Veris Consulting - Forensics

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integrity and objectivity you can count on

forensics


Founded in 2000, Veris Consulting, LLC, provides highly specialized accounting, financial, and survey services in particular market niches. The name Veris reflects the cornerstone of our services—integrity and objectivity—and was derived from “verify” and the Latin for “truth.”

Veris’ operations have grown considerably since our formation and today consist of forensic accounting and litigation support, outsourced internal auditing and accounting, information technology consulting and assurance services, and technology-based survey and research services. Veris serves a diverse clientele throughout the United States, as well as clients in Europe and the Caribbean. Services are provided from regional offices in Reston, Virginia; Red Bank, New Jersey; and Columbus, Ohio.

As part of our formation, Veris acquired certain practice areas of Johnson Lambert & Co., a niche-focused CPA firm created in 1986 by Veris’ founder, Larry Johnson. Recently, we have made further acquisitions from that firm. We expect to continue expanding our resources and service areas as opportunities arise that we believe are consistent with our strategic vision: to provide value and an unparalleled quality of service by concentrating on specialized market niches, remaining committed to technical leadership in those market niches and applying an entrepreneurial spirit that seeks out opportunities in a rapidly changing world.

The management of Veris will continue to dream in color and act in black and white.


and areas of specialization. Biographies of our principal executives are included in the back of this publication. We provide litigation consulting services to both plaintiff and defendant parties. We have been engaged on behalf of regulators and as adverse to regulators, on behalf of parties asserting claims against outside professionals and on behalf of defendant outside professionals. In the back of this publication, we identify many of the law firms with which we have consulted throughout the United States.

forensics

In addition to law firms, we have also consulted with The dictionary

defines forensics as “the use of science and technology to investigate and establish facts in criminal or civil courts of law.” That precisely describes what Veris provides in the areas of financial statement and accounting analysis, calculations of economic damages, insolvency measurements and reinsurance-related disputes. The past several years have seen heightened public concern about and scrutiny of accounting and financial reporting. The world of financial reporting has become a subject of much criticism and increased regulatory oversight. Corrections of financial statements have occurred on an unprecedented scale in both magnitude and scope. As a consequence of these circumstances, significant change has occurred in the landscapes of directors’ and officers’ duties, corporate accountability to shareholders, regulatory oversight and the relationships of corporations and their external auditors. During this period of time, Veris has actively consulted in many of the highly publicized cases that have contributed to this changing landscape. Our professional staff’s ability to respond to highly technical issues in an understandable manner with an uncompromised commitment to integrity

Veris Consulting, LLC

and testified on behalf of the United States Department of Justice in claims made against various departments of the federal government. On a state level, we have been engaged by several state regulators in connection with their oversight and investigation of failed insurance companies and to assist them with forensic analysis, as well as evaluation of the conduct of directors, officers and third parties. We have provided this assistance in connection with several of the largest failures in US history.

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has resulted in dramatic growth in the scope of our services


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fo

a ccounting & auditing standards The vast majority of financial statements are properly prepared and fairly present an entity’s financial results. Similarly, the vast majority of audits conducted by CPAs comply with the professional standards that apply to their conduct.

However, when assertions of error in financial state-

of the presentation of financial statements and in

ments are made, or when the conduct of professionals

defense of auditor compliance with relevant professional

is challenged, it is imperative that those assertions and

standards. In other circumstances, we have provided

challenges be evaluated by competent professionals who

expert analysis and testimony that previously issued

will call it as they see it. That competency and integrity

financial statements had been materially misstated and

define the practice and professionals of Veris. We have

that auditors had failed to discharge their responsibilities

provided expert analysis and testimony involving a

under accepted auditing standards.

variety of financial reporting and accounting matters, including the appropriateness of accounting for loss reserves, asset impairments, business combinations, GAAP and statutory accounting for insurance enterprises, related party matters and financial statement disclosures. We have given expert testimony in defense

