md litigation presentation to lehman college

ATTEST & ASSURANCE | TAX COMPLIANCE & RESEARCH | SPECIALTY & CONSULTING

PRESENTATION TO:

Lehman College Student Chapter of the ACFE

April 25, 2014

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Litigation Support Accounting

Presented By Mark DiMichael, CPA/CFF, CFE, CVA, MAFF

Supervisor in the Valuation & Forensic Services Department of Citrin Cooperman

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Accountants as Expert Witnesses

The subject matter of expert testimony to be offered at trial:

- Federal Rules of Evidence 702 – > In Federal Court, “[a] witness who is qualified as an expert by knowledge, skill,

experience, training, or education may testify in the form of an opinion or otherwise if: – (a) the expert’s scientific, technical or other specialized knowledge will help the

trier of fact to understand the evidence or to determine a fact in issue; – (b) the testimony is based on sufficient facts or data; – (c) the testimony is the product of reliable principles and methods; and – (d) the expert has reliably applied the principles and methods to the facts of the

case.” FRE 702.

- In New York State court, an expert witness may testify when it would be helpful “to clarify an issue calling for professional or technical knowledge possessed by the expert and beyond the ken of the typical juror.” DeLong v County of Erie, 60 NY2d 296,307 [1983] (citations omitted).

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Types of Litigation Services Provided By Accountants

Investigative

Interpretive

Economic Damages Analysis

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Investigative

Tracing of funds or assetsTo determine a revenue streamOn behalf of a company to:- determine if a fraud has been committed- Identify individuals involved- Quantify the losses

On behalf of an individual accused of having perpetrated a fraud.- To clear that individual’s name- To reduce the sentence

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Interpretative

To determine whether the methodology employed by one party to the litigation is correct or in accordance with the terms of a contract

If a contract is vague, to determine whether the methodology employed makes “economic sense” from an accounting standpoint

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Damages Analysis

To determine economic losses due to a tort

To determine lost profits

Business Valuations

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Consulting / Expert Witness Services

CPA is generally retained by an attorney.- Occasionally retained by a litigant directly or as a neutral.

CPAs can assist prior to a litigation, but most work is done once a litigation has commenced:- Discovery & Depositions- Preparing an Expert Report- Rebuttal of an Opposing Expert Report- Trial

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The Expert Report

Per the Federal Rules of Civil Procedure – Rule 26 (a)(2)(B)Provide a written report – prepared and signed by the witnesscontaining

(i) a complete statement of all opinions the witness will express and the basis and reasons for them; (ii) the facts or data considered by the witness in forming them; iii) any exhibits that will be used to summarize or support them; (iv) the witness’s qualifications, including a list of all publications authored in the previous 10 years; (v) a list of all other cases in which, during the previous 4 years, the witness testified as an expert at trial or by deposition; and (vi) a statement of the compensation to be paid for the study and testimony in the case.”

New York State Disclosures are less stringent - CPLR §3101[d][1][i] - Upon request, a party “shall identify each person whom the party expects to call as an expert witness at trial and shall disclose in reasonable detail the subject matter on which each expert is expected to testify, the substance of the facts and opinions on which each expert is expected to testify, the qualifications of each expert witness and a summary of the grounds for each expert’s opinion.” CPLR §3101[d][1][i].

Experts generally have an opportunity to produce reports rebutting opposing experts.

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An Expert’s Trial Testimony

Attorney and expert must establish expert’s credentials and have her declared an expert in a particular area.

Direct Testimony- Expert provides their findings or opinion- Expert must refer to facts and theories upon which expert

opinion is based.

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Cross-Examination

An expert can be cross-examined about reasoning and data.

Opposing attorney attempts to undermine the expert’s findings

Unlike lay witnesses, experts can answer hypotheticals.

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Required Knowledge & Skills

Financial Skills- Accounting- Auditing- Economics- Forensic Accounting- Business Valuation- Finance

Other Attributes of a Good Expert- Analytical Skills- Inquisitive Mind- Persistence- Creativity- Judgment- Communication skills

CAYMAN | CONNECTICUT | NEW JERSEY | NEW YORK | PENNSYLVANIA

CITRINCOOPERMAN.COM

Mark DiMichael, CPA/CFF, CFE, CVA, MAFFSupervisor

E-mail: mdimichael@citrincooperman.comPhone: 212.697.1000

NEW YORK OFFICE