J.H. Cohn's Forensic Accounting and Litigation Support Practice is nationally recognized for its ability to expose and analyze issues of multifaceted complexity. Our expertise in gathering, analyzing, and interpreting financial data equips counsel, arbitrators, management, and others with the intelligence necessary to quickly make informed decisions. Our professionals have provided litigation support services and/or expert witness testimony in Federal District Courts, Bankruptcy Courts, State Courts, Tax Courts, as well as before the U.S. Supreme Court.
Our team utilizes sophisticated forensic techniques and advanced computer technology to achieve the best possible outcome in the shortest period of time. We are skilled at evidence discovery and in reconstructing accounting, electronic, and business records to uncover essential facts. We custom craft the right solutions that solve financial challenges and manage the risk associated with them. Situations that may require our authoritative, persuasive, and results-driven forensic accounting and litigation support team include:
- Asset tracing and recovery
- Banker/lender collateral investigations
- Breach of contractual obligations
- Business intelligence leak investigations
- Buy-sell agreements and disputes
- Class-action suits
- Civil and criminal investigations
- Cross-examination of adversary experts
- Damage calculations, discovery, and critiques
- Dispute resolution services
- Economic loss claims
- Fraud investigations
- Kickback schemes
- Misappropriation of funds or assets
- Post-acquisition purchase price disputes
- Professional malpractice claims
- Royalty compliance services
- Securities fraud and SEC actions
Accounting Malpractice Claims
Investigations of accounting malpractice claims require specialized knowledge of technical issues relating to Generally Accepted Accounting Principles and Generally Accepted Auditing Standards. Our forensic experts combine that skill set with the expertise to assess loss causation and damages. We have served as an expert witness to both plaintiffs and defendants in accounting malpractice matters. Our investigation focuses on the following issues:
- Did the auditors breach their duties by failing to exercise reasonable care?
- Did the auditors negligently or recklessly perform the audit?
- Did the auditors fail to detect material errors and/or irregularities in the client’s financial statements?
The depth of the Firm’s accounting and auditing practice enhances our technical expertise in the assessment of malpractice. As accountants and consultants for the American Institute of Certified Public Accountants since 1987, we have developed the reputation as “The Accountants’ Accountant.”
Select Accounting Malpractice Engagement
- Our role as financial advisors to the unsecured creditors committee of this college bookstore retailer and wholesaler included the monitoring of activities during the company’s Chapter 11 liquidation. Upon confirmation of the Liquidating Plan, we assumed the duties of Liquidating Supervisor. This role included the filing of actions against various parties, including malpractice actions against the Company’s former auditors. We prepared expert reports regarding these actions, provided deposition testimony and participated in settlement negotiations that resulted in a favorable outcome for the estate.
Damage Analysis
Economic losses represent the difference between what an entity might have accomplished but for the detrimental actions of another party or the damaging effects of an event. Our professionals are experts in accurately assessing and interpreting the relationships between actual performance, but-for performance, and the present value of past and future losses. When disagreements arise as a result of disparate claims between stakeholders, our professionals have the expertise to appropriately assess and consider the weight of the evidence.
Select Damage Calculation Engagements
- The BIS Group was engaged as the damage expert in connection with malpractice arbitration. The matter, commenced by a large insurance/financial services firm against an accounting firm, related to the accounting firm’s performance of an agreed-upon procedures engagement. We provided financial analysis in relation to damages claimed by the insurance firm and prepared an expert report. This report was instrumental in reaching a settlement favorable to our client.
- A leading financial institution retained our group to quantify damages caused to it by a large jewelry manufacturer's fraudulent activities. These wrongdoings included the creation of fictitious customers and sales, manipulation and mis-posting of customers' cash receipts, delays in recording of returns and allowances, inaccurate inventory reporting, and the preparation of inaccurate borrowing base certificates. The BIS Group investigated, identified, and quantified the losses resulting from these fraudulent activities. We obtained significant recoveries for our client, through the preparation and filing of amended income tax returns and income tax refund claims. Additionally, we analyzed accounts receivable activity and were instrumental in counsel’s collection efforts of accounts receivable.
Forensic Accounting
The BIS Group is called upon when circumstances dictate the need for a forensic accounting team with an unparalleled breadth of intellectual capital. Our clients rely on our multifaceted experiential knowledge to rapidly investigate, identify, and assess a myriad of complex situations. Years of experience allow our team to thoroughly and effectively analyze the most complicated financial issues, reveal discrepancies often undetected by others, and present our findings in a clear and concise manner.
We are proficient in examining and analyzing voluminous financial records and other data to determine whether historical business dealings resulted in misstated finances, securities fraud, or other pecuniary offenses to specific parties. BIS professionals use a team-oriented approach to leverage their years of experience in forensic accounting, fraud examinations, and due diligence investigations to provide in-depth, comprehensive, and favorable-results focused solutions.
Select Forensic Engagements
- J.H. Cohn served as financial advisor to the Court-appointed Examiner in the WorldCom bankruptcy matter, one of the largest bankruptcies in U.S. history. Our group investigated allegations of fraud, dishonesty, incompetence, misconduct, and other irregularities in the management of the affairs of the Debtor entities, including, but not limited to, issues of accounting irregularities. Among others, our findings included that (1) the Company fraudulently manipulated its financial statements for four consecutive years, and the breakdown of internal controls permitted the fraud to continue undetected for that long a period of time; (2) major responsibility for the fraud and the resulting injury to the Company rested with the Company’s CFO; and, (3) the Company’s independent auditors committed professional malpractice.
- The BIS Group was engaged to determine the validity and collectibility of a Company's accounts receivable. Our forensic investigation identified the existence of fictitious customers, fictitious sales, and forged bills of ladings, invoices, and other documents. We helped Federal investigators reach conclusions that certain officers and employees of the Company were involved in a massive fraud that resulted in a loss of between $600 million and $1 billion to several U.S. and foreign banks. Our involvement, in part, resulted in the arrest of the Company's Chief Executive Officer on charges of conspiracy to commit bank fraud, mail fraud, and wire fraud. Also arrested on such charges were the Company's Chief Financial Officer and the Company's former treasurer. Allegedly, these officers misrepresented to the Company's lenders, the nature and existence of purported metal buyers, and the existence of metal sold.
Litigation Support and Dispute Resolution
Complex business arrangements sometimes end in even more multifarious disputes. Counsel and other stakeholders trust the BIS Group to assist them in determining quantum or to act as their expert witness in legal proceedings. We provide counsel with the financial expertise to unravel the complex issues involved in all phases of the litigation process. Our team provides support in preparing and responding to interrogatories, assisting in deposition and trial preparation, and by providing expert witness testimony. Our experience, advice, and testimony have helped our clients to optimize their outcomes in the dispute resolution processes
- As solvency experts, J.H. Cohn was asked to determine if the Debtor/Plaintiff was insolvent or if it became insolvent as a result of certain payments made under one of its financing agreements. J.H. Cohn prepared an expert report as to our findings in this matter, provided deposition testimony, and testified at trial. Our efforts, in part, resulted in our client accepting a favorable settlement offer from the defendant.
- J.H. Cohn was retained by Respondent’s counsel as forensic accountants in an arbitration to analyze the business conduct between the Claimant and its subsidiaries and affiliated entities (collectively, the “Affiliated Group”) to determine if the Affiliated Group operated as one business enterprise. The Respondent alleged that certain payments it made to one of the members of the Affiliated Group were for services either not performed or over-billed. We issued an expert report as to our findings, which resulted in a settlement favorable to our client.