Forensic Accounting Services
Forensic Accountants, or Fraud Examiners, are a vital tool used by the Claims Professional in evaluating a broad range of losses. Forensic Accountants should be utilized on any claim where an analytical review of financial records is necessary in appraising the claim.
Accurate interpretation of financial data ensures that claims are adjusted impartially. Many types of claims should not be settled without a review of accounting records, regardless of Claimant or the Claim Professional’s business market. Listed below are a few of the types of cases in which the forensic accountant is invaluable.
Commercial Business Income Loss
Calculations of this nature are considered the forte of the forensic auditor. The Forensic Accountant must possess analytical skills that detect revenue trends, both within the earnings cycle, as well as the industry. Expenses must be analyzed for continuation, or savings, during the period of restoration. Our accountants, all having insurance company backgrounds, are knowledgeable in the coverage features such as coinsurance, ordinary payroll, and other unique policy language.
Loss of Personal Earnings
Often slighted, claims of self-employed individuals are frequent and are often represent significant dollar amounts. The individual claimant’s legal status could be sole proprietor, partnership, LLC, or corporation (e.g. a significant shareholder. These claims are most often encountered in the following coverage lines: 1. Personal Injury Protection (No-Fault) Wage Loss Coverage 2. Uninsured and Underinsured Motorists Coverage 3. Third Party Claims –Automobile Bodily Injury and Property Damage (vehicle downtime) and General Liability (both personal and commercial)
These claims are presented by automobile rental agencies, truckers, taxi-cabs, limousine, bus, and even rail services. The simple fact that the damaged vehicle did not generate revenue during the downtime does not indicate a loss. Often, additional units within the fleet can mitigate a short term downtime. If revenue was adversely affected a savings offset will normally occur in operating expenses.
Wrongful Death, Partial or Permanent Disability
An accomplished forensic accountant can determine the net present value of future earnings on these types of losses. A few of the variables considered are real earnings growth, education, life earnings cycle, work life and life expectancy, taxes, personal consumption, and household services.
The U.S. Chamber of Commerce estimates the annual cost of Employee Theft at $40 billion. When discovered, these losses can be devastating. Unique coverage conditions, such as superseded surety ship and condonement, require expertise in their evaluation.
Property Damage – Self-Repair of Damage
Most property damage claims are best evaluated by an appraisal expert. However, damage repaired internally by the claimant is regularly presented on full absorption costing. Our evaluation determines which incremental costs were incurred due to the property damage. These cases are often presented by third party claimants, most notably public utility companies.
This coverage is frequently misinterpreted, both by the Insured and Public Adjusters. An oversight can be costly, as most Extra Expense coverage is limited only to those within the Period of Restoration. Our auditors conduct an objective evaluation of financial records to determine what expenses were incurred, due to property damage, to minimize the suspension of operations.