The Role of a Forensic Accountant as an Expert Witness

At some point in their career, many forensic accountants will be called upon to participate in Court procedures as an Expert Witness (Parker, 2007, p. 1). This proceeding can occur immediately after they have finished the written Expert Report or several years later. 

Many forensic accountants think that ‘once the hard work of the written expert report is completed, providing verbal evidence in Court is straight forward and uncomplicated’ where they can show the barristers they are in control. However, this is not the case.

Forensic accountants are often called upon to provide testimony in criminal prosecutions such as embezzlement, misappropriation of assets/ funds, tax evasion and many other financial frauds. The role requires the Expert Witness to follow the specific guidelines set out by APES 215: Forensic Accounting Services to provide an opinion about accounting evidence (Federal Court of Australia, 2013). Generally, when a forensic accountant is called upon to provide expert evidence in Court, it can be a very challenging and tense situation. 

Cartoon: View about WorldCom Trial

This is because they may be utilised as defense witnesses to support the defendant’s claim and/or be cross-examined by barrister(s) questioning their qualifications, bases of expert opinions, statements made in the Expert Report and overall, how familiar they are with the findings in the Expert Report (Singleton & Singleton, 2010, p. 264 – 265). 

Video: Example of cross examination of Expert Witness

Without experience and qualifications, the role of the forensic accountant as an Expert Witness can be a very daunting process during an oral testimony. The reason for this is because the barrister(s) cross-examining the individual try to make it appear as if the forensic accountant is unqualified and that the Expert Report, along with the evidence provided, is inadmissible in Court. At times, the forensic accountant may even look ‘stupid’ in the eyes of the Court.

Therefore, in order for a forensic accountant to become a successful Expert Witness they must possess the following characteristics:

•          Experience and qualifications
•         Attention to detail
•         Understand the Expert Report extensively
•          Ensure evidence is admissible
•         Follow Expert Witness/Report Guidelines and Standards (Axion Forensics Pty, 2015).

 Video: Expert Witness cross examination advice

Most of these attributes were not evident during my experience from the Mock Trail. I could see that the major issues most students made during their presentation of their expert evidence was that they did not pay enough attention to the small details which could show that they did not familarise themselves with the Expert Report and possibly made the evidence inadmissible. Nonetheless, the Mock Trail was for learning purposes and from my perspective, most students performed very well for their first time providing a testimony on a report they did not write. It should also be noted that the barristers themselves stated that it was a badly written report thus making it difficult to defend.

From this Mock Trail, I learnt that it is important to:

• Only answer the questions asked by the barrister(s), even if it is just a simple “yes” or “no"
• Know Expert Report extensively well
• Look at Judge while answering questions – there to convince Judge not barrister(s)
• Don’t answer a question you do not understand instead ask barrister to clarify question
• Check and understand report findings and calculations yourself – don’t rely on someone else’s assessment
• Write every report as if it is going to end up in Court

After learning all this, I know now that it is crucial for Forensic Accountants to understand and obtain the knowledge and skills for the role of an Expert Witness.

References:

Parker, D. (2007). The Accountant as an Expert Witness: A Basic Guide to Forensic Accounting. InTheBlack Journal, 77, (33), 1 -2. Retrieved from http://search.proquest.com.ezp01.library.qut.edu.au/docview/211304322?accountid=13380%5C

Accounting Professional and Ethical Standards Board. (2013). APES 215 Forensic Accounting Services [Supersedes APES 215 Forensic Accounting Services issued in December 2008]. Retrieved from http://www.apesb.org.au/download.php?code=680

Singleton, T. W. and Singleton, A. J. (2010) The Legal Role and Qualifications of an Expert Witness. Fraud Auditing and Forensic Accounting, 4, 263 – 267. doi: 10.1002/9781118269183.ch15

Axion Forensics Pty. (2015). Independent expert witnesses. Retrieved from https://axiomforensics.com.au/index.php/independentexpertwitness

The risk of fraud with online services

Online fraud efforts will continue to increase as more and more individuals regularly use networks to access Facebook, Twitter, Internet banking and online payment systems. 

Organisations with online services tend to face the same risks but with potentially bigger consequences. 

When an organisation requires customers to register personal details along with their banking or credit card information, the company is exposing themselves and their clients to potential online fraudulent activities (Yarden, 2005). 

These online risks include identity theft, credit card fraud, ransomware and online scams (Gordon & Ford, 2006, p. 15 - 16). Overall, these online risks can damage the reputation of an organisation and cost them the loyalty of their customers.