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“...we will remain true to our commitment to call it as we see it.�

orensics Many of our engagements involve highly publicized

Offering expert services both for and against financial

accounting and financial reporting scandals. In particular,

statement preparers and independent auditors requires

we have provided expert opinions regarding:

careful study and evaluation of the facts, circumstances and merits of each case and a dedication to uncompro-

n

n

the historical development of accounting and disclo-

mising integrity. We will not permit ourselves to be

sure requirements in the use of so-called Special

labeled or associated as plaintiff experts or defendant

Purpose Entities (SPEs)

experts; we will remain true to our commitment to call

the conditions governing the recognition of revenue,

it as we see it. The ongoing referrals we have received

including issues of software sales and the determina-

demonstrate our commitment to these requisites.

tion of reasonable assurance of collectibility n

the historical evolution and application of the accounting principles dealing with risk transfer in reinsurance arrangements

Veris Consulting, LLC


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“An expert must explain answers with candor, truthfulness and believability.�

economic damages Measuring damages in litigated disputes is a complex

n

On behalf of the US Department of Justice,

endeavor. Determining with reasonable certainty the

Veris provided analysis and expert testimony in

measure of economic harm suffered requires an under-

several engagements related to the costs of storing

standing of the business in which the harm has occurred,

and removing spent nuclear fuel. We assisted in

the ability to create and measure alternative economic

defending the Department of Energy against claims

scenarios in constructing a so called but-for world, the

involving hundreds of millions of dollars, providing

evaluation of theories of lost profits, the analysis of

expert testimony in federal court.

the reasonableness of discount and capitalization rates

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In litigation involving asserted contractual breaches

and the evaluation of causation issues. An expert must

related to global positioning satellite systems in the

possess not only the skill and expertise to answer the

US aviation industry, we constructed a lost-profits

issues that confront him or her, but also the ability to

model and presented that model at trial. The jury

explain those answers with candor, truthfulness and

awarded damages based entirely on our model.

believability. Once again, our references speak to

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In connection with disputes involving insurers and

our technical, communication and client service

offshore reinsurers, we conducted an analysis of

skills. The following anecdotes illustrate the types

underlying claims and developed a model to project

of damage-related matters in which we have provided

the population of valid claims as well as the cash

expert assistance.

flows related to those claims. We provided testimony at arbitration of this matter; the arbitration finding resulted in a monetary award matching the results of our analysis.

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insolvencies Evaluating financial reporting and the potential liability

well as the applicable principles of law being applied.

of officers, directors and third-party professionals often

Causation matters and issues related to regulatory or

involves determining at what point and to what extent an

market conduct might also be involved.

enterprise became insolvent. That type of determination requires a measurement of assets and liabilities at various

We have provided expert testimony in a variety of

points in time based on proper application of accounting

circumstances to either identify the existence of a

and valuation principles and an understanding of

company’s insolvency or to rebut assertions made by

underlying economic values. Such an analysis might also

others. We’ve also provided expert testimony regarding

involve evaluation of prospective cash flows, the likeli-

the damages representing the economic harm from

hood of those cash flows and the implications of those

continuing an enterprise after its insolvency in circum-

cash flows. Veris has extensive experience in conducting

stances in which we have prepared or rebutted the

the analyses required for these determinations.

measurement of that harm.

A frequent measure of damages involves the use of

deepening insolvency. The measurement of damages under that theory seeks to identify the harm caused by the continuation of operations of an enterprise after the enterprise should have been reported or determined to be insolvent. Deepening insolvency damages calculations require construction of but-for worlds, as well as a comprehensive understanding of the operating and financial consequences of business continuation, as

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reinsurance Reinsurance involves contractual arrangements between

these arrangements, has required significant judgment.

