By Chrissie A. Powers, CPA/CFF, CFE, CVA
When choosing your team for a bankruptcy case, bankruptcy attorneys should contemplate utilizing a forensic accountant that is seasoned in detecting fraudulent schemes. It is not unusual for individuals or businesses to hide assets from creditors. Forensic accountants comb through voluminous records regularly and have an eye for spotting irregularities. Even if there are no red flags glaring, it's a good idea to have a forensic accountant involved in the investigation.
The fraud being perpetrated could be hidden in the masses of financial documents produced. Forensic accountants are able to use their skill sets to identify these relationships and correlations. For example, sometimes the debtor will transfer assets to a family member so that the assets won't be forfeited. It is even possible that a lack of records is key that something is awry. Such as, assets listed on the financial statements six months before bankruptcy are now NOT on the bankruptcy schedules.
A forensic accountant can trace missing assets, gather evidence of misconduct and conclude an amount of loss. Another area where the forensic accountant can assist is with preferential payments. They are able to review and analyze all suspect vendor payments looking at payment patterns months before bankruptcy and ninety days prior to bankruptcy. Loan payments, which were guaranteed by the owner, and related party loan payments are examples of preferential payments to watch for.
If you have additional questions or concerns regarding fraud, don't hesitate to contact us at 614-745-5192.