting Method.
    • Using Present Value Tables.
    • Using Present Value Calculators.
    • Determining a Discount Rate.
    • Court Cases Relating to an Appropriate Discount Rate.
    • Total Lost Profits.
  • Step 9--Calculate Prejudgment Interest, If Requested
  • Step 10--Review the Results of the Lost Profits Computation for Reasonableness
    • Destruction of a Business.
    • Self-employed Businesses.
    • Start-up Businesses.
  • Steps 11 through 13--Prepare a Schedule of Preliminary Findings and Fine-tune Computations Based on Discussions with the Client and Client's Attorney
  • Step 14--If Requested, Issue a Formal Report
  • Steps 15 through 17--Help the Client's Attorney Prepare the Court Case; Testify
• 304 USING REGRESSION ANALYSIS IN DAMAGE COMPUTATIONS
  • Introduction
  • Simple Regression Analysis
    • The Regression Equation.
    • Example.
    • Determine How Well the Model Fits the Data.
    • Common Mistakes in Regression Analysis.
  • Multiple Regression Analysis
• 305 LOST PROFITS CASE STUDY
  • Background Information
  • Information Learned during the Discovery Phase
  • Expert's Analysis of the Evidence
• APPENDIX 3A: Practice Aids
  • APPENDIX 3A-1: Procedures and Reporting Checklist Lost Profits Engagements
  • APPENDIX 3A-2: Lost Profits Worksheet
  • APPENDIX 3A-3: Documentary Evidence Listing
• APPENDIX 3B: Present Value Tables
• APPENDIX 3C: Additional Sources of Information Relating to Lost Profits

CHAPTER 4: DAMAGE STUDIES INVOLVING INDIVIDUALS

• 400 INTRODUCTION
  • AICPA Guide
  • The CPA's Role in Personal Injury, Wrongful Death, and Wrongful Termination Cases
    • Expert Witness Testimony.
    • Keep the Lost Earnings Analysis Conservative.
  • Organization and Scope of This Chapter
• 401 OVERVIEW OF LEGAL CONCEPTS
  • Types of Cases
  • Liability
  • Damages
  • Types of Damages
  • Compensatory Damages
    • Categories of Compensatory Damages.
    • Economic and Noneconomic Damages.
    • Special and General Damages.
    • Hedonic Damages.
  • Punitive Damages
  • Nominal Damages
  • Damages CPAs Compute
• 402 CONDUCTING A LOST EARNINGS ANALYSIS
  • Step 1--Discuss the Primary Objectives of the Engagement with the Attorney and the Attorney's Client
  • Step 2--Determine the Known Facts of the Case
  • Steps 3, 4, and 5--Obtaining the Information Needed to Perform the Engagement
    • Obtain Information from the Plaintiff and the Plaintiff's Employer.
    • Obtain Information from the Self-employed Plaintiff.
    • Obtain Information from the Student Plaintiff.
    • Obtain Information from the Retired Plaintiff.
    • Obtain Information Relating to a Child Plaintiff.
  • Step 6--Obtain Additional Information from the Plaintiff, the Plaintiff's Employer, and the Defendant
  • Step 7--Obtain Economic Data Published by External Sources
  • Step 8--Perform the Lost Earnings Computation
    • Lost Salaries and Benefits before Trial.
    • Determining an Earnings Base.
    • Income Taxes.
    • Benefits.
    • Growth Rates for Salaries and Benefits.
    • Period of Recovery.
    • Medical Expenses before Trial.
    • Value of Personal (Household) Services Lost before Trial.
    • Consumption Expenses before Trial.
    • Other Expenses before Trial.
    • Mitigating Earnings before Trial.
    • Income Taxes.
    • Projected Lost Salaries and Benefits after Trial.
    • Income Taxes.
    • Defined Benefit Pension Plans.
    • Projected Medical Expenses after Trial.
    • Value of Projected Personal (Household) Services Lost after Trial.
    • Projected Consumption Expenses after Trial.
    • Other Expenses after Trial.
    • Projected Mitigating Earnings after Trial.
    • Income Taxes.
    • Discounting Future Economic Loss to Present Value.
    • Below-market Discount Rate Method.
    • Net Discounting Method.
    • Total Effect Discounting Method (Also Known as the Case-by-case Method).
    • Total Offset Discounting Method.
    • Adjusting the Discount Rate for Other Factors.
    • Applying the Discount Rate.
    • Total Economic Loss.
    • Should Income Taxes Be Considered in the Lost Earnings Analysis?
  • Step 9--Review the Results of the Lost Earnings Computation for Reasonableness
    • Rechecking the Logic and Math.
    • Challenging a Lost Earnings Computation from an Adversary Perspective.
  • Step 10--Prepare a Preliminary Draft of the Report
  • Steps 11 and 12--Have the Attorney Review the Draft Then Complete the Report
  • Step 13--If Requested, Issue a Formal Report
  • Steps 14 through 16--Help the Attorney Prepare the Court Case and Testify
• APPENDIX 4A: Practice Aids
  • APPENDIX 4A-1: Procedures and Reporting Checklist--Lost Earnings Engagements
  • APPENDIX 4A-2: Lost Earnings Worksheet
  • APPENDIX 4A-3: Case Cover Sheet
  • APPENDIX 4A-4: Client Questionnaire
  • APPENDIX 4A-5: Personal (Household) Services Worksheet
  • APPENDIX 4A-6: Data Request Checklist for Damage Studies Involving Individuals
  • APPENDIX 4A-7: Consumption Analysis for Wrongful Death Claims
• APPENDIX 4B: Sources of Information Relating to Damage Studies Involving Individuals

