THE OLD CLICHÉ THAT VARIETY IS THE SPICE OF LIFE CERTAINLY APPLIES TO THE WORK OF AN EXPERT!

Forensic accountant and accredited expert witness Fiona Hotston Moore , of FRP Advisory, reflects on a number of recent cases.

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THE PAST FEW MONTHS have been particularly varied and interesting in terms of the matters on which I have been instructed as an expert witness. I am fortunate to be assisted by an experienced team of forensic accountants, which enables us to accept a number of instructions – from large fraud investigations and professional negligence cases through to smaller matrimonial matters.

Here are just a few of our recent cases highlighting what we found particularly interesting or challenging.

Instruction as party expert to assess a warranty claim and to determine the value of any loss arising

I was instructed as party expert by a transport technology company to review and give an opinion on a warranty claim arising in respect of buying a business for which the sale completed in 2021. I was instructed to review the completion accounts and to give a view on the warranty claim and the potential loss arising.

We reviewed the completion accounts and management accounting, with particular reference to the recognition of income on the customer contracts. In our opinion the completion accounts materially overstated the income and there was a claim under the warranties.

Following the preparation and disclosure of our report and correspondence between the parties, the matter settled in favour of our client and therefore on that occasion avoided protracted and costly litigation.

A particular challenge in this case was to determine an approach that enabled us to focus our review on the key contracts, ensuring that our work was cost proportionate.

Instruction as an expert witness in a professional negligence claim against a firm of solicitors

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. We 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, combining our team’s 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 our client. The lawyers said the work undertaken by us had placed the client in a good position to negotiate the deal achieved.

A key issue in this case was to assess the market value of the company at a point 10 years earlier, based on the information that would have been available at that time; so avoiding tainting my view with the benefit of hindsight.

Engagement to undertake a financial investigation following a whistleblower report

Following a report by a whistleblower, 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 engagement required a rapid deployment of our forensic services team to complete the investigation, as the matter had a potentially significant impact on business operations.

We were appointed as forensic accountants to undertake an indepth investigation, including a review of financial records, interviews of company staff and the investigation of electronic records. Our forensic services staff were deployed from our Cambridge, Norwich and Birmingham offices alongside our forensic technology team and worked on the investigation with the instructed lawyers. Our review initially identified over 240,000 documents and the team was able to refine those to a subset of 15,000 potentially relevant items that were included in our investigation.

FRP’s 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 our team’s investigation. Following the issue of our report the investigation was concluded and the company was able to share the executive summary with relevant parties.

The key challenge in this case was to sift through 240,000 documents, using search methodology to reduce the documents to a manageable number that could be reviewed by the team q