There is something about the word forensic that makes my mind immediately go Silent Witness, white suits and crime scenes. But what of the ‘forensic accountant’ and why would you need one on your divorce team?
So I asked Suzanne Grant, a member of our in-house forensic accounting team to join us on the blog to explain what the team does and how they can help when the financial detail in a divorce is just not adding up.
“To start, I can assure you that there are no white suits or crime scenes in our office. Instead, you will find a much calmer, quieter place as we concentrate on investigating the financial elements of a divorce case.
Whilst it is always preferable upon marriage breakdown for the parties to reach an agreed financial settlement rather than leaving the matter for the court to decide upon, it isn’t always possible.
One of the most complicating/contentious factors in a divorce can be the division of assets, especially when tensions are running high and one party may not be willing to fully cooperate in the financial disclosure process.
It is often the case that one spouse managed the parties’ finances such that the other spouse is disadvantaged in terms of their knowledge as to the full extent of the financial ‘pot’. That’s where the skills of a forensic accountant come in.
The main role of the forensic accountant in divorce matters is to ensure financial transparency by investigating the parties’ finances, both personal and business, with the ultimate aim being to identify and investigate any discrepancies, including revealing hidden assets and income.
Assets can be hidden in any number of ways including by transferring them offshore or by giving them to a friend or another family member to hold until the divorce is finalised. For those spouses who have businesses, these are often used as a vehicle to hide assets and therefore the accounts must be reviewed for any inconsistencies and irregularities, particularly in the year(s) leading up to separation and continuing thereafter until an agreed financial agreement is reached.
Income can also be hidden and/or manipulated in a number of ways including by delaying receipt or by not entering into lucrative business contracts until the divorce is finalized.
Put very simply, if an asset or income stream is excluded from the financial ‘pot’, it cannot be divided. Even if the existence of that asset or income stream later comes to light, it is by no means certain that the terms of the agreed financial settlement can be revisited and a share allocated to the entitled spouse. For that reason, it is vital that the full extent of the ‘pot’ available for the division is identified and the terms of the financial settlement agreed before Decree Absolute is granted.”