CHAPTER 5: DIVORCE SERVICES

• 500 INTRODUCTION
  • How This Chapter Is Organized
    • Divorce Engagement Practice Aids.
  • Engagement Acceptance Considerations
• 501 OVERVIEW OF THE DIVORCE PROCESS
  • Filing the Divorce Petition
  • Resolving Temporary Support, Custody, and Other Issues
    • The CPA's Role in Determining Temporary Support Amounts.
    • Preparing Preliminary Schedules of Income and Expenses.
  • The Discovery Process
    • Preparing Schedules of Net Disposable Income and Expenses.
    • Federal Taxation of Support Payments.
    • Possible Need for a Forensic Examination of Income.
    • Preparing Schedules of Marital and Separate Assets and Liabilities.
    • Possible Need for a Forensic Examination of Assets.
  • Finalizing Property Distribution and Support Agreements
  • Granting the Divorce
  • Special Considerations for Collaborative Divorce Engagements
    • The CPA's Role in Collaborative Divorce.
  • Use of Joint Experts
• 502 INTRODUCTION TO ALIMONY AND CHILD SUPPORT
  • Types of Support Payments That May Be Required
    • Alimony.
    • Child Support.
    • Temporary Support.
    • Final Support.
  • The CPA's Role in Alimony and Child Support Issues
• 503 FACTORS CONSIDERED BY THE COURTS IN AWARDING SUPPORT
  • Importance of Net Disposable Income and Living Expenses
    • Net Disposable Income.
    • Living Expenses.
  • Support Payments Can Easily Be Determined If Sufficient Funds Are Available
  • Sufficient Funds Are Usually Not Available for Both Spouses to Maintain Their Standards of Living
  • Resolving Support Shortfalls
  • Additional Factors to Be Considered in Awarding Support
    • Marital Misconduct.
    • Duration of the Marriage.
    • The Age and Health of the Parties.
    • Employability of the Receiving Spouse.
    • Child Care Responsibilities.
    • Contributions Made by the Spouse during the Marriage.
    • Property Distributions.
    • Bankruptcy Filing.
• 504 ALIMONY AND CHILD SUPPORT
  • Types of Alimony
    • Temporary Alimony.
    • Rehabilitative Alimony.
    • Permanent Alimony.
    • Term Alimony.
    • Reimbursement Alimony.
  • Civil Unions and Domestic Partnership Issues
  • Alimony Rules Vary from State to State
  • Child Support Must Be Paid until a Child Is Considered to Be Emancipated
  • State Child Support Guidelines
  • Allocating between Alimony and Child Support
    • Alimony May Be Deductible by the Paying Spouse.
    • Alimony and Child Support Payments Cease at Different Dates.
• 505 THE CPA'S ROLE IN MARITAL SUPPORT ENGAGEMENTS
  • Step 1--Resolve Various Issues Based on Discussions with the Client's Attorney
    • Assisting in the Temporary and Final Support Phase.
    • The CPA Should Accumulate Financial Information on Both Spouses.
  • Step 2--If Requested by the Attorney, Assist in Accumulating Information on Which Temporary Support Will Be Based
  • Steps 3, 4, and 5--Obtaining Required Records and Documents
    • Prepare a List of Records and Documents That Are Needed.
    • Obtaining Needed Records and Documents.
    • Obtaining Additional Records and Documents as Needed.
    • Problems Often Encountered in Obtaining Needed Records and Documents.
  • Steps 6, 7, and 8--The Accumulation of Data through Interrogatories, Depositions, and Interviews
  • Step 9--Consider the Need for a Forensic Examination
  • Step 10--Prepare a Preliminary Schedule of Net Disposable Income and Living Expenses
    • The Schedule of Net Disposable Income and Living Expenses Should Generally Show Monthly Information.
    • Preparing a Schedule of Net Disposable Income and Living Expenses.
    • Sources of Income Information.
    • Federal, State, and Local Income Taxes and Social Security Taxes.
    • Living Expenses.
  • Steps 11 and 12--Discuss the Preliminary Schedule of Net Disposable Income and Living Expenses with the Client and Update It As Needed
  • Step 13--If Requested, Propose One or More Marital Support Arrangements
    • Resolving Shortfalls between What Is Needed and What Can Be Paid.
    • Assessing the Impact of Proposed Property Distributions on Support Arrangements.
    • Allocating Support Payments between Alimony and Child Support.
    • Determining How Long Alimony and Child Support Should Last.
  • Step 14--If Requested, Issue a Formal, Written Report
  • Step 15--If Requested by the Attorney, Assist in Any Settlement Negotiations
• 506 PROPERTY ISSUES--BASIC CONCEPTS
  • How Can the CPA Assist in Resolving Marital Property Issues?
    • Preparing Schedules of Marital Assets and Liabilities.
    • Valuing Assets and Liabilities.
    • Assisting in the Distribution of Assets and Liabilities.
    • Attending Settlement Negotiations.
  • Terminology
  • Community Property versus Equitable Distribution States
    • Community Property.
    • Equitable Distribution.
  • Overview of Marital Property Engagements
  • How the Material on Property-related Services Is Organized in This Chapter
• 507 DISTINGUISHING BETWEEN MARITAL AND SEPARATE PROPERTY
  • What Is Marital Property?
  • What Is Separate Property?
  • Special Issues Regarding Separate Property
    • Property Acquired in Exchange for Separate Property.
    • Is an Increase in Value of Separate Property Treated as Separate Property?
    • Tracing of Commingled Property.
    • Transmuted Property.
  • Earnings from Separate Property
  • Premarital Agreements
• 508 PREPARING A SCHEDULE OF ASSETS, LIABILITIES, AND NET WORTH
  • Step 1--Resolve Various Issues Based on Discussions with the Client's Attorney
    • Determining the Appropriate Date or Dates for the Schedule of Assets, Liabilities, and Net Worth.
    • Selecting the Appropriate Standard of Value.
    • Identifying the Items That Should Be Included in the Schedule of Assets, Liabilities, and Net Worth.
  • Steps 2, 3, and 4--Obtaining Required Records and Documents
    • Determining What Records and Documents Are Needed.
    • Obtaining Needed Records and Documents.
    • Obtaining Additional Records and Documents as Needed.
  • Steps 5, 6, and 7--The Accumulation of Data through Interviews, Interrogatories, and Depositions
  • Step 8--Consider the Need for a Forensic Examination
  • Steps 9 and 10--Compile and Value a Preliminary Schedule of Assets and Liabilities
    • Schedule of Assets, Liabilities, and Net Worth Worksheet.
    • Cash.
    • Marketable Securities.
    • Cash Value of Life Insurance Policies.
    • Investments in Closely Held Businesses.
    • Family Residence.
    • Automobiles and Other Vehicles.
    • Retirement Plans.
    • Military Retirement and Benefits.
    • Federal Employee Retirement Benefits.
    • Social Security Benefits.
    • Employee Stock Options.
    • Other Assets.
    • Intangible Assets.
    • Professional Licenses or Advanced Degrees.
    • Celebrity Goodwill.
    • Claims Arising from Lawsuits.
    • Accrued Vacation, Holiday, and Sick Leave.
    • Severance Pay.
    • Disability Benefits.
    • Debt.
    • Other Liabilities.
    • Income Taxes Payable.
    • Estimated Income Taxes on Differences between Current Values and Tax Bases.
  • Step 11--Discuss the Preliminary Schedule of Assets and Liabilities with the Client and the Client's Attorney
  • Step 12--If Needed, Arrange to Have Professional Valuation Consultants Value Some of the Marital Assets
    • Valuing a Defined Benefit Pension Plan.
    • Engaging Other Valuation Specialists.
  • Step 13--Update the Preliminary Schedule of Assets and Liabilities
  • Step 14--Prepare a Proposed Entitlement and Distribution Schedule of Marital Assets and Liabilities between the Husband and Wife
    • Determining Entitlements.
    • How to Distribute Assets and Liabilities to the Spouses.
    • Assets and Liabilities That Logically Belong to a Particular Spouse Should Be Distributed First.
    • After Distributing Assets and Liabilities That Logically Belong to a Particular Spouse, Other Assets and Liabilities Should Then Be Distributed.
    • Special Considerations Regarding Retirement Plan Assets.
    • What If the Desired Distribution Cannot Be Achieved?
  • Step 15--If Requested, Issue a Formal, Written Report
  • Step 16--If Requested by the Attorney, Assist in Any Settlement Negotiations
• 509 TAXATION OF ALIMONY, CHILD SUPPORT, AND PROPERTY SETTLEMENTS
  • General Types of Payments and Income Tax Treatment
  • Taxation of Alimony and Child Support
    • Minimize Taxes, Maximize Spendable Resources.
    • Requirements for Alimony.
    • Child Support.
    • Fixed Child Support.
    • Deemed Child Support.
    • Alimony Recapture.
  • Taxation of Property Settlements
    • Applicability of Section 1041.
    • What Is Incident to a Divorce?
    • Transfer within One Year of Divorce.
    • Transfer Related to the Cessation of the Marriage.
  • Gain or Loss on Transfers and Carryover of Basis
    • No Gain or Loss Recognized on Transfers.
    • Holding Period.
    • Tax Planning Issues.
    • Receiving Spouse Must Maintain Proof of Basis and Holding Period.
• 510 FORENSIC EXAMINATIONS--BASIC CONCEPTS
  • Definition of Forensic Examination
    • Forensic Examination at the Family Level.
    • Forensic Examination of a Closely Held Business.
  • How the Material on Forensic Examinations Is Organized in This Chapter
• 511 WHAT ARE THE CIRCUMSTANCES UNDER WHICH A FORENSIC EXAMINATION MIGHT BE REQUIRED?
  • Reasons for Conducting a Forensic Examination of Personal Financial Representations
    • Determining the Existence of Hidden, Transferred, or Deferred Income.
    • Discovering Hidden or Transferred Property.
    • Determining the Total Disposable Income of the Parties.
    • Identifying the Standard of Living during the Marriage.
    • Validating Claims of Separate Property.
    • Identifying Transmuted Property.
  • Reasons for Conducting a Forensic Examination of a Closely Held Business
    • Finding the Unreported Income of a Closely Held Business.
• 512 DETERMINING THE NEED FOR A FORENSIC EXAMINATION
  • Determining the Need for a Forensic Examination of Personal Financial Representations
  • Determining the Need for a Forensic Examination of a Closely Held Business
  • When Should the Decision to Perform a Forensic Examination Be Made?
• 513 CONDUCTING A FORENSIC EXAMINATION
  • Step 1--Discuss the Primary Objectives with the Attorney and the Client Spouse
  • Steps 2, 3, 4, and 5--Obtaining Records and Documents
  • Steps 6, 7, and 8--The Accumulation of Data through Interviews, Interrogatories, and Depositions
  • Step 9--Performing Appropriate Analytical and Detailed Procedures
  • Steps 10 and 11--Preparing a Schedule of Preliminary Findings
    • Findings in a Forensic Examination of Personal Financial Representations.
    • Findings in a Forensic Examination of a Closely Held Business.
  • Step 12--Perform Additional Procedures If Requested or If Considered Necessary
  • Step 13--If Requested, Issue a Formal Report
• APPENDIX 5A: Practice Aids
  • APPENDIX 5A-1: Divorce Engagement Work Program
  • APPENDIX 5A-2: Data Request Checklist for a Divorce Engagement
  • APPENDIX 5A-3: Disposable Income and Personal Living Expenses Worksheet
  • APPENDIX 5A-4: Schedule of Assets, Liabilities, and Net Worth Worksheet
  • APPENDIX 5A-5: Checklist for Clients Going through a Divorce
• APPENDIX 5B: Additional Sources of Information Relating to Divorce Services

