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Forensic accountants are important experts in divorce proceedings

| Sep 10, 2014 | Property Division |

For couples seeking a divorce in Florida, where state laws make it easy to set up and run a small business, divorces involving a couple’s business can be very complex. Businesses are required by law to maintain certain categories of records, and any well-run business needs a certain minimum level of accounting. Unfortunately, when an equitable asset split is involved, businesses can be points of contention in divorce court. When a business apportionment is part of a divorce settlement, the business owner may try stalling tactics, like delivering all financial documents at the last possible minute to run up their spouses legal bills. They may try presenting documents that have been deliberately jumbled and misfiled to conceal missing information.

Some business owners will attempt to under-sell the value of the business to make its on-book valuation lower. This lets them pay less than they otherwise would for buying out their spouse’s share of the business, or in some cases, commit outright fraud. Unfortunately, many divorce and family law attorneys aren’t well versed on accounting techniques, which is why hiring a forensic accountant can be a key advantage in a divorce proceeding.

Forensic accountants should be brought in whenever a business is bought or sold; someone to go over the books and ask questions will reveal tricks like overpaying payroll to increase on-book expenses or find discrepancies between declared cash flow and profits. Businesses looking to sandbag their valuations for an asset split have created false vendors and false debts with checks written that won’t be cashed as a way to hide assets from a divorce decree.

Complex asset division can only be equitable in a legal context when all of the information is available to every interested party. Having an experienced third party look over all financial data can be an important part of many divorces.

Source: Forbes, “Why A Forensic Accountant Belongs On Your Divorce Team“, Jeff Landers, September 04, 2014

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