As with most of the work done by forensic accountants, the results of the lifestyle analysis can be skewed if “special” items are not treated correctly. Various cash receipts and expenditures of money by the family can have an impact on the calculations. Statutes, their interpretations, and case law may provide little to no guidance on the special items, since it is rare that the family lawyer encounters them.

In this chapter, we address some of the special situations that can occur in a divorce and will impact the lifestyle analysis. As with all of the material in this book, your local rules must be considered and will take precedence over any guidance offered here. Continue reading

Closely held businesses present special challenges in the family law setting. Typically, only one spouse is actively involved in the business. Therefore, not only does the spouse control the family’s finances, but he or she also controls all of the records of the business. When the spouse who does not work actively in the business attempts to quantify the income from the business or the value of the business, the spouse who works in the business daily can purposely (and often very effectively) obstruct efforts to get accurate and complete data.

Certain types of businesses, such as restaurants and retail stores, can be prone to manipulation because they have so many cash transactions. Construction companies, real estate ventures, and auto dealerships are notorious for “creative” bookkeeping. Professional service providers, such as doctors, dentists, and attorneys, are at risk for financial maneuvering because it is so difficult to verify the amount of professional services actually provided to patients or clients. Continue reading

After the number crunching is complete, the results are assembled into a report the attorneys and the court can understand. The expert must assume that the readers of the report have no accounting or financial background. The report must be easy to understand, with exhibits and attachments supporting the opinions set forth in the report.

The Expert’s Report

In most cases, the work of the financial expert will be summarized in a written report, with selected supporting documentation attached. Occasionally a written report will not be produced, but this is not recommended. The financial issues can be complicated, and it is almost always beneficial to have the facts laid out on paper so the attorney and the judge have a roadmap of the issues. Continue reading