CHAPTER 6: BANKRUPTCY SERVICES

• 600 INTRODUCTION
  • Bankruptcy Process
    • The Bankruptcy Code.
    • Types of Bankruptcy.
  • Out-of-court Settlement
  • Prepackaged Bankruptcy
  • CPA Services for Debtors in Bankruptcies or Out-of-court Settlements
  • CPA Services for Creditors in Bankruptcies or Out-of-court Settlements
  • Status as Litigation Services
  • Scope of This Chapter
    • Appendixes and Practice Aids.
• 601 OVERVIEW OF THE BANKRUPTCY LAWS
  • Sources of Bankruptcy Laws
    • U.S. Trustee Program.
  • Organization of the Bankruptcy Code
  • Bankruptcy Commencement
    • Commencement of a Voluntary Bankruptcy Proceeding.
    • Commencement of an Involuntary Bankruptcy Proceeding.
    • Petition Documents (Official Forms).
  • Participants in the Bankruptcy Process
    • Bankruptcy Court.
    • U.S. Trustee.
    • Trustee.
    • Examiners.
    • Debtors.
    • Debtor's Estate.
    • Creditors.
    • Adjusters (Operations or Field Agents).
    • Fraud Investigator's Relationship to Participants in Bankruptcy Proceedings.
  • Bankruptcy Concepts
    • Automatic Stay.
    • Cash Collateral.
    • Adequate Protection.
  • Claims
    • Allowed and Disallowed Claims.
    • Priority Claims.
    • The Importance of Claims Identification and Classification.
  • Avoidance of Contracts, Leases, Transfers, and Other Transactions
    • Executory Contracts and Leases.
    • Preferential Transfers.
    • Fraudulent Transfers.
  • The Plan of Reorganization
    • Small Business Standard Plan of Reorganization.
    • Exclusivity Period.
    • Exclusivity Period in a Small Business Case.
    • Required Contents and Provisions.
    • Feasibility Standard.
    • Best Interests of Creditors and Interest Holders Standard.
  • The Disclosure Statement
  • Plan Acceptance and Confirmation
    • Plan Acceptance.
    • Plan Confirmation.
    • Cram Down.
    • Effect of Plan Confirmation.
  • More Information about the Bankruptcy Laws
• 602 PRE-ENGAGEMENT AND PLANNING ACTIVITIES
  • Engagement Acceptance
    • Bankruptcy Experience.
    • Preliminary Survey for Knowledge about the Debtor.
    • Independence and Status as a Disinterested Person.
    • Scope of Services.
    • Fee Considerations.
    • Engagement Letters.
  • Accountant Retention
    • Overview of the Process.
    • Affidavit of Proposed Accountant.
    • Application for Retention of Accountant.
  • Compensation
    • Standards for Court Award of Professional Fees.
    • Application for Compensation and Reimbursement in Accordance with the U.S. Trustees' Guidelines.
    • Local Rules on Applications.
    • Approval of Compensation.
    • Interim and Final Payment.
  • Status of Accountant's Fees in a Bankruptcy Engagement
    • Unpaid Prepetition Fees.
    • Postpetition Fees.
  • Time Records
  • Documentation of Pre-engagement, Planning, and Engagement Activities
• 603 GATHERING INFORMATION FOR THE OFFICIAL FORMS AND PREPARING MONTHLY OPERATING REPORTS
  • Official Forms
    • Form 1--"Voluntary Petition."
    • Form 4--"List of Creditors Holding 20 Largest Unsecured Claims."
    • Form 6--"Schedules."
    • Schedule D--"Creditors Holding Secured Claims."
    • Schedule E--"Creditors Holding Unsecured Priority Claims."
    • Schedule G--"Executory Contracts and Unexpired Leases."
    • Form 7--"Statement of Financial Affairs."
  • Monthly Operating Reports
    • SOP 90-7, Financial Reporting by Entities in Reorganization under the Bankruptcy Code.
    • Reporting Responsibility for Monthly Operating Reports.
• 604 SERVICES RELATED TO CLAIMS
  • Scheduling Claims
    • Suggested Procedures.
    • Second Priority Administrative Expense Claims.
    • Claims Related to Rejected Contracts.
    • Contingent, Unliquidated, or Disputed Claims.
    • Nonallowable Claims.
  • Reconciling Proofs of Claims
  • Claims Processing Systems
  • Disbursing Agent Services
• 605 ANALYZING EXECUTORY CONTRACTS AND UNEXPIRED LEASES
• 606 IDENTIFYING POSSIBLE PREFERENTIAL TRANSFERS AND FRAUDULENT TRANSFERS
  • Preferential Transfers
    • Procedures for Identifying Possible Preferential Transfers.
    • Determining Insolvency.
    • Opinion on Solvency as Part of Expert Witness Testimony.
  • Fraudulent Transfers
    • Identifying Possible Fraudulent Transfers.
  • Identifying Insiders
• 607 DEVELOPING THE PLAN OF REORGANIZATION
  • Administrative Convenience Claims Class
  • Provisions for Settling Debts
  • Tax Consequences
  • Negotiation with Creditors
  • Drafting the Plan
• 608 PREPARING FINANCIAL PRESENTATIONS FOR THE DISCLOSURE STATEMENT
  • Pro Forma Financial Information
    • Considerations in Preparing the Pro Forma Presentation.
    • Presentation of Pro Forma Information.
  • Liquidation Analysis
    • Considerations in Preparing the Liquidation Analysis.
    • Presentation of the Liquidation Analysis.
  • Prospective Financial Information
    • Considerations in Preparing Prospective Financial Information.
• 609 DEVELOPING BUSINESS VALUATIONS AND VALUING COLLATERAL
  • Reorganization Value
    • Conditions for Using Reorganization Value.
    • Definition of Reorganization Value.
    • Valuation Methods for Determining Reorganization Value.
  • Liquidation Value
    • Valuation Methods for Determining Liquidation Value.
  • Valuation Reports
  • Relation of Valuations to Expert Witness Services
• 610 PREPARING DOCUMENTATION FOR COURT MOTIONS, APPEARING IN COURT, AND TESTIFYING AS AN EXPERT WITNESS
  • Core Matter Proceedings in a Bankruptcy Case
    • Motion Practice for Core Matters.
    • Preparing Documentation for Court Motions.
  • Adversary Proceedings in a Bankruptcy Case
    • Related Adversary Proceeding outside the Bankruptcy Case.
  • Court Appearances
  • The Discovery Process in Bankruptcy-related Court Actions
  • Testimony Presentation in Bankruptcy-related Court Actions
  • Engagement Letter
  • Written Reports and Workpapers
• 611 ACTING AS AN EXAMINER
  • Examiner's Report
• 612 REPORTING AND WRAP-UP ACTIVITIES
  • Reporting Considerations
    • Historical Financial Statements in Monthly Operating Reports.
    • Prospective Financial Presentations Prepared for Inclusion in Disclosure Statements.
    • Pro Forma Presentation Prepared for Inclusion in Disclosure Statements.
    • Liquidation Analysis Prepared for Inclusion in Disclosure Statements.
  • Final Compensation Procedures
• 613 LEGISLATIVE DEVELOPMENTS
• APPENDIX 6A: Practice Aids
  • APPENDIX 6A-1: General Procedures Checklist for Troubled Business or Bankruptcy Engagement
  • APPENDIX 6A-2: Checklist of Chapter 11 Bankruptcy-related Actions (Accountants for the Debtor)
  • APPENDIX 6A-3: Claims Reconciliation Form
  • APPENDIX 6A-4: Claims Summary Form
  • APPENDIX 6A-5: Preferential Transfers Worksheet
• APPENDIX 6B: Additional Sources of Information Relating to Bankruptcies
• APPENDIX 6C: Blank Forms and Schedules That CPA-experts May Need to Complete in a Bankruptcy Case
  • APPENDIX 6C-1: Form 1
  • APPENDIX 6C-2: Form 4
  • APPENDIX 6C-3: Summary of Schedules
  • APPENDIX 6C-4: Schedule D--Creditors Holding Secured Claims
  • APPENDIX 6C-5: Schedule E--Creditors Holding Unsecured Priority Claims
  • APPENDIX 6C-6: Schedule F--Creditors Holding Unsecured Nonpriority Claims
• APPENDIX 6D: Illustrative Forms Relating to the Retention and Compensation of a CPA-expert in a Bankruptcy Case
  • APPENDIX 6D-1: Affidavits of Proposed Accountant for Debtor (Long Form)
  • APPENDIX 6D-2: Application for Retention of Accountant
  • APPENDIX 6D-3: Application for Compensation and Reimbursement of Expenses
• APPENDIX 6E: Illustrative Statements Completed by a CPA-expert for a Bankruptcy Filing
  • APPENDIX 6E-1: Background Information to Reorganization Value Determination and Disclosure
  • APPENDIX 6E-2: Narrative Disclosure in Disclosure Statement Concerning Reorganization Value
  • APPENDIX 6E-3: Pro Forma Financial Statements and Related Note Disclosure
  • APPENDIX 6E-4: Liquidation Analysis, Best Products Co., Inc., et al.