insurance companies. Many of these contractual

Professionals at Veris have, for several years, played

arrangements become the subject of disputes as to

a leadership role in the evolution of these accounting

whether and to what extent underlying claims should

principles and the development of guidance to preparers

be the responsibility of the reinsurers. More recently,

of financial statements. In fact, the current authoritative

a major issue with these contractual arrangements is

guidance that identifies the appropriate accounting for

whether insurance risk has been transferred from one

reinsurance arrangements that do not transfer insur-

party to the other and whether the accounting for these

ance risk was prepared by a task force chaired by Larry

contractual arrangements has been in compliance with

Johnson, President and CEO of Veris.

the applicable accounting principles. The issue of risk transfer has become the focus of many federal and state

When we provide consulting and analytical services to a

investigations and has led to many restatements of finan-

particular reinsurance arrangement, we base our services

cial statements and litigation filed asserting improper

on an in-depth knowledge of the development of the

financial reporting. Veris has been actively involved in

accounting standards. We can tell you what the guidance

the conduct of many of these investigations.

means because we wrote it.

Accounting principles for reinsurance arrangements have evolved over time. Evaluating the economic substance of reinsurance arrangements, as well as the contractual obligations that have been created as a consequence of

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integrity

integrity / intégritee / n. steadfast adherence to a strict moral or ethical code.

actuarial forensics Separate from consulting services regarding risk transfer,

We formed Veris Forensic Actuarial Services in

we have provided expert assistance and testimony in

response to the demands of complex litigation, valua-

a multitude of circumstances involving reinsurance

tions and damages measurements involving insurance

disputes. That assistance has included examining

entities. Directed by highly experienced consultants

the underlying support for claims reported by ceding

who are Fellows of the Casualty Actuarial Society,

companies, as well as evaluating the claims adjudica-

this practice area focuses on matters dealing with loss

tion practices of those ceding companies. We have also

reserves, reinsurance, solvency issues and damages

provided expert testimony about financial representa-

considerations.

tions and reporting made by the parties to a reinsurance arrangement in proceedings that sought to rescind those

Our enhanced forensic capabilities are also used in

reinsurance arrangements.

our corporate governance and outsourcing services. They are further evidence of Veris’ commitment to our

A substantial amount of our claims-related assistance

entrepreneurial spirit and strategic vision of serving

has been on behalf of London reinsurers; we’ve also

specialized market niches.

provided significant assistance to a major multi-national Swiss insurance organization.

Veris Consulting, LLC

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“We can tell you what the guidance means because we wrote it.”


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corporate governance The enactment of the Sarbanes-Oxley Act has dramatically changed the responsibilities of publicly owned companies and their auditors. Moreover, the heightened attention on internal controls and the increased scrutiny of financial statements has caused private companies as well as not-for-profit organizations to exercise a higher level of diligence.

There is a growing need for directors to understand

Our services include:

financial statements, accounting principles and auditing

n

Financial statement training for directors and officers

requirements. At the same time, the services that can

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Special investigative services, specifically

be provided by a company’s independent auditors have been significantly restricted. Veris offers a variety of consulting expertise to boards

for directors or audit committees n

Accounting and financial reporting advice

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Internal accounting control reviews

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Due diligence consultation

of directors, with an emphasis on the use of proper accounting measurements, the adequacy of financial

Veris provides internal audit outsourcing services, a

statement disclosures and the assessment of the control

critical tool for management and directors to be able to

environment. Our perspective in these matters comes

identify and manage operating risks. We have devel-

not only from the extensive public accounting and corpo-

oped separate staffing resources dedicated to these

rate experiences of our staff, but also, in particular, from

services. The services involved in internal auditing

our forensic experiences in analyzing what can go wrong

activities include identification, evaluation and tests

in corporate financial reporting.

of procedures for the purpose of enabling management to evaluate and make assertions about internal control structure design and operating effectiveness. Veris also provides forensic data mining services, analyzing large amounts of data in a manner that detects obscure facts, trends, data inconsistencies and suspicious transactions.

Veris Consulting, LLC


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