Video: Identity theft and how to prevent it

Video: Top 10 Online Scams and how to avoid it

An organisation’s reputation can be damaged by just one fraudulent activity that exposes the customer. This happened to me at first hand. A few years back, I was a regularly customer of the online shop ‘Amazon’. The website seemed perfectly safe and secure for me to use my credit card details to purchase items that were always delivered on time with no problems. 

Unfortunately one time, I became a victim of credit card fraud where my details were stolen and used to purchase airplane tickets from another country. It was then that I realised a hacker had stolen my details during one of my purchases on ‘Amazon’. Since then, I have never bought anything from ‘Amazon’ again, which shows how the incident had destroyed the company’s reputation and cost them a customer (me!).

Therefore, it is recommended that for organisations to minimise the risk of fraud for online services, the company implement policies and programs that will improve the level of security for both the business and its clients. The policies should prevent and detect the potential risks of using the organisation’s online services through the use of IP and email address controls, multi-factor online authentication where the user has to approve transactions by two or more forms (ie. login details and SMS confirmation code) and perform account level checks to look out for ‘out of the ordinary’ transactions (McGlasson, 2010).   

References:

Gordon, S, & Ford, R. (2006). On the definition and classification of cybercrime. Journal in computer virology, 2, 15 – 16. doi: 10.1007/s11416-006-0015-z.

McGlasson, L. (2010). 6 steps to reduce online fraud. Retrieved from http://www.bankinfosecurity.com/6-steps-to-reduce-online-fraud-a-2375/op-1

Yarden, J. (2005). Know the risks of using online payment systems in a corporate environment. Retrieved from http://www.techrepublic.com/article/know-the-risks-of-using-online-payment-systems-in-a-corporate-environment/

Pros and Cons to 'Hot-tubbing'

There are many different ways in which expert evidence can be presented in Court. “Hot-tubbing” is one of them.

Concurrent evidence, or ‘hot tubbing, can be described as

“a discussion chaired by the judge in which various experts…….. engage in a co-operative endeavor to identify the issues and arrive at a common resolution of them”

-                Hon Justice Peter McClellan

 (The Academy of Experts, 2015). 

The process has been very successful in the Australian Courts (Croke & Mallon, 2013) where the pros include:

·      Experts being able to debate, with few interruptions, all the issues in a joint report

·      Questioning being directed at the substance and resolution of issues without damaging or discrediting the reputation of witnesses

·      Saving time and money

(Farthing, 2013).

The disadvantages with ‘hot-tubbing’:

·      Often difficult to find a time when a number of experts can come together to prepare a joint report

·      The judges may not have a consistent approach to the conduct of the concurrent evidence session

·      The more confident expert might overshadow or overwhelm the other expert’s in the ‘hot tub’

(Garling, 2011).

Link for information about the 'expert witness' 

Before writing this blog, I had never even heard the concept of concurrent evidence or ‘hot-tubbing’. Nevertheless, after reading articles about this method, I believe it is a relatively beneficial technique. In my opinion, based solely on research, I see it as a process that potentially gives each expert a fair opportunity to present their evidence while allowing the Court to get straight to the point of the issues in dispute. For instance, in cases where children sustain physical injury, it is important for the Court to mainly concentrate on the expert’s medical evidence of the injury so that they are able to come to a fair-minded resolution.

Therefore, it is recommended that for the pros to outweigh the cons of ‘hot-tubbing’, each experts’ evidence should be properly combined in a joint report in order to significantly assist the Court in understanding the views of each expert and coming to a resolution.

References:

The Academy of Experts. (2015). Concurrent evidence – hot tubbing. Retrieved from http://www.academyofexperts.org/guidance/users-experts/concurrent-evidence-hot-tubbing

Croke, A. and Mallon, L. (2013). Hot-tub: lessons from Australia. Retrieved from https://www.ashurst.com/publication-item.aspx?id_Content=9604

Farthing, S. (2013, April 25).  Judge enjoys ‘hot tubbing’ – finds advantages in concurrent evidence. Mondaq. Retrived from http://www.mondaq.com/australia/x/235820/court+procedure/Judge+enjoys+hot+tubbing+finds+advantages+in+concurrent+evidence

Garling, P. (2011). Reflections on concurrent expert evidence. Journal of the NSW Bar Association, Summer 2011 – 2013, 12 – 15. Retrieved from http://search.informit.com.au.ezp01.library.qut.edu.au/fullText;dn=775555457638283;res=IELHSS