CHAPTER 7: CLAIMS AGAINST ACCOUNTANTS

• 700 INTRODUCTION
  • Appendix of Practice Aids
• 701 ENGAGEMENT ACCEPTANCE CONSIDERATIONS
  • Testimony or Consultant Services for Plaintiffs, Defendants, or Both?
    • Testimony for Plaintiffs.
    • Testimony for Defendants.
  • Repeat Engagements
  • State Licenses
• 702 THE LITIGATION CONSULTANT'S ROLE IN AN AUDITOR MALPRACTICE CASE
  • Case Evaluation
  • Document Production and Management
  • Development of Case Strategy
  • Assisting with Depositions
  • Drafting Interrogatories, Responses, Contentions, Affidavits, and Other Court Documents
  • Testimony on Liability, Causation, or Damages
    • Scope of Testimony.
    • Audit versus Expert Opinions.
    • Charges of Use of Hindsight.
• 703 DEVELOPING EVIDENCE IN AN AUDITOR MALPRACTICE CASE
  • Sources of Evidence
    • Evidence of Material Misstatement.
    • Evidence of Malpractice.
  • Audit Documentation as Evidence in Auditor Malpractice Actions
    • Creation of Documentation.
    • Retention of Documentation.
    • Alteration of Audit Documentation.
• 704 CLAIMS INVOLVING AUDIT SERVICES
  • Importance of the Expert's Understanding of Legal Theories
  • Negligence (Professional Malpractice)
  • Breach of Contract
  • Fraud
  • Gross Negligence
  • Claims Arising under Federal Statutes
    • The Securities Act of 1933.
    • The Securities Exchange Act of 1934.
    • The Sarbanes-Oxley Act of 2002.
    • Rule 102(e) Proceedings by the SEC.
  • Evaluating the Degree of Departure from the Standard of Ordinary Care
    • Importance of the Audit Area.
    • Need for Heightened Scrutiny.
    • Degree of Deviation from Required Procedures.
  • Damages
  • Affirmative Defenses
    • The Statute of Limitations Defense.
    • The Privity Defense and Related Defenses.
    • The No Reasonable Reliance Defense.
    • The No Jurisdiction Defense.
  • Joint and Several Liability
  • Proportionate Liability
• 705 CLAIMS INVOLVING COMPILATION AND REVIEW SERVICES
  • Claims by Third Parties
    • Duty of Care Owed to Plaintiff.
    • Breach of Duty of Care.
    • Defense of No Reasonable Reliance.
  • Claims by Clients
    • Engagement Letters and Breach of Duty of Care.
    • Cases Involving Claims for Failure to Detect Embezzlements.
    • Communication Responsibilities of Fraud or Illegal Acts.
• 706 CLAIMS INVOLVING CONSULTING SERVICES
  • Role of the Expert in a Consulting Malpractice Case
    • Professional Standards.
    • Industry Knowledge and Consulting Techniques.
  • Litigation Support Consulting Service Claims
    • Background of the Case.
    • Lessons to Be Learned.
• 707 CLAIMS INVOLVING TAX SERVICES
  • Role of the Expert in a Tax Malpractice Case
    • Adherence to Professional Standards.
    • Compliance with Client Contract.
  • Problems of Special Significance to Tax Malpractice Cases
    • Tax Files.
    • High Risk Areas.
    • Frequent Tax Law Changes.
    • Breach of Fiduciary Duty.
    • Government Charges.
• APPENDIX 7A: Example Request for Production in Any State District Court for Any County
• APPENDIX 7B: Additional Sources of Information Relating to Claims against Accountants

CHAPTER 8: EMPLOYEE FRAUD ENGAGEMENTS

• 800 INTRODUCTION
  • Organization and Scope of This Chapter
• 801 DEFINITION OF FRAUD AND ITS COMMON ELEMENTS
  • What Is Fraud?
  • Elements of Fraud
    • Elements of Fraud.
  • The Fraud Triangle
    • Pressures to Commit Fraud.
    • Opportunities to Commit Fraud.
    • Integrity and Rationalization.
  • Characteristics of Fraud Perpetrators
  • No Guarantee of Fraud Detection
• 802 TYPES OF EMPLOYEE FRAUD AND COMMONLY USED MEANS OF DETECTING THEM
  • Cash
    • Diversion of Cash Receipts.
    • Less Cash Schemes.
    • Petty Cash Embezzlement.
    • Embezzlement through the Use of Voids and Sales Returns.
  • Accounts Receivable
    • Lapping.
  • Inventory
  • Accounts Payable
    • Vendor Frauds.
    • False Expense Reports.
  • Payroll
    • Phantom Employees.
    • Theft of Manual Checks.
    • Overpayment Schemes.
    • Diverting Wages or Payroll Taxes.
    • Theft of Paychecks.
    • Employees Writing Extra Checks to Themselves.
    • Embezzling Withholding.
    • Keeping Former Employees on the Payroll.
  • Contract Fraud
  • Kickbacks
• 803 CONSULTANT'S ROLE ON FRAUD ENGAGEMENTS AND UNIQUE ENGAGEMENT CONCERNS
  • Reason for Fraud Services
  • The Role of the Fraud Consultant
  • Unique Engagement Considerations
  • Conflicts of Interest
  • Management Integrity
    • Extent of Fraud.
    • Purpose of the Investigation.
  • Establishing an Understanding with the Client
  • Engagement Staffing
  • Client Commitment
  • Will the Benefits of a Fraud Engagement Exceed Its Cost?
• 804 CONDUCTING A FRAUD ENGAGEMENT
  • Step 1--Discuss Facts and Objectives with the Client and Client's Attorney
    • Determining the Facts of the Case.
    • Determining the Objectives of the Engagement.
  • Step 2--Evaluate Whether to Accept the Engagement/Assignment
    • Business Risks.
    • Investigator's Ability to Provide the Services.
    • Staffing Considerations.
    • Conflicts of Interest.
    • Predication.
    • Client Considerations.
    • Profitability and Fee Collection.
    • Documenting Client Acceptance.
  • Step 3--Prepare a Work Program
    • Caution about Over-reliance on Work Programs.
  • Step 4--Prepare a Time and Fee Estimate or Budget
  • Step 5--Obtain Approval of the Work Program, Staff Assignments, and Fee Estimate
  • Step 6--Obtain an Engagement Letter
    • Billing Rates.
    • Billing Arrangements.
    • Engagement Letter Considerations in Bankruptcy Engagements.
  • Steps 7 and 8--Identify Fraud Exposures and Symptoms
    • Understanding the Industry and Operations.
    • Financial Analysis.
  • Steps 9 and 10--Evaluate the Evidence Obtained and Determine the Additional Evidence Needed
  • Steps 11 and 12--Search for, Accumulate, and Evaluate Additional Evidence
  • Step 13--Discuss the Preliminary Findings with the Client and Client's Attorney
    • Schedule of Preliminary Findings.
    • Discussions with the Client and Client's Attorney.
  • Step 14--Draft a Formal Report
  • Step 15--Review the Report and Workpapers
  • Step 16--Resolve Professional Disputes
  • Step 17--Clear Review Points and Open Items
  • Step 18--Deliver the Report or Communicate Engagement Findings
  • Step 19--Help the Attorney Prepare the Court Case and Testify
  • Step 20--Perform Follow-up Procedures
  • Step 21--File the Workpapers and Report
• 805 INVESTIGATIVE TECHNIQUES
  • Types of Investigative Techniques and Evidence
  • Documentary Evidence
    • What Documents Are Available?
    • Legally Obtaining Documentary Evidence.
    • Criminal Cases.
    • Civil Cases.
    • Electronic Searches.
    • Handling, Storing, and Retrieving Documentary Evidence.
    • Maintain Originals in Pristine Form.
    • Summarizing the Contents of Documents.
    • Document Storage.
    • Retrieval.
    • Marking Evidence.
    • Criminal Cases.
    • Civil Lawsuits.
    • How Much Evidence Is Enough?
    • Use of Computers.
    • Objectives of the Engagement.
    • Cost/Benefit Relationship.
    • Known Facts of the Engagement.
    • Level of Sophistication of the Fraud Scheme.
    • Ease of Testing Transactions.
    • Ability to Identify Unnecessary Procedures.
  • Testimonial Evidence
    • Interviewing Witnesses and Suspects.
    • Location of Interviews.
    • Miranda Warnings.
    • Confessions.
    • Lie Detector Tests.
    • Additional Procedures.
  • Observation Techniques
    • Fixed-point Observation.
    • Moving Observation.
    • Invigilation.
    • Covert Operations.
    • Other Physical Forensic Evidence and Procedures.
• 806 REPORTING THE RESULTS OF AN EMBEZZLEMENT ENGAGEMENT
  • Testimony
  • Written Reports
    • Schedule of Preliminary Findings.
    • Final Report.
  • Consulting Services Practice Aid on Fraud Investigations
  • Reporting Standards for Certified Fraud Examiners and Internal Auditors
• 807 ADDITIONAL ISSUES
• APPENDIX 8A: Practice Aids
  • APPENDIX 8A-1: General Procedures Program for Fraud Detection Engagements
  • APPENDIX 8A-2: Client Initial Interview Questionnaire for Fraud Detection Engagements
  • APPENDIX 8A-3: Documentary Evidence Listing--Misappropriation of Assets
  • APPENDIX 8A-4: Proof of Cash Worksheet
  • APPENDIX 8A-5: Surprise Cash Count Form and Receipt--Petty Cash Fund
  • APPENDIX 8A-6: Fraud Detection Programs--Misappropriation of Assets
    • APPENDIX 8A-6a: Fraud Detection Program for Cash
    • APPENDIX 8A-6b: Fraud Detection Program for Receivables
    • APPENDIX 8A-6c: Fraud Detection Program for Investments
    • APPENDIX 8A-6d: Fraud Detection Program for Inventory
    • APPENDIX 8A-6e: Fraud Detection Program for Fixed Assets (Property and Equipment)
    • APPENDIX 8A-6f: Fraud Detection Program for Payables and Disbursements
    • APPENDIX 8A-6g: Fraud Detection Program for Payroll and Employee Reimbursements
  • APPENDIX 8A-7: Standard Form to Confirm Account Balance Information with Financial Institutions
  • APPENDIX 8A-8: Request for Subsequent Bank Statements
  • APPENDIX 8A-9: Accounts Receivable Confirmation Request
• APPENDIX 8B: Social Security Area Numbers
• APPENDIX 8C: 24 Ways Employees Embezzle Cash from Retail Businesses
• APPENDIX 8D: Case Study
  • APPENDIX 8D-1: Illustrative Fraud Report Prepared by a CPA
  • APPENDIX 8D-2: Engagement Letter
  • APPENDIX 8D-3: Schedules of Potential Fraudulent Transactions
• APPENDIX 8E: Sources of Information Relating to Fraud Detection

