Forensic Accounting Tools for Complex BV Engagements The intersection of business valuation and forensic accounting creates revenue

opportunities for valuation practitioners. Mark S. Warshavsky of Gettry Marcus Stern & Lehrer, CPA, P.C., reminded the audience at last months AICPA business valuation conference that many complex valuation engagements require forensic accounting. To validate this point, Warshavsky quoted from BVRs case digest of In re Nellson Nutraceutical titled: Experts Left in the Dark by Deliberately Manipulated Management Projections, Business Valuation Update (April, 2007): Its every valuation experts nightmare, learning after the fact that the long-range financial plans provided by management did not represent their best and most honest thinking, to use the Bankruptcy Courts more delicate phrasing. Warshavsky presented a handful of practical forensic accounting tools and techniques available. These include: Full-and-false inclusion methodology is used to identify that the proper data is included in an investigation, but unnecessary data is excluded. Genogram depicts prior and existing associations of the target individual/entity, encompassing all relevant parties, both related and unrelated. The process map visually guides the practitioner through the logical actions of a forensic accounting assignment. The methodology starts at the earliest stage of an assignment and progresses through the final stage, which is testimony delivery pursuant to a trial. Proof of cash method is more detailed and extensive than bank reconciliation. Time line analysis is a powerful graphic representation of the entire sequence of financial, and non-financial, events presented in an organized, chronological fashion for a particular topic. Digital analysis, employing computer-assisted forensic tools and techniques, is an innovative method of analyzing digit and number patterns of data sets in an effort to identify anomalies. Black Book Online (www.blackbookonline.info) is a useful starting point to investigate the people associated with the money in a case, including public records searches.

 KnowX (www.knowx.com) is another helpful website for background checks, asset searches and more. The business valuator who has financial forensic knowledge can bring more expertise and value to the assignment, which can play a vital role in developing the attorneys litigation strategies.
Reprinted with permissions from Business Valuation Resources, LLC

To learn more about GMSL's Business Valuation and Litigation Support Group and how we might be able to help you better understand the different standards of value employed in a business valuation, please feel free to contact: Mark S. Warshavsky Partner-in-Charge Business Valuation and Litigation Support Group Phone: (516) 364-3390 ext. 121 Email: mwarshavsky@gmslny.com Andrew P. Ross Partner Business Valuation and Litigation Support Group Phone: (516) 364-3390 ext. 246 Email: aross@gmslny.com www.gmslny.com The information contained in this communication is provided for informational purposes only, and should not be construed as legal or accounting advice on any subject matter. It is not intended or written to be used, and it cannot be used, for a particular matter. These articles are prepared to present matters of general interest relating to business valuation, forensic accounting and litigation support topics. They do not render an opinion by Gettry Marcus Stern & Lehrer, CPA, P.C. (GMSL), its partners, or employees on any technical matter; but rather are of an educational nature. GMSL disclaims all liability with respect to actions taken or not taken based on any or all of the contents of this communication.