Expert witness qualifications and selection

Pages165-171
Publication Date01 Apr 2005
DOIhttps://doi.org/10.1108/13590790510624954
AuthorDerk G. Rasmussen,Joseph L. Leauanae
SubjectAccounting & finance
Expert Witness Quali®cations and Selection
Derk G. Rasmussen and Joseph L. Leauanae
INTRODUCTION
This paper discusses the criteria and quali®cations that
should guide the selection of a forensic accounting
expert witness. The discussion draws distinctions
between the dierent skill sets that exist within foren-
sic accounting and how those skill sets drive the selec-
tion of forensic accounting experts. These distinctions
and classi®cations are used as a gauge for identifying
appropriate experts in a variety of situations.
SCOPE
This paper is not intended as a treatise or `how-to'
manual on the selection of an expert; rather, it is
intended to provide the reader with information
regarding the criteria that should be considered and
weighed in selecting a forensic accounting expert.
While the paper is intended for a wide audience, it
addresses issues pertinent to attorneys evaluating
experts; practitioners seeking to enhance their viabi-
lity as an expert; and those in academia, including
forensic accounting instructors and students.
AREAS OF EXPERTISE WITHIN
FORENSIC ACCOUNTING
The term `forensic accounting' has come to represent a
fairly broad range of services that can be classi®ed into
several distinct skill sets. Each skill set represents an
area of specialisation within forensic accounting that
requires additional expertise and training. This
added expertise and training is distinguished by sepa-
rate quali®cations and certi®cations.
The types of forensic accounting skill sets are cate-
gorised into the following three categories:
(1) Investigative accounting
(2) Economic loss calculation
(3) Business and intangible asset valuation.
Investigative accounting
Investigative accounting refers to the process
employed to trace funds or to reconstruct accounting
information. This task has traditionally been under-
taken by accountants because of their detailed under-
standing of the ®nancial accounting process and
because they are more aptly trained to trace speci®c
accounting transactions and to identify potential
®nancial statement manipulation.
Investigative accounting may be useful in any situa-
tion where doubt exists as to the integrity of account-
ing data. Investigative accounting may be applied in
the following types of cases:
(1) Fraud detection, documentation, and prosecu-
tion/defence in criminal litigation
(2) Shareholder disputes
(3) Ocers' and directors' litigation
(4) Asset and income searches
(5) Reconstruction of accounting records because of
natural disasters, such as ¯oods, ®res and earth-
quakes
(6) Marital dissolution
(7) Insolvency and bankruptcy.
Economic loss calculation
Economic loss calculation refers to the determination
of potential lost pro®t due to the occurrence of a par-
ticular event or series of events. Typically these calcu-
lations evaluate damages suered relative to the past,
present and future performance of companies and
individuals under varying assumptions and scenarios.
Both economists and forensic accountants tradi-
tionally undertake these calculations. Forensic accoun-
tants are particularly eective at economic loss
calculations because, unlike economists, they can
interpret and assess lost revenue and determine the
associated ®xed and variable expenses.
Economic loss calculations may be useful in any
situation where an economic loss may have occurred.
Economic loss calculations may be performed in the
following types of cases:
(1) Business interruption
(2) Lost pro®ts/earnings
(3) Wrongful discharge/death
(4) Personal injury
(5) Breach of contract
(6) Loss of goodwill
(7) Price erosion
(8) Unjust enrichment
(9) Prejudgment interest
Page 165
Journal of Financial Crime Ð Vol. 12 No. 2
Journalof FinancialCrime
Vol.12,No. 2,2004,pp. 165 ±171
#HenryStewart Publications
ISSN1359-0790

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