CHAPTER 9: CRIMINAL TAX CASES

• 900 INTRODUCTION
  • Scope of the Chapter
  • Overview of the Chapter
  • Appendixes and Practice Aids
• 901 OVERVIEW OF CRIMINAL TAX OFFENSES
  • Matters Discussed in This Section
    • Criminal Offenses.
    • Civil Offenses and Penalties.
    • Elements of Tax Crimes and Burden of Proof.
    • Civil Case following Criminal Trial.
    • Other Tax Crimes.
    • Statutes of Limitations and Defenses.
  • Attempt to Evade or Defeat Tax (Tax Evasion)--IRC Sec. 7201
    • Avoidance versus Evasion.
    • Examples of Tax Evasion.
    • Criminal Penalty for Tax Evasion.
    • Civil Penalty for Tax Evasion.
  • Willful Failure to Collect or Pay over Tax--IRC Sec. 7202
    • Criminal Penalty.
  • Willful Failure to File Return, Supply Information, or Pay Tax--IRC Sec. 7203
    • Criminal Penalty.
    • Civil Penalty.
  • Making False Statements on Returns--IRC Sec. 7206(1)
    • Criminal Penalty.
  • Aiding or Abetting in Preparing or Presenting False Returns--IRC Sec. 7206(2)
    • Penalties.
  • Making False Returns, Statements, or Documents--IRC Sec. 7207
    • Criminal Penalty.
  • Attempts to Interfere with Administration of Internal Revenue Laws--IRC Sec. 7212(a)
  • Knowingly or Recklessly Disclosing Tax Return Information by Preparers--IRC Sec. 7216
    • Key Terms and Definitions.
  • Civil Penalties versus Tax Assessments
  • Civil Penalty for Fraud--IRC Sec. 6663
  • Tax Crimes in Non-IRC Statutes
    • Aiding or Abetting a Criminal Offense--18 USC Section 2.
    • Conspiracy to Commit an Offense against, or to Defraud, the Government--18 USC Section 371.
    • Making a False or Fraudulent Statement, Representation, or Document within the Jurisdiction of a Department or Agency of the U.S.--18 USC Section 1001.
  • Currency Offenses
  • Statutes of Limitations for Tax Offenses
    • Statute of Limitations for Criminal Tax Fraud under the IRC (Title 26 of the USC).
    • Statute of Limitations for Criminal Tax Crimes under Title 18 of the USC.
    • Statute of Limitations for Civil Penalties for Fraud.
    • Statute of Limitations for Civil Penalties Where No Fraud Is Involved.
• 902 ELEMENTS OF TAX CRIMES
  • Additional Tax Owing
    • Defenses against Allegations of Tax Owing.
  • Attempt to Evade Tax
  • Willfulness (Intent)
    • Badges of Fraud.
  • Defenses against Allegations of Tax Fraud
• 903 THE PROCESS OF A CRIMINAL TAX INVESTIGATION
  • Triggers of a Criminal Investigation
    • Whistleblower Program.
  • Signs of an Impending Criminal Investigation
  • CI Investigation
    • Miranda Warning.
    • Interviews and Document Reviews.
    • Use of Grand Jury.
    • CI Decision about Prosecution.
  • IRS Counsel
  • Department of Justice Tax Division and Attorney General
  • Indictment and Trial
    • Assessment and Collection of Civil Penalties.
• 904 METHODS OF PROVING UNREPORTED INCOME
  • Direct (Specific Item or Transaction) Method
  • The Net Worth Method
    • Determination of Net Worth.
    • Likely Source of Income.
    • Illustration of, and Worksheet for, the Net Worth Method.
    • Defenses against the Net Worth Method.
  • The Expenditures Method
    • Illustration of, and Worksheet for, the Expenditures Method.
  • The Bank Deposits Method
    • Illustration of the Bank Deposits Method.
    • Defenses against the Bank Deposits Method.
  • The Cash Method
  • The Percentage Method
    • Sources of the Percentage.
    • Illustration of the Percentage Method.
    • Defenses against the Percentage Method.
  • The Unit and Volume Methods
• 905 THE ACCOUNTANT'S SERVICES IN A CRIMINAL TAX CASE
  • Information Gathering
  • Production of Documents
  • Analysis of the Proof of Income
  • Assistance in Developing a Theory of Defense
  • Appearance at Meetings and Court Sessions
    • Accountant Testimony.
• 906 ENGAGEMENT ADMINISTRATION
  • Engagement Letter
    • Illustrative Engagement Letter.
  • Work Program
  • Attorney/Client/Accountant Privilege
• 907 GUIDANCE FOR THE TAXPAYER'S REGULAR TAX ACCOUNTANT OR RETURN PREPARER
  • A Regular Tax Audit Appears Headed for a Criminal Investigation
    • Advise the Taxpayer to Engage an Attorney.
    • Engage Another Accountant.
    • Consider Engaging an Attorney for the Accountant.
    • Accountant Remain Silent.
    • Advise against Destroying Documents.
    • Consider Filing Delinquent Returns.
  • Discovery of Failure to File Returns
    • Inform Nonfiler of Risks and Courses of Action.
    • Consider Credit Risk.
    • Consider Need to Withdraw from the Engagement.
    • Additional Guidance.
  • Discovery of Error on Return
  • Discovery of Fraud
• APPENDIX 9A: Practice Aids
  • APPENDIX 9A-1: Procedures and Reporting Checklist--Criminal Tax Engagements
  • APPENDIX 9A-2: Documentary Evidence Listing--Criminal Tax Engagement
  • APPENDIX 9A-3: Letter Requesting Copies of Summoned or Subpoenaed Documents--Criminal Tax Engagement
  • APPENDIX 9A-4: Worksheet for the Net Worth Method of Proving Income
  • APPENDIX 9A-5: Worksheet for the Expenditures Method of Proving Income
• APPENDIX 9B: Additional Sources of Information Relating to Criminal Tax Matters
• APPENDIX 9C: Illustrations of Proofs of Income
  • APPENDIX 9C-1: Net Worth Method (IRM Exhibit 9.5.9-1)
  • APPENDIX 9C-2: Expenditures Method (IRM Exhibit 9.5.9-2)
  • APPENDIX 9C-3: Bank Deposits Method (IRM Exhibits 9.5.9-3 TO 9.5.9-6)

