What We Know
Accounting malpractice claims typically involve highly technical and complex accounting and auditing rules and principles. To effectively analyze these claims, one must have both in-depth knowledge of the specific rules and principles at issue and also the professional experience to understand how these rules and principles should be applied in practice. FSG’s accounting experts include professionals with years of experience at major accounting firms and senior faculty at top-tier universities around the country. Our blending of practical experience and thought leadership provides clients with unusually nuanced expertise for any case involving malpractice claims.
FSG accounting experts understand financial statements and the interrelationships within and between them. Our strength lies in our ability to cut through the “noise” that sometimes clouds financial statements and confounds accounting analysis, and in our ability to effectively interpret and communicate the results of complex accounting analyses. Together, these skills enable our accounting experts to form and advance well-supported, accurate, and objective opinions.
Litigation often involves a number of different damages claims, such as lost profits, unjust enrichment, and diminution of business value, to name just a few. FSG’s experts are adept at identifying and implementing methods of analyzing damages that are appropriate to specific facts and issues of any given case. Additionally, we have extensive experience analyzing and assessing the methods and assumptions used by other experts. This experience enables us to identify quickly any theoretical or mathematical flaws embedded in an opposing expert’s work, as well as inconsistencies with proper and accepted practices. Whether you need an objective affirmative assessment of damages or a detailed analysis of an opposing expert’s computations, you can rely on FSG’s experts to quantify the true economic impact of any litigated event.
Corporate Reporting Issues
Many business disputes have their genesis in financial reporting and disclosure decisions. Applicable rules and principals are becoming increasingly complex, with a growing focus on form over function, multiple standard-setting authorities, and increasing application of judgment. More and more frequently, questions about the reasonableness and appropriateness of disclosures lead to disputes and litigation. FSG’s accounting experts are recognized authorities on GAAP and GAAS, with extensive industry experience and service to the profession, including participation on standard setting and other professional committees. Our experts use their knowledge and experience to understand the circumstances under which reporting decisions are made and as the basis for independent, sound, and well-supported opinions.
Ethical standards for professionals are often subjective and require interpretation. FSG’s experts have a thorough understanding of ethical guidelines and other standards of care for CPA’s and other licensed professionals, such as CFA’s, ASA’s and CFE’s. Our accounting experts have dealt with these issues in their roles as senior leaders at major accounting firms, as members of standards-setting bodies, and as members of corporate boards.
Fair Value Analysis
The adoption of fair value accounting in the US and internationally has brought new challenges in corporate financial reporting. The most recent manifestation of these challenges is the subprime debt crisis, which stressed financial markets and made it difficult for companies to value certain financial assets. FSG’s professionals (in multiple practice areas) have deep expertise in analyzing and valuing complex securities and instruments, in even the most difficult environments.
FSG’s professionals are skilled at evaluating and performing a host of different kinds of financial analyses, including ones involving profitability, liquidity, solvency, and stability of a business enterprise or operating unit, among others. We have worked with clients in a number of high-profile cases that required the application of complex financial concepts to extraordinarily large data sets. As always, we support our opinions with sound analyses that are grounded in case facts, and strive to communicate our results and opinions clearly and effectively.
FSG accounting experts have assisted a number of companies with SEC investigations and with uncovering and pursuing internal and external fraud. FSG professionals collectively have had years of experience auditing corporate financial statements, analyzing internal controls, and assessing financial information systems. We are skilled at uncovering fraud and tracing the movement of funds through various bank accounts. Often, we can recommend controls to improve the reliability of our clients’ financial systems. In addition to being CPA’s, many of our accounting professionals have enhanced their qualifications with certifications such as Certified Fraud Examiner (CFE) and Certified in Financial Forensics (CFF).
FSG accounting experts have helped lawyers and companies pursue and defend directors, officers, and senior executives in disputes involving alleged accounting improprieties and audit malpractice. In addition to being CPA’s, a number of our professionals are Certified Fraud Examiners and are certified in Financial Forensics.
Over the past decade, accounting frauds have roiled the financial markets and have spurred massive amounts of corporate, shareholder and class action litigation. As a result, it has become increasingly clear that firms should take a proactive approach to fraud prevention. FSG has accounting experts, Certified Fraud Examiners, and finance professionals who can devise strategies and implement internal controls to help corporations protect against fraud and ensure proper financial security.
Solvency analysis is often critical in preference and avoidance actions in a bankruptcy. In addition to being familiar with the accounting principles and financial statements, FSG’s experts are adept at interpreting the results of various analyses to form well supported opinions. Our experts have successfully presented solvency opinions in bankruptcy courts throughout the country. Additionally, our experts have also provided solvency opinions to the boards and management teams of companies involved in leveraged transactions.
FSG’s experts have assisted lawyers and clients in a wide variety of tax related disputes, ranging from the tax implications of complex structured transactions to estate tax valuations and transfer pricing. In addition to our knowledge of the tax laws, we are familiar with precedents set in tax courts and prepare our opinions to comply with these precedents. As always, our testimony is presented clearly and concisely, in a manner that would allow those not familiar with tax law to fully understand the issues at hand.
Finance Scholars Group is not a certified public accounting firm and does not provide audit, attest, or public accounting services.
Practice Area Contact: Terry Lloyd, CPA, CFA
What We’ve Done
FSG has been retained on high-profile accounting investigations involving a variety of industries. Our experts have consulted or testified on matters involving financial statement misstatements, Ponzi schemes, fraud, and trading practices. They have advised accounting firms, regulators, and individual defendants on matters related to compliance with standards, professional liability, regulatory issues, and damages. Examples of our recent casework include:
- Retained as experts in various actions brought by the SEC and the Public Company Accounting Oversight Board (PCAOB) against accounting firms, including claims against individual partners and managers. Many such matters have related to accounting and auditing issues encountered in the financial services industry. Recently, FSG experts have evaluated audits in relation to PCAOB standards on issues of valuation of investments and transfers of financial assets under FAS 140.
- Retained as experts or consultants on various confidential matters involving professional liability and regulatory issues on behalf of the large accounting firms, including BDO, Deloitte, Ernst &Young, Grant Thornton, KPMG, and McGladrey.
- Retained by the SEC on accounting and/or damages issues in various matters alleging false and misleading financial Retained as the accounting expert for Delphi Corporation executives pursuant to an SEC action that alleged certain post- General Motors spin-off transactions had been inappropriately reported in publicly filed documents.
- Retained by the SEC on accounting and/or damages issues in various matters alleging false and misleading financial statements by corporations and their senior executives.
- Retained by the Office of Federal Housing Enterprise Oversight to investigate the application of FAS 133 at Freddie Mac.
- Retained on behalf of Barclays Bank to review fair value accounting issues pertaining to its $45 billion acquisition of Lehman Brothers’ broker dealer business and allegations of a $5 billion secret discount conferred through the valuation of acquired securities. Work included comprehensive analysis of valuation computations involving security positions and accounting and auditing records. Barclays was exonerated of these allegations at trial, and no damages were awarded to Plaintiff.
- Retained as the forensic accounting expert in a complex, billion-dollar real estate/public company privatization transaction.
- Retained as a forensic expert to examine trading, including market timing and late trading, at a leading investment bank.
- Retained to lead forensic accounting efforts on behalf of Stephen Cooper, the interim CEO of post-petition Enron.
- Retained by an international agribusiness company to perform forensic reconstruction of thousands of cash, futures, and forward transactions in defense of class action alleging market manipulation and hundreds of millions of dollars of damages.
- Provided accounting consultation services to the court-appointed examiner in connection with the SEC’s investigation of Spiegel, Inc.