Financial experts are often needed in commercial litigation cases. They could be used to value a business, figure out economic damages, or to look into fraud allegations. In these cases, the quality of the numeric data that is available to the expert is critical, affecting both the time that the financial expert must put into the case, and the reliability of their opinions.
Varying Levels of Assurance
Obviously the quality of financial information covers a wide range. Think of a business that only generates tax returns versus a company with audited financial statements that conform to GAAP. Usually these larger companies have stronger internal controls and well-developed accounting systems. In commercial litigation matters this mean that the financial expert can access information that’s unavailable for a smaller business without audited financial statements.
The other side of this is the business with only a tax return for financial recordkeeping. In these cases the financial expert and the attorney need to come up with a plan to figure out what additional information the expert will need. Also, the client needs to be made aware of the situation, as a lack of information can affect both sides of the case. Without reliable records, the expert may be unable to reach reliable conclusions.
Remedying Data Deficiencies
It can happen that the other side in a commercial litigation case has sub-standard financial reporting. When this happens, the expert and the attorney should carefully document the deficiencies in the financial data. They should also note any attempts that they make to correct these deficiencies. If they can’t be fully remedied, the expert needs to document what they did to arrive at their conclusions
Remember, it’s key to make sure the client is aware of the lack of quality information. They should know what’s being done about it, and how it can potentially change the outcome of the case.
Identifying Deficiencies Early
The financial expert and the involved attorneys need to discuss the quality of financial reporting early on in litigation support meetings. It can affect both the level of investigation as well as the reliability of the expert’s conclusions, as well as the cost of the work to be done by the financial expert. Therefore, the attorney needs to be aware of this issue before the expert begins their work. To learn more about financial experts and quality financial information, talk with Filler & Associates.