CHAPTER 10: VALUING CLOSELY HELD BUSINESSES AND PROFESSIONAL PRACTICES

• 1000 INTRODUCTION
  • Resources Available to Practitioners
  • The Role of the Practitioner
  • Objectivity of the Practitioner
    • Advisory Engagements.
  • AICPA Standards and Other Guidance
    • AICPA Standards.
    • The AICPA Valuation Standards Subcommittee.
    • AICPA Valuation Designation.
    • AICPA Practice Aid.
  • AICPA Statement on Standards for Valuation Services
    • Scope of the Statement.
    • When Will the Standard Not Apply?
    • Engagement Acceptance Considerations.
    • Types of Engagements.
    • The Valuation Process.
    • Documentation.
    • Arriving at a Conclusion.
    • Valuation Report.
  • Standards and Guidance of Other Valuation Organizations
    • Standards of the American Society of Appraisers (ASA).
    • Standards of the Business Valuation Committee of ASA.
    • Code of Ethics and Standards of the Institute of Business Appraisers (IBA).
    • Standards of the Appraisal Foundation.
    • Standards of the National Association of Certified Valuation Analysts.
    • Standards of the International Business Brokers Association.
    • Guidelines of the Internal Revenue Service.
  • Impact of Accounting Guidance
    • FASB's Future Role in the Valuation Field.
  • Impact of Federal Legislation on Business Valuers
    • FIRREA.
    • Gramm-Leach-Bliley Act.
    • Treasury Department Circular No. 230.
    • Sarbanes-Oxley Act of 2002.
    • Pension Protection Act of 2006.
  • Organization of This Chapter
• 1001 OVERVIEW OF VALUATION TERMS AND METHODOLOGY
  • Definition of Value
    • Fair Market Value.
    • Intrinsic Value.
  • Fair Value in Accounting Literature
  • Valuation Premises
    • The Value of a Business Is Equal to the Present Worth of the Future Benefits of Ownership.
    • Value Is Not Always a Single Number.
    • Value Is Based on a Single Point in Time--the Valuation Date.
  • Defining the Company Being Valued
  • Valuation Approaches
    • Income Approach.
    • Market Approach.
    • Asset-based Approach.
  • Discounted Future Returns and Capitalized Returns Methods
    • Cash Flow.
    • Earnings.
    • Discount Rates and Capitalization Rates.
  • Value Multiples Involving Guideline Data
  • Underlying Asset Methods
  • Other Methods
  • Selecting Valuation Methods
    • Authoritative Guidelines.
    • Uniform Standards of Professional Appraisal Practice.
    • Revenue Ruling 59-60.
    • Court Precedents and IRS Pronouncements.
• 1002 PRE-ENGAGEMENT PROCEDURES
  • Engagement Acceptance
    • AICPA Standard Defines Business Valuation Engagement Considerations for Practitioners.
    • Making the Acceptance Decision.
    • Assessing Professional Competence.
    • Conflicts of Interest.
    • The Other Services Provided for the Company.
    • Understanding the Nature and Requirements of the Engagement.
    • Assessing the Feasibility of the Engagement.
    • Documenting Engagement Acceptance.
  • Preparing Work Programs
  • Developing Time and Fee Budgets
    • Fee Quotation.
    • Budget Considerations.
  • Engagement Letters
    • Importance of an Engagement Letter in a Valuation.
    • Necessary Features of an Engagement Letter.
  • Consultation with the Client's Attorney
• 1003 DATA GATHERING AND ANALYSIS
  • Working with the Attorney
  • What Type of Data Should Be Gathered?
    • Collect Data That Is Available or Determinable as of the Valuation Date.
    • Use a Checklist to Determine What Is Available.
  • Financial Information
    • Historical Financial Statements.
    • Interim Financial Statements.
    • Federal and State Tax Returns.
    • Prospective Financial Information.
    • Other Financial Information.
    • Preliminary Analysis of the Financial Information.
  • Legal Documents
  • Operational Data
    • The Company's Website.
    • Site Visits.
    • Interviews.
    • Other Documents.
  • Economic, Industry, and Market Data
    • Relating the Need for External Data to the Method to Be Used.
    • Identifying Key External Factors.
    • Electronic Resources.
  • Review and Adjustment of the Financial Statements
    • GAAP Adjustments.
    • Normalization Adjustments.
    • Normalization Adjustments Related to the Balance Sheet.
    • Normalization Adjustments Related to the Income Statement.
  • Income Taxes
    • Determination of Tax Provisions for Nontaxable Companies.
  • Financial Statement Analysis
• 1004 VALUATION METHODS AND TECHNIQUES
  • Discounted Future and Capitalized Returns Methods
    • When Is It Appropriate to Use a Discounted Future Returns Method versus a Capitalized Returns Method?
    • Capitalized Returns Methods.
    • Discounted Future Returns Methods.
    • Discount Rates and Capitalization Rates Are Related.
    • The Build-up Method.
    • Discount Rate for Cash Flow versus Discount Rate for Earnings.
    • Use of Present Value Tables.
    • How a Capitalization Rate Is Determined.
    • Capitalized Returns Methods.
    • Discounted Future Returns Methods.
    • Application of These Methods in Litigation Engagements.
  • Guideline Companies Methods
    • Transactions of Other Closely Held Companies.
    • Analysis of Similar Publicly Held Stock.
    • Comparing a Public Company to a Closely Held Company.
    • Determining the Appropriate SIC/NAICS Codes.
    • Using Closely Related Industry Codes.
    • Using SIC/NAICS Codes to Identify Potential Guideline Data.
    • On-line Databases.
  • Underlying Asset Methods
    • When Should the Underlying Assets Methods Be Applied?
    • Net Asset Value Method.
    • Tax Considerations Relating to the Net Asset Value Method.
    • When to Choose Liquidation Value.
  • The Excess Earnings Method
    • Developing a Rate of Return on Net Tangible Assets.
    • Developing a Capitalization Rate for a Company's Excess Earnings.
  • Other Methods
    • Multiple of Discretionary Earnings Method.
    • Rules of Thumb.
    • Company Specific Methods.
    • Analyzing Prior Stock Transactions of the Company Being Valued.
    • Valid Enforceable Contract.
  • Concluding Advice on Valuation Methods and Techniques
• 1005 WRAPPING UP THE ENGAGEMENT
  • Arriving at a Final Conclusion of Value
    • Weighting of Methods.
    • Factors to Consider in Weighting the Results of More Than One Valuation Method.
  • Applying Sanity Checks to the Estimate of Value
    • Recheck the Logic and Math.
    • Compare the Company Being Valued to Other Companies.
    • Test the Reasonableness of the Value from a Buyer's Perspective.
    • Computing the Payback Period.
    • Testing the Reasonableness of a Value from an Adversary's Perspective.
    • Add Back Excess and Nonoperating Assets.
  • Application of Premiums and/or Discounts
    • Control Premium.
    • Minority Interest Discount.
    • Discount for Lack of Marketability.
    • Restrictive Buy/sell Agreements.
  • Obtaining a Representation Letter
  • Workpaper Documentation, Performing the Appropriate Workpaper Reviews, and Resolving Professional Disputes
    • Workpaper Documentation.
    • Engagement Review.
    • Resolving Professional Disputes.
• 1006 VALUATION REPORTS
  • General Guidelines
  • Updating Reports
  • Professional Standards
    • AICPA Standards.
    • Standards of Professional Appraisal Organizations.
    • ASA Guidelines.
    • The Appraisal Foundation Standards.
    • ASA Business Valuation Committee Standards.
    • IBA Business Appraisal Standards.
    • NACVA Professional Standards.
  • Other Guidelines
    • IRS Guidelines.
    • DOL Requirements.
  • Report Checklist
  • Valuation Reports for Use in a Court of Law
    • ASA Requirements.
    • The Appraisal Foundation Requirements.
    • IBA Requirements.
    • Reporting When Testifying as an Expert in a Civil or Criminal Case.
• 1007 VALUING PROFESSIONAL PRACTICES IN LITIGATION SITUATIONS
  • How Professional Practices Differ from Other Businesses
    • Professional Licenses.
    • Reliance on the Professional.
    • Nature of Services Performed.
    • Nature of the Client Base.
    • Typical Accounting Policies.
    • Value Heavily Dependent on Intangibles.
  • Data Gathering for the Professional Practice
    • Statutory Environment.
    • Regulatory Environment.
    • Financial Information.
    • Legal Documents.
    • Operational Data.
    • Adjustments to Financial Information.
    • Cash versus Accrual Accounting.
    • Work in Process.
    • Contingent Work in Process.
  • Accrued Expenses and Deferred Revenues
    • Contingencies.
  • Valuation Methods
    • Guideline Methods.
  • Professional versus Practice Goodwill in Divorce Engagements
    • Professional Goodwill.
    • Practice Goodwill.
    • Goodwill in a Professional Practice.
    • Treatment of Professional and Practice Goodwill in Litigation Valuations.
    • Noncompete Agreements.
  • Valuation of Professional Licenses, Celebrity Goodwill, and Other Types of Enhanced Earnings in Divorce Engagements
    • Professional Licenses.
    • Professional Designation.
    • Celebrity Goodwill.
    • Enhanced Earnings Concepts.
  • Wrapping up the Engagement
    • Nature of the Business and Its Assets.
    • Purpose of the Valuation and Definition of Value.
    • The Premise or Premises of Value.
    • Quantity and Quality of Data Available.
    • Sanity Checks.
    • Premiums and/or Discounts.
• APPENDIX 10A: Practice Aids
  • APPENDIX 10A-1: Valuation of a Closely Held Business Procedures Checklist
  • APPENDIX 10A-2: Documentary Evidence Listing
• APPENDIX 10B: Factors to Consider in Selecting Valuation Methods
• APPENDIX 10C: Revenue Ruling 59-60
• APPENDIX 10D: Revenue Ruling 68-609
• APPENDIX 10E: Present Value Tables
• APPENDIX 10F: Example Business Valuation Report
• APPENDIX 10G: Additional Sources of Information Relating to Business Valuations

