Week 6: Forensic Accountants Role in Civil Trials

Forensic accountants (FA’s) all over Australia are contracted by clients to provide expert witness statements on particular matters.

The APES 215 states that a forensic accountant: (APESB, 2019):

1. Has a duty to the court which overrides that of the client 
2. Provide expertise in an objective and unbiased manner 
3. Not to advocate for a party

Therefore, an FA’s duty is to the court in providing evidence based on expertise in particular court matters and not determining an innocent or guilty verdict.

The FA’s role is to investigate the quantification of loss or damages due to a guilty verdict. In most cases the investigation of damages is for their client, but in some matters, FA’s could be contracted to cross-examine work completed by another FA (such as in Labelmakers Group Pty Ltd v LL Force PtyLtd [2012]).

But how does a FA calculate the loss or damages for the successful plaintiff? Let’s say for instance a doctor is inappropriately performing their duty and knocks your new born baby on the head causing serious brain damage. One matter to be considered is the valuation of all future expenses which you as a parent would have to pay as a result of your child’s brain damage (such as medical bills, new fittings for your home to accommodate the disability etc.). Another matter is the effect of interest on the lump sum damages payment, as the money’s value will decrease over time (effects of inflation etc.). FA’s take this into account, usually through applying the RBA cash rate plus a further percentage that the judge sees fit (usually 4-6%) (interest is applied for pre- and post-judgement).

Additional Information: 

References 

APESB. (2019). APES 215 Forensic Accounting Serivces . Melbourne: Accounting Professional & Ethical Standards Board Limited.

Brisbane Consulting. (2021, April 28). How to Calculate Damages in Fraud Cases? [Video]. Youtube.