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Forensic Accountants' Roles in Mediation

It is often, but not always, the case in forensic accounting engagements that an expert is on one side or the other during disputes. Indeed, the expectations and reality of being involved in forensic accounting, valuation and litigation support is that we are in a position of conflict, having to argue and defend your work and opinions.

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That being said, there are also great opportunities to be a conduit to resolution and to exercise our softer, diplomatic side.

In my nearly 30 years as a CPA I have encountered events, gained experiences and dealt with casts of characters that run the professional and personal spectrums. I don’t think there has ever been a situation where I felt totally out of place. I grew up in a working-class neighborhood and attended schools in lower, middle and upper class areas alike throughout my formative years. As an expert in the business of dealing with individuals and organizations from all walks of life—who experience pressures and challenges professionally and personally—and having represented both plaintiff and defendant, accuser and accused, I find my time as a court-appointed joint expert or my time being privileged enough to be engaged in mediation to be the most rewarding of all. 

It is an opportunity and position of trust that is not to be taken lightly. All of your experience and expertise need to come together with independence and impartiality. Now not only one, but two, or more sides are relying on you to provide a remedy to their situation. You gather all the information available, communicate with all parties involved and use combined resources to achieve the best possible outcome in an otherwise unfortunate situation. 

It makes great sense, in my opinion, to use a forensic accountant in mediation or as a joint expert, primarily because (depending on the case and situation) if all information is made available and all facts are known, numbers are mainly objective. This method is not always practical or possible, though. If one side is determined to hide, suppress, or manipulate information, this method of resolution is not going to work because one side (or sometimes both) may have another agenda or may not want all the details and facts to come to light. In these cases, taking of sides and adversarial relationships need to take their traditional course. However, in cases such as in a divorce or contract dispute, when both sides are open to cooperation and working through a fair resolution and settlement, the results can be less costly, both financially and emotionally.

In mediation, or as a joint expert, it is also necessary to be comfortable enough and confident in your expertise and interpersonal skills to be open and up front with clients. In a divorce case, when one spouse is upset and challenging the valuation of a business by exposing or accusing the other spouse of paying for personal and household expenses through their company, it is the job of the impartial expert to ask the accusing spouse to what extent they or their family benefited from such activities, and if they knew that something (possibly not legitimate) was occurring. Is the accuser prepared to go down that road and admit to some degree of culpability in the process? Things aren’t always as cut and dry as they may appear, especially when one side’s expert has only one side of the story to rely upon. How much more effective and efficient is the mediation process then? As opposed to one side spending precious time and resources trying to nail and expose the other…only to drop the argument when they realize and admit that they were a party to such activities?

While this merely scratches the surface of the advantages and benefits of the forensic accountant’s role in mediation, it also provides insight when considering the possibility to combine efforts and save resources of both time and money, not to mention the opportunity to stay out of a courtroom.

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