CHAPTER 11: PROVIDING EXPERT WITNESS SERVICES

• 1100 INTRODUCTION
  • CPA's Role in Litigation Services Engagements
    • Expert Consultant's Work-product Privilege.
    • Retaining and Compensating the Expert.
    • Independence Issues.
  • Federal Rules
    • Chapter Overview.
• 1101 OVERVIEW OF THE CIVIL LITIGATION PROCESS
  • Investigation and Pleadings
  • Discovery
    • Requests for Production of Documents.
    • Interrogatories.
    • Requests for Admissions.
    • Subpoenas.
    • Depositions.
    • CPA-expert's Role in Depositions.
  • Motion Practice and Negotiation
    • Motion in Limine.
    • Daubert Challenge.
    • General Electric v. Joiner.
    • Kumho Tire.
    • Revision of Rule 702.
    • Impact of a Daubert Challenge.
    • Defending Methodology from a Daubert Challenge.
    • Settlement Negotiations.
  • Trial and Appeal
• 1102 OVERVIEW OF THE CRIMINAL LITIGATION PROCESS
  • Filing Criminal Charges
  • Arresting and Charging the Defendant
    • Fourth Amendment.
    • Fifth Amendment.
    • Preliminary Hearings.
    • Grand Jury.
  • Arraignment
  • Discovery
  • Pretrial Motions
  • Trial and Appeal
    • Burden of Proof.
    • Sixth Amendment.
    • Evidence.
    • Appeal.
• 1103 PREPARING FOR EXPERT WITNESS TESTIMONY
  • Understanding Significant Aspects of the Case
    • When the Expert's Testimony Will Hurt the Client's Case.
  • Documenting Support for Opinions
    • Reporting When the CPA Serves as an Expert Witness.
  • Possessing Good Witness Behavioral Skills
    • Communication Skills.
    • Recalling Pertinent Facts.
    • Thinking under Pressure.
    • Concentration and Endurance.
• 1104 GENERAL GUIDELINES FOR PRESENTING EXPERT WITNESS TESTIMONY
  • Opportunities to Testify
  • Answering Questions
    • Tell the Truth.
    • Do Not Guess.
    • Using Notes.
    • Do Not Memorize.
    • Prepare for Testimony.
    • Listening.
    • Don't be Argumentative--Know Which Truths to Defend.
  • Avoiding the Appearance of Advocacy
    • Answering a Judge's Questions.
  • Witness Behavior
    • Dress Conservatively.
    • Videotaped Depositions.
    • Be on Time.
    • Behavior When Not Testifying.
    • Contact with Jurors.
• 1105 PRETRIAL TESTIMONY
  • Depositions
  • Preparing for Deposition Testimony
  • Providing Deposition Testimony
    • Objection Raised by the Client's Attorney.
    • Answering Questions at Depositions.
    • Questions from the Client's Attorney.
  • Preliminary Hearings and Grand Jury Proceedings
• 1106 DIRECT EXAMINATION TESTIMONY
  • Expert's Qualifications
    • Is the Expert Qualified to Provide That Help?
    • Preparing an Effective Curriculum Vitae.
    • Opposing Attorney's Efforts to Disqualify the Expert Witness.
    • Evidence about an Expert's Character.
  • Scope of Assignment
  • Materials Reviewed
  • Methods Used and Conclusions Reached
  • Presentation Style
    • Use of Demonstrative Exhibits.
• 1107 CROSS-EXAMINATION TESTIMONY
  • Introduction
  • The Witness's Conduct
    • Where to Look.
    • Taking the Initiative.
  • Presentation Style
    • Responding to Questions.
    • Avoid Arguing with the Attorney.
    • Repetitive or Irrelevant Questions.
    • Unnecessary Words.
    • Hypothetical Questions.
    • Didn't You Say Something Different at Your Deposition?
    • Dealing with Defensiveness.
    • Learning to Recognize Difficult Questions.
  • The Attorney's Conduct
    • Approaching the Witness.
    • The Shouting Attorney.
• 1108 RE-DIRECT TESTIMONY
• 1109 RE-CROSS TESTIMONY
• 1110 REBUTTAL
• 1111 RULES OF EVIDENCE
  • Overview of the Rules
  • Background
  • Relevancy of Evidence
    • Rule 401--Definition of "Relevant Evidence."
    • Rule 402--Relevant Evidence Generally Admissible; Irrelevant Evidence Inadmissible.
    • Rule 403--Exclusion of Relevant Evidence on Grounds of Prejudice, Confusion, or Waste of Time.
  • Witnesses
    • Rule 615--Exclusion of Witnesses.
  • Expert Testimony
    • Rule 701--Opinion Testimony by Lay Witnesses.
    • Rule 702--Testimony by Experts.
    • Rule 703--Bases of Opinion Testimony by Experts.
    • Rule 704--Opinion on Ultimate Issue.
    • Rule 705--Disclosure of Facts or Data Underlying Expert Opinion.
    • Rule 706--Court-appointed Experts.
  • Hearsay
    • Rule 803--Hearsay Exceptions; Availability of Declarant Immaterial.
  • Use of Originals
    • Rule 1001--Definitions.
    • Rule 1002--Requirement of Original.
    • Rule 1003--Admissibility of Duplicates.
    • Rule 1004--Admissibility of Other Evidence of Contents.
    • Rule 1005--Public Records.
    • Rule 1006--Summaries.
    • Rule 1007--Testimony or Written Admission of Party.
    • Rule 1008--Functions of Court and Jury.
• 1112 FEDERAL RULES OF CIVIL PROCEDURE
  • Electronic Documents
  • Depositions and Discovery
    • Rule 26--General Provisions Governing Discovery; Duty of Disclosure.
    • Written Reports.
    • Information Considered.
    • Supplementing the Written Report.
    • Publications.
    • List of Other Cases.
    • Are Written Reports Always Required?
    • Deposing the Expert.
  • Depositions
    • Rule 30--Depositions upon Oral Examination.
  • Interrogatories
    • Rule 33--Interrogatories to Parties.
  • Requests for Document Production
    • Rule 34--Production of Documents and Things and Entry upon Land for Inspection and Other Purposes.
  • Sanctions for Nonproduction
    • Rule 37--Failure to Make Disclosure or Cooperate in Discovery; Sanctions.
• 1113 FEDERAL RULES OF CRIMINAL PROCEDURE
  • Preparation for Trial
    • Rule 15--Depositions.
    • Rule 16--Discovery and Inspection.
  • Trial
    • Rule 26--Taking of Testimony.
    • Title 18 of the United States Code.
• 1114 PREPARING EFFECTIVE DEMONSTRATIVE EXHIBITS
  • Preparing Effective Demonstrative Exhibits
  • General Concerns Applicable to All Exhibits
    • Presenting Financial Statements and Financial Statement Elements.
    • Preparing Graphs and Charts.
  • Types of Graphs
    • Bar Graphs.
    • Line Graphs.
    • Area Graphs.
    • Combination Line and Column Graphs.
    • Pie Graphs.
    • Overlays.
    • Use of Color.
  • Types of Charts
  • Using a Graphic Designer
  • Preparing Graphs and Charts In-house
  • Understanding the Underlying Information
  • Notification of Exhibits
    • Reviewing the Exhibits of the Opposing Expert.
• APPENDIX 11A: Additional Sources of Information Relating to Expert Witnesses
• APPENDIX 11B: U.S. Courts of Appeal
• APPENDIX 11C: Internet Sites for Legal Research

