An expert witness’s reflections on 2022

Forensic accountant and accredited expert witness Fiona Hotston Moore, of FRP Advisory, looks back on some notable cases she contributed to last year.

[I ENJOY THE VARIETY OF CASES I work on as an expert witness and the challenge that every case inevitably presents. 2022 was a busy year and I was fortunate to be instructed as a forensic accountant on 38 new matters, including 19 engagements as a single joint expert.

Some matters are relatively discrete. They typically require preparation of a court-compliant report and my involvement is limited to a couple of months. Other matters, however, involve preparation of a number of reports over many months or even years and can involve meetings with other experts or legal counsel, attending mediation and –if the matter is not resolved – giving evidence in court.

I am fortunate to be supported by a specialist team of forensic accountants. That allows me to undertake a number of assignments concurrently and gives me access to different skill sets and the opportunity to take soundings from colleagues.

Notable matters on which I was instructed in 2022 included:

A financial investigation following a report by a whistle-blower

Following a report by a whistle-blower I was engaged to undertake a financial investigation into the financial reporting, corporate governance and internal controls of a fast-growing entrepreneurial business in the technology sector.

The assignment included a review of financial records, interviews of company staff and the investigation of electronic records. My review initially identified over 240,000 documents: the team was able to refine those to a subset of 15,000 potentially relevant items that were included in the investigation.

My engagement was concluded – and a full report including recommendations issued – within 10 weeks. The client and instructing lawyers were pleased with the efficiency and thoroughness of my team’s investigation. Following the issue of my report the investigation was concluded and the company was able to share the executive summary with relevant parties.

Appointment as party expert to value a chain of wine bars and hotels

The client, the owner of a chain of wine bars and hotels in London, was going through a divorce and had obtained an expert valuation of the business as part of the settlement process. However, the client was unhappy with the valuation received and required a second opinion. I was initially instructed to give a high-level opinion as party adviser on the valuation report of the single joint expert.

In my view, the valuation had been significantly overstated and my opinion reflected the belief that the valuation methodology was not appropriate. In light of my opinion the client then obtained permission from the court to allow me to prepare a full court-compliant valuation report as party expert. That report included commentary on the single joint expert’s report, as well as my own assessment of the value of the business.

My valuation of the business was approximately £4m. That valuation was significantly lower than that of the original expert, who valued the business at approximately £9m. The Family Court considered both reports and decided to put a valuation on the business midway between the two. The client was pleased with the outcome, which in his view was a fairer position.

Valuation helps client to settle professional negligence claim

The client – a business providing services in the construction sector – was involved in a professional negligence claim against a firm of solicitors, arising from the advice given in relation to the corporate finance transaction regarding the disposal of the business. The company was claiming for a resulting loss, as the sale consideration was substantially less than was anticipated. I was engaged as party expert witness to give a valuation of the company at the time of the sale, which had taken place around 10 years earlier.

I prepared financial and market analysis, looking at the information available at the time of the sale. My valuation considered the relevance of alternative methodologies and explored the value that an alternative purchaser might have placed on the company. Following the valuation a joint report was prepared, comparing my findings with the findings from the other party’s expert, who provided an alternative view.

The matter was settled just prior to the court hearing, in favour of my client. The lawyers said the work undertaken by FRP had placed the client in a good position to negotiate the deal achieved.

Appointment as single joint expert on a probate valuation of a care home

The client, a company in the care and social services sector, sought a valuation when one of the joint shareholders passed away. I was jointly instructed by executors of the deceased’s estate and the remaining shareholder of the company to provide an independent assessment of the probate valuation of the shareholding in question. The tax implications of the valuation were also required in respect of inheritance tax payable by the beneficiaries of the estate and any capital gains tax that would arise on a subsequent sale of the shares. q