When couples get divorced in Maricopa County Arizona, each spouse is required to submit to the court a document called an Affidavit of Financial Information [“AFI”]. The document, which can be prepared by the parties or their legal representatives, is also known as Form DROSC13f-010119. The AFI is used to assist the court in creating …
Sometimes, before your bank will finance an acquisition, they require a quality of earnings (“QoE”) report. You might be saying, what is a QoE report? A QoE report analyzes the earnings power of a business to determine how sustainable and accurate the business’ earnings are. Specifically, a QoE report digs into the seller’s financial information …
Are you in the market to merge or acquire another company? Identifying four elements before the deal is complete can help make it a win-win for both parties. There are a handful of the problems that often arise in the mergers and acquisitions (“M&A”) process. To begin with, buyers tend to be overexuberant about the …
In the case of Estate of Streightoff vs Commissioner, the IRS argued that the interest to be valued in a family limited partnership (FLP) was a limited partner interest, not an assignee interest. The Tax Court agreed with the IRS noting characteristics of the property transferred and admission requirements of the FLP. Case background Streightoff …
You have probably heard valuation multiples being tossed around by owners and others regarding the value of businesses. The typical multiple referenced is a multiple of EBITDA which is defined as “Earnings Before Interest, Taxes, Depreciation and Amortization.” Owners sometimes overestimate the value of their business. Recent market data can be very instructive but must …
Earnings management (“EM”) is the practice of earnings smoothing. Research shows there are three reasons why managers engage in EM. They include: optimal contract design, signaling and rational expectations. One example of an optimal contract design is when management’s compensation is tied to the earnings of the firm. Risk-averse managers will engage in EM to …
It was after the lunch hour and I was testifying as a CPA expert on an economic damages case. The venue was a superior courthouse in Santa Ana, California. The day was a hot one and I was testifying at a jury trial. I had been retained by the plaintiff. My testimony was laced with …
I recently read an article about fraud within the Massachusetts State Police (MSP). The author, a former MSP trooper, outlined an investigation by the U.S. Department of Justice (DOJ) and the Massachusetts Attorney General’s Office. The investigation involves a minimum of 46 troopers with the allegations including payroll fraud and conspiracy, among other federal violations. …
In a previous blog, I discussed the term “forensic accounting” and ultimately provided a very general definition: Forensic accounting is the application of specialized accounting, finance, economics and related knowledge and skills in a legal setting. After publishing that blog, I realized that I may have given short shrift to the term forensic economics. Upon …
Crime is big business both domestically and across the globe and, as a result, money laundering activities are extensive. In fact, the United Nations Office of Drugs and Crime reports that “[t]he estimated amount of money laundered globally in one year is 2% – 5% of global GDP, or $800 – $2 trillion in current …