FAQs on Forensic Accounting

At Prime Accountants, our specialists use accounting, auditing and investigative skills to support clients with a wide range of cases that require forensic accounting expertise. 

Here, Prime director and forensic accounting expert Adrian Pym, answers the most common questions he has been asked by clients. 

Adrian has more than 30 years’ experience in forensic accounting and has been a member of the ICAEW President’s Appointment Scheme for more than 20 years. 

Forensic accounting is a specialism that looks beyond numbers to reveal the business and commercial reality of a situation. 

It includes investigation, collation of evidence and provision of opinion for use in a range of legal proceedings. 

Forensic accounting is most commonly used for the following purposes: 

• Divorce proceedings 
• Partner or shareholder disputes 
• Business valuations 

The process involves looking at the facts of the situation and seeking evidence to assist the parties involved, or the court, to resolve a dispute. 

Forensic accounting is utilised for a variety of scenarios: 

• Valuations – used by clients who want to know how much their business is worth, either to pass shares onto family members, or for retirement and succession planning purposes 
• Divorce proceedings – used for valuation purposes in divorce proceedings. For example, the court may order a report on the valuation of a business owned by one or both parties. Read our FAQs on using a forensic accountant in divorce proceedings.  

• Shareholder disputes – a forensic accountant may be required to resolve a shareholder dispute, for example, where a business has been sold to a new owner and there is a dispute over monies owed 

A forensic accountant investigates financial issues and provides an independent opinion. 

The evidence and reports compiled by a forensic specialist can be used in alternative dispute resolution and in formal legal proceedings and tribunals. 

They ensure technical financial issues are shared in layman’s terms so that all parties involved understand the findings and any potential implications. 

A forensic accountant can present their independent opinion in writing in the form of a report, or verbally, such as in court answering questions from a barrister or the judge. 

Expert determination utilises the technical skills of an independent expert – such as a forensic accountant – for determining a dispute in a cost and time efficient manner. 

This private process is commonly used for commercial purposes, including shareholder disputes.  

An expert is enlisted by mutual agreement or appointment by the President of the ICAEW and the determination is binding. 

It is completely impartial and based on evidence alone.  

A forensic accountant can investigate and provide an expert opinion on a financial dispute, which can be used to assist the parties involved, or the court, to reach a settlement or judgement on the items in dispute.  

The parties to a dispute will agree the appointment of a forensic accountant to investigate the issues and gather evidence to support their opinion on the how the dispute might be resolved. 

Forensic accountants are independent experts and must always remain impartial.  

The process involves looking at the numbers and evidence, in addition to the explanations provided by the parties involved. 

• What evidence is there to examine? 
• Can the explanation provided be corroborated or supported by third party evidence? 
• Can the information be verified? 
• Do external sources within the public domain support the evidence provided? 

For example, when applying forensic accounting skills to a shareholder dispute, the reasons for any change in the cost of materials, running costs or wages within a business need to be understood as they may impact the value of the business. 

At Prime, Adrian and the forensic accounting team also work with our tax planning team to provide accurate valuations on behalf of our clients. 

In short, forensic accountants look to find supporting evidence to form an opinion on issues where the facts are ambiguous, disputed or lacking. 

While every case is different, the process follows a similar set of steps.  

• A forensic specialist gathers and analyses evidence, but not solely on an accounting basis 
• They consider if there are holes within the evidence 
• They investigate whether evidence points to the possibility of undisclosed information or assets  

For example, additional information from personal social media posts and website updates from businesses can reveal a bigger picture that requires further investigation. 

Ultimately, a forensic accountant looks at the whole picture to determine the right answer. 

Forensic accountants use a range of techniques and tools to collect evidence for a case. 

That evidence may support a claim or defence to a legal issue, or alternatively, it can provide an opinion on the value of a business or asset. 

Specialists examine multiple resources when looking for evidence, but they can only utilise information which is in the public domain or provided by the parties 

This can include information from social media accounts for use in divorce proceedings, or data from professional associations and industry bodies in business valuations or shareholder disputes.  

Prime Accountants subscribes to technical databases that provide access to a wealth of data to assist with business valuations, including records on private company transactions in order to benchmark against like-for-like sales. 

Despite popular belief, forensic accountants cannot access bank accounts, unless a court order has been made for parties involved to disclose details of their bank accounts. 

Also, a business valuation cannot be completed using information from Companies House alone.  

Much more evidence is required for a specialist to make an informed opinion on the value of a business. 

The question that Adrian and Prime are most often asked is can you value a business without the need for owners to disclose financial records? The answer is most definitely no.  

By carefully assessing the financial evidence available, forensic accountants can potentially identify any missing or hidden assets. 

However, they can only find hidden assets if other evidence highlights their existence. 

For example, bank transfers may highlight the existence of an undisclosed bank account. 

Assisting the parties to a legal case to understand the accounting issues involved.  

Litigation support includes assessing the strength of their case, and the strength of the other parties’ case.  

The process includes: 

• Advising on potential financial outcomes 

• Advising on the valuation of a business and the shares held personally by each party 
• Assisting the solicitors to draft the letter of instruction to the expert 
• Assessing the report of the expert and the questions that could be asked