In the course of litigation, forensic accountants are most often engaged to assist in the analysis of financial evidence. Attorneys typically seek their expertise to answer questions about money matters: to calculate and quantify losses, to determine economic value, to identify fraud, to provide support for a claim of economic damages or to offer criticism of the opposing expert's opinion.
Increasingly, however, forensic accountants are being called upon to analyze non-financial information in order to answer questions about past trends, current practices and the outlook for the future. Companies have become more sophisticated in the way they handle data, and the resulting availability of "business intelligence" technologies to compile and analyze a company's information on sales, customers, inventory and employees means that forensic accountants have a whole new range of resources at their disposal. Where once we focused primarily on profit and loss statements, balance sheets and cash flows to answer questions like "how much?," now we can tap in to the vast quantity of data and information that are increasingly available to us to develop spreadsheet models and databases that allow us to answer many more questions like "how many?" or "how often?" or "at what rate?"
For example, Bruce L. Ross & Company was retained by counsel for a market research company in connection with a class action lawsuit brought by a group of employees who worked as field recruiters. Plaintiffs alleged that they were non-exempt employees and that defendant had failed to pay them for overtime, failed to provide itemized wage statements and failed to provide meal breaks. Unfortunately, analysis of these issues was complicated by the fact that our client did not keep contemporaneous time records, which is often the case when employers assume that their employees are exempt. The company did, however, maintain sign-in sheets for each project that indicated which recruiters worked on the project, what days of the week they worked, and how many people they recruited. We compiled four years worth of sign-in spreadsheets, cross referenced them with a database of projects and created a new database of tens of thousands of records. Analysis of this database provided a great deal of insight into the typical behavior of this group of recruiters. Where previously we would be forced to rely upon deposition testimony or anecdotal information to understand their work patterns, by analyzing actual data we were able to determine the number of projects each recruiter worked on, the number of days the recruiter worked on the project, the average number of projects each recruiter worked on per day and the average number of days per week recruiters worked. We were also able to determine the last day each recruiter worked during the class period, which was particularly helpful since the company did not maintain a record of termination dates. Analysis of the data also helped us to perfect the class list, since the data revealed that certain employees on the list did not belong in the class and that other employees who should be in the class were not found on the class list. From all of this information, BLR&Co was able to prepare a reasonable estimate of damages, providing our client with the information it needed to settle the matter at mediation.
Another example of the use of business intelligence data to supply missing facts involved a case in which a wholesale real estate mortgage brokerage company sued a competitor for wrongfully targeting and recruiting a number of its top account executives. Counsel for the plaintiff retained Bruce L. Ross & Company to develop a non-speculative damage analysis and provided us with a vast database of loan transactions. Because the account executives in question had relationships with certain brokers, we analyzed the loans generated by these brokers and noted a precipitous drop in business coming from these brokers after the departure of the targeted account executives. By comparing the performance of each account executive's brokers before and after his or her departure date, we developed a model to determine the number of lost loans, lost revenues and lost profits and developed sophisticated queries to obtain a variety of other information from the company's loan database.
Forensic accounting is no longer just about dollars and cents. Computer models and database queries allow us to leverage the vast quantities of data available in the information age and answer a wide array of questions that can help demonstrate a defendant's liability or refute a plaintiff's anecdotal claims. Information is a powerful tool for revealing the truth of what actually happened. The best way to arrive at the truth is by guiding the client to compile as much relevant data as possible, seeking the appropriate data through discovery and ensuring that the data is available in a readily analyzable format. Finally, the litigation support team must address the right questions. With a better understanding of the data, both financial and non-financial, attorneys and their clients will better understand the facts of their case and will be better prepared to present those facts to a judge or jury. At Bruce L. Ross & Company, our professionals can not only assist in defining the right questions, but can also help identify the data needed to answer those questions. We can create valuable databases by digitizing information from source documents, or we can mine already existing databases for previously undiscovered facts or patterns. We'll perform a thorough analysis of all of the evidence and present our findings to both you and the trier of fact in a way that is clear and easy to understand. The increasing availability of business intelligence data has provided a new resource in litigation; Bruce L. Ross & Company can help you make the most of it.