CHAPTER 12: PROVIDING SERVICES TO THE TRIER OF FACT (OR FACILITATOR) OR AS A JOINT EXPERT

• 1200 INTRODUCTION
• 1201 BACKGROUND
  • The CPA's Role in Providing Assistance to the Trier of Fact or Facilitator
  • The CPA's Role as a Jointly Retained Expert
• 1202 ORGANIZATION AND SCOPE OF THIS CHAPTER
• 1203 OVERVIEW OF LEGAL ENVIRONMENT
  • Legal Basis for Appointment of Experts by the Court
  • Legal Basis for Appointment of Special Masters
  • Legal Basis for Appointment of Jointly Retained Experts
  • Scope of Work
• 1204 PROVIDING SERVICES TO THE TRIER OF FACT OR FACILITATOR
  • Appointment of the CPA to Provide Assistance to the Trier of Fact or Facilitator Reporting to the Court
    • Receiver.
    • Examiner.
    • Accountant to the Debtor-in-possession or Trustee.
    • Trustee.
    • Financial Adviser to Creditors' Committee.
    • Court's Expert--Testifying.
    • Court's Expert--Consulting.
    • Special Master.
• 1205 SERVING AS A JOINTLY RETAINED EXPERT
  • Serving as a Jointly Retained Expert in Marital Dissolution Matters
  • Serving as a Jointly Retained Expert in Insurance Disputes
  • Serving as a Jointly Retained Expert for a Determination of Value
  • Serving as a Jointly Retained Expert for Mediator or Arbitrator
• 1206 GENERAL ADMINISTRATIVE AND PROCESS INFORMATION
  • Reaching An Understanding
  • Allocation of Fees
  • Professional Liability
  • Use of Retainers
  • Changes to the Scope of Work
  • Communication Among the Parties and the Court
• 1207 REPORTING
  • Issuing a Draft Report
    • Review the Results for Reasonableness and Re-check the Logic and Math.
    • After the Expert Has Supplied Preliminary or Final Reporting.
• APPENDIX 12A: Stipulation Appointing Evidence Code ?730 Expert

CHAPTER 13: ALTERNATIVE DISPUTE RESOLUTION

• 1300 INTRODUCTION TO ALTERNATIVE DISPUTE RESOLUTION
  • ADR Methods
  • Organization and Scope of This Chapter
  • When Is ADR Appropriate?
  • The Alternative Dispute Resolution Act of 1998
  • Uniform Mediation Act
  • Model Mediator Standards
  • Mediator Designation and Certification Initiatives
  • Arbitration Legislation
  • Pending Legislation
  • Principles for ADR Provider Organizations
  • California Arbitrator Ethics Standards
  • Advantages of Mediation and Arbitration
  • Sources of Information on Alternative Dispute Resolution
• 1301 THE CPA'S ROLE IN ALTERNATIVE DISPUTE RESOLUTION
  • Attest Clients
  • Expert Witness Engagements
  • Consulting Engagements
  • Commonly Provided Services
  • CPAs Serving as Mediators or Arbitrators
• 1302 ADR ORGANIZATIONS
  • The American Arbitration Association
  • Judicial Arbitration & Mediation Service
  • CPR Institute for Dispute Resolution
  • Finance Industry Regulatory Authority
  • Association for Conflict Resolution
  • American Bar Association
• 1303 MEDIATION
  • Assisting the Client in Choosing a Mediator
  • The Role of the Mediator
    • Identifying the Major Issues to Be Resolved.
    • Determining Ways to Resolve the Issues.
    • Settlement Negotiations.
  • Compensation
• 1304 ARBITRATION
  • Overview
  • Assisting the Client in Choosing an Arbitrator
  • The Arbitration Hearing
  • Arbitration Characteristics of Particular Interest to an Expert
• 1305 COMBINED MEDIATION/ARBITRATION
• 1306 OTHER DISPUTE RESOLUTION METHODS
  • Minitrials
  • Summary Jury Trial
  • Role of the Expert in Minitrials and Summary Jury Trials
  • Collaborative Law
  • Role of the Expert in Collaborative Law
• APPENDIX 13A: Mediation and Arbitration Organizations
• APPENDIX 13B: Additional Sources of Information Relating to Mediation and Arbitration

CHAPTER 14: INSURANCE CLAIMS

• 1400 INTRODUCTION
  • Potential for Litigation
  • The CPA's Role in Cases Involving Property Damage or Business Interruption Claims
  • Organization and Scope of This Chapter
• 1401 TERMINOLOGY AND RISKS RELATED TO PROPERTY DAMAGE INSURANCE
  • Overview
    • Building Coverage.
    • Contents Coverage.
  • Types of Risks Covered by Property Damage Policies
  • Valuation of Insured Property
  • Co-insurance Penalty
• 1402 MEASURING A PROPERTY DAMAGE LOSS
  • Step 1--Meet with the Client and the Client's Attorney and Define the Terms of the Engagement
  • Steps 2 and 3--Request Copies of the Documents Needed in the Case, Including a Copy of the Insurance Policy, and Obtain a List of the Missing or Damaged Assets
  • Steps 4 and 5--Read the Insurance Policy; Obtain Clarification for Any Unclear Provisions; and Consider Meeting with the Insurance Broker, an Attorney, and a Public Adjuster to Gain an Understanding of the Intended Coverage of the Policy
  • Step 6--Value the Property Using the Value Model Outlined in the Policy
  • Step 7--Reduce the Claim by the Deductible and Co-insurance Penalty
  • Step 8--If Requested, Prepare the Written Claim Documentation
  • Step 9--If Requested, Participate in Settlement Negotiations
  • Step 10--If Requested, Assist the Attorney in Any Litigation
• 1403 TERMINOLOGY AND RISKS RELATED TO BUSINESS INTERRUPTION INSURANCE
  • Overview
  • Types of Risks Covered by Business Interruption Policies
  • Actual Loss Sustained
  • Representative Base Period
  • Co-insurance Penalty
• 1404 MEASURING A BUSINESS INTERRUPTION LOSS
  • Step 1--Meet with the Client and the Client's Attorney and Define the Terms of the Engagement
  • Step 2--Request Copies of the Documents Needed in the Case, Including a Copy of the Insurance Policy
  • Steps 3 and 4--Read the Insurance Policy; Obtain Clarification for Any Unclear Provisions; and Consider Meeting with the Insurance Broker, an Attorney, and a Public Insurance Adjuster to Gain an Understanding of the Intended Coverage of the Policy
  • Step 5--Determine the Period of Restoration
  • Step 6--Calculate the Amount of Lost Revenue
    • Overview.
    • Lost Revenue from Lost Sales of the Company's Products.
    • Sales Value of Lost Production.
    • Calculating the Sales Value of Lost Production.
    • Lost Sales.
    • Other Lost Revenue.
  • Step 7--Calculate the Product Costs and Continuing Expenses
    • Ordinary Payroll.
  • Step 8--Calculate Expenses Incurred to Avert or Reduce the Loss
    • Expediting Expenses.
    • Extra Expenses.
  • Step 9--Calculate the Co-insurance Penalty
  • Step 10--Check for Duplication with the Property Damage Claim
    • Inventory.
  • Step 11--Calculate the Amount of the Claim by Considering Steps 6 through 10
  • Step 12--If Requested, Prepare the Written Claim Documentation
  • Step 13--If Requested, Participate in Settlement Negotiations
  • Step 14--If Requested, Assist the Attorney in Any Litigation
• APPENDIX 14A: Calculation and Presentation of a Business Interruption Claim

Continuing Professional Education

CPE & Training Solutions

INDEX