Forensic Accounting "light" and Why You Need it (even When You Think You Don't)

• Publication year: 2018
• Author: Julie Bodenheimer

Forensic Accounting "Light" and Why You Need It (Even When You Think You Don't)

Julie Bodenheimer

Julie K. Bodenheimer is an attorney and an accountant. She works with family law attorneys to prepare the financial cases for their clients by assisting them with discovery plans, digitizing the relevant documents and then organizing and analyzing the data contained in those documents. She also acts as a special master for financial issues in family law cases. You can find more information about her at her website www.backtoyourbusiness.com.

What do these situations have in common?

A new client walks in and tells you she is absolutely, positively certain that her soon to be ex-husband is hiding money—she just doesn't quite know where.
Opposing party claims that her monthly income is a mere $3,000 per month when you know she is running a successful dental practice.
Your client purchased a home during marriage with assets she owned prior to marriage but can't find the bank records to prove it.

They each present an opportunity for you to use financial documents to win cases for your clients. You will be able to take the most advantage of the financial documents available in discovery or from your client if you make it a regular habit to collect, organize and analyze all financial information at the outset of your representation.

We call it "forensic accounting light," and you can do it without the assistance of an accountant. Should your case end up needing assistance from a forensic accountant, your materials will not only be instantly available to your joint expert, they will be in a format that experts will find easier to follow, better to work with, and more persuasive. Instituting a protocol in your office of performing "forensic accounting light" on every case with a financial component allows you to access not just opposing party's claims, but the validity of the claims of your client prior to setting foot in a courtroom or negotiation. And we all know that knowledge is power.

If you are new to practicing family law or if you are interested in streamlining your process, here is how to use financial documents to make your case.

Where to Start

First, in any case where finances are at issue, have your client provide you with complete and correct copies of the last three to five years of tax returns (or the tax returns that pertain to the years at issue). If they are not in possession of those returns, they can obtain them from their accountant or tax preparer. Transcripts of the tax returns from the previous three years may be obtained for free directly from the IRS by using their online Order a Transcript tool (go to www.irs.gov to find the IRS website). Transcripts are also available by phone or mail or fax. Directions on how to obtain tax transcripts in those manners can also be found on the IRS website. An actual copy of a filed and processed tax return can be obtained using IRS Form 4506 Request for Copy of Tax Return. There is a fee of approximately $60 per tax return. The IRS keeps tax returns for seven years from the date of filing before they are destroyed by law. In cases where your client is not entitled to access the income tax returns of opposing party, you should request those documents directly from opposing party as early in your representation as possible. If you do not have the tax returns in electronic format, scan them and save them as PDF files. If you are familiar with Adobe Acrobat, you can add Bates numbering to your documents as well.

It is important to start with the tax returns even if you believe that there are no tax issues or that you do not know enough about taxes to make analyzing them worthwhile to your case. Marriage of Loh,...