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Marcum LLP
Marcum LLP
Valuation & Litigation Support

Financial Forensic Investigations

Watch and Money
 

Financial forensic investigations are a specialized field of accounting that utilize accounting, auditing, and investigating skills.

Our forensic investigation will look beyond the numbers to identify missing or incomplete data, financial discrepancies, and/or financial fraud. We will assist in translating complex financial issues into a more understandable manner and produce a clear and concise analysis.

Our forensic professionals include in-house attorneys, CPAs, valuation analysts, IT forensic specialists, and Certified Fraud Examiners. We work closely with legal professionals, their clients, and advisors to provide the necessary financial tools and achieve the desired outcome.

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Civil and Criminal Fraud

Marcum Advisory's team of experienced forensic professionals specialize in providing forensic accounting services, conducting fraud investigations, and assisting counsel in litigating civil and criminal cases.

Many of our professionals hold designations as Certified Fraud Examiners and former Enrolled Agents from the Internal Revenue Service's Computer Forensic experts, and certified public accountants.

Independent or internal counsel of a company is frequently our clients; although we have worked for regulatory agencies as well. We work closely with counsel and other relevant parties in interest and are aware of the impact these types of claims have on the company, its officers, or directors while regulatory investigations and forensic analysis is conducted.

Our scope and work plan is dependent upon the facts and circumstances of the case. Frequently, our cases involve interviews and reviews of financial and business documents. In this we critically analyze complex financial transactions to evaluate the propriety of accounting treatment, identify parties, affiliates, and ownership interests of principals involved in the circumstances at issue. We perform asset tracing and background investigations as required. Many cases involve computer forensics and electronic data preservation. We also perform e-discovery by using our data analysis capabilities to identify fraud schemes. In other cases, we have few business and accounting records and must trace and reconstruct individual financial transactions. An integral part of this process is frequent communication to key stakeholders and the preparation of a written report, as required. When required, we will testify as an expert in relevant Court proceedings.

Types of Engagements

As a result of the industry knowledge our professionals possess, we are capable of providing comprehensive analyses that look beyond the numbers to explain the realities of economic and business matters.

Our engagements have involved investigations of:

  • Ponzi schemes.
  • Conversion of cash and other assets (misappropriation of funds).
  • Related party or key officer self-dealing.
  • Lapping and kiting.
  • Money laundering schemes.
  • Financial accounting record misrepresentations.
  • Theft of intellectual property.
  • Investment portfolio churning.
  • Improperly prepared federal and state tax returns.
  • Breakdown or gaps in a company's internal controls.
  • Racketeering claims.
 
Our typical engagements involve allegations from:
  • Regulatory and law enforcement agencies (FDIC, SEC, USA, IRS, Inspector General, US Trustees, Receivers).
  • Anonymous whistleblowers.
  • Actual or threatened litigation.
  • Internal investigators as by examination committees, general counsel or external counsel.
  • Regulatory inquiries.
Investigation Used in Connection with Business Valuations

A business appraisal may require an investigation of inappropriate expenses or unrecorded revenue. When necessary, our forensic investigation will look deeper into financial activity to understand whether certain financial numbers match; if they do not, we will investigate why. By doing so, our examination may uncover those transactions and personal activities that may affect the income or assets of a business.

Determining True Economic Income in Divorce

In addition to their weekly salary, business owners may receive income from their business in other forms that are not apparent. Distributions, payments made on behalf of an owner and treated as expenses of the business, and payments treated as officer loans may be considered part of total earnings. In an effort to reduce their tax liability, an owner may run personal expenses through the business that may be overlooked at the time of a divorce. Our forensic investigation will include a review of the expenses and other transactions to determine the true income to the business owner generated from a business.

Fraud and Embezzlement

Fraud and embezzlement should continue to remain a concern for business owners. In their 2016 Report to the Nation, the Association of Certified Fraud Examiners reports a typical organization loses about 5% of its total annual revenue to fraud and abuse each year. The Report also found that on average a fraud lasted a median of 18 months before being detected. Nearly half of victim organizations do not recover any losses that they suffer due to fraud. Further, the perpetrators with higher levels of authority, such as managers and executives, tend to cause much larger losses, and most occupational fraudsters are first-time offenders with clean employment histories.

Our forensic investigation team will review the financial operations for possible fraud. In addition, we will review internal controls and recommend anti-fraud procedures to help deter and prevent fraud from occurring in the future.

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Mark  Harrison

Valuation & Litigation Services Leader
Valuation & Litigation Support
New Haven, CT
 
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