A forensic accountant is someone who uses a combination of investigative skills, accounting knowledge, and records auditing to analyze financial records for legal purposes. These trained specialists may be hired to uncover illegal or unethical financial practices such as hiding funds, embezzlement, or falsifying records. Alternatively, they can also exonerate someone who has been accused of financial wrongdoing.
Based on the description, you may think of forensic accountants in terms of taking down criminal enterprises and busting white-collar criminals. In truth, they can also play an essential role during Colorado divorce proceedings.
The Role of a Forensic Accountant in a Divorce
In a divorce, a family attorney must ensure their client receives fair treatment when it comes to the division of assets, responsibility for debts, and any ongoing financial support. Since the Colorado courts base their rulings on submitted financial records, every party must ensure that the other party discloses all the relevant financial information. In some situations, the latter can become quite complicated.
As emotions run high, various accusations can be made, including those of hiding income or assets. In these cases, a lawyer may recommend using a forensic accountant to get to the truth of the matter. Here are some of the things a forensic accountant will do:
- Attempt to uncover hidden income or assets.
- Accurately calculate personal expenses.
- Provide an accurate appraisal of assets.
- Find inconsistencies.
- Conduct an inventory of real assets such as art or antiques and provide a valuation of these assets.
- Provide information on the potential impact of a financial settlement.
- Assist the lawyer in creating documents and preparing evidence to present to the court.
If you decide to hire a forensic accountant or your lawyer brings one on, they will conduct a thorough review of your financial records. They will look at bank and credit card statements, review your tax returns, comb through investments and stocks, and analyze any other relevant documents and records. If they notice any abnormalities, these can be further investigated to help your case.
When a divorce is contentious, all records must be reported accurately. This protects you from accusations of wrongdoing and allows the courts to make decisions based on accurate information.
What Happens When The Other Party Hires a Forensic Accountant?
Forensic accountants have legal and ethical obligations to be honest and present correct information. That said, it's also important to remember that a forensic accountant hired by your former spouse is hired to work at their discretion. Your attorney should be informed if this happens.
While you should never lie or hide things from a forensic accountant, you should treat communication with them very carefully. Seek your attorney's advice if they request any records or information. If possible, let your lawyer handle any communication with them. Your lawyer will also advise you as to whether or not you should hire your own forensic accountant.
When Should I Hire a Forensic Accountant For my Divorce?
Here are some situations in which you should consider hiring a forensic accountant:
- You believe your spouse is hiding income or assets.
- You have reason to suspect records have been altered or forged.
- You have been accused of financial dishonesty.
- There was a history of financial abuse in your marriage.
- The marital assets and accounts are complex.
- Your spouse is self-employed or owns a business.
Ultimately, your family attorney is the best source of advice on this. If you are already experiencing pressure regarding family finance and future asset distribution, don't hesitate to reach out to our firm for